Author Topic: Be fearful when others are greedy  (Read 4741 times)

beltim

  • Magnum Stache
  • ******
  • Posts: 2964
Re: Be fearful when others are greedy
« Reply #50 on: June 26, 2020, 04:22:02 AM »
^_^
Yes I screwd up my maths elsewhere, but I'm happy to admit that.

I'd rather admit mistakes than cry foul when someone when someone dissects my argument with better reason and research.

If the mods want to take action over that because some snowflake's ego can't handle being corrected, then frankly I'd rather not be here.
When you get something right, we'll find out if I can handle it. 

I'm requoting this because it's hilarious. 

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Be fearful when others are greedy
« Reply #51 on: June 27, 2020, 04:12:04 AM »
As for the BRK vs SPY underperformance.

To be fairer to BRK though, "100% underperformance" is not the way to phrase it. If SPY is the benchmark then it is better to say that BRK has only delivered just over 50% of the total return of the S&P over the 10 year holding period.

It is not a case of 26.3k (BRK) vs 34k (SPY) because you are starting from a base of $10k.

10k -> 26.3k = 16.3k profit, 163% total return
10k -> 34k = 24k profit, 240% total return

163 is 67.92% of 240. Take this to the daily level and the gap becomes more like 60%, hence my summary "BRK has only delivered just over 50% of the total return of the S&P over the 10 year holding period." is pretty close.
You just posted that to try and change the argument when you're losing.  Here's what you said:

Have you even bothered to check Berkshire's performance lately?

It's trailing the S&P by -18% over the last year, and -14% YTD.. and that's without even factoring in any dividends received from the index. So, no, he's not really anywhere near market returns, not by a long chalk. I don't know anyone else who would get a free pass from their investors having underperformed so miserably.

On a forum that seems to get excited about Vanguard being able to save you 0.1% in annual fees I just thought that would have been, y'know, worth recognising.
Both of your examples are in the past 12 months.  To be clear, you're saying nobody tolerates a single year of under performance.
Fair enough. He's underperformed the S&P by 100% in the last decade. I know plenty of peole who wouldn't tolerate that.
You said Buffet underperformed the S&P 500 by 100% in the last decade.  You were wrong about that, weren't you?

And just to get back to my 15 year example... if Buffet isn't underperforming by 100% over 15 years, there's two possibilities: he also didn't underperform over 10 years, or the 10 year example is cherry picking.  That's what I see you doing here: when I and others showed you that the 10 year performance was not "100% underperformance", you switched to start month and end month, again trying to cherry pick the dates.  And after all that rejecting of 15 years... or 10 years that didn't end on a certain month... you still can't show "100% underperformance" by Warren Buffet, who runs Berkshire Hathaway.

This is getting boring now.

SPY closing price 2010-28-06: $87.92
SPY price 2020-25-06: $307.35
10yr rolling return: 249.6%

BRK/A price 2010-28-06: $121000
BRK/A price 2020-25-06: $267840
10yr rolling return:  121.4%

Prices taken from stockcharts.com which factors in dividend payments AND has daily data.
https://stockcharts.com/articles/mailbag/2014/11/what-is-the-difference-between-adjusted-and-unadjusted-data.html

As for 15 years:

SPY closing price 2005-27-06: $88.0
SPY price 2020-25-06: $307.35
15yr rolling return: 249.3%

BRK/A price 2005-27-06: $83500
BRK/A price 2020-25-06: $267840
15yr rolling return:  220.8%

BERKSHIRE STILL TRAILS OVER 15 YEARS

Why so willing to talk about 15 year performance?  I thought you said:
Firstly, I said 10 years. 10 is not 15. Clear? Good.

Earlier in this thread you claimed Buffet had 100% underperformance over a decade.  To back up the claim, you posted data and then decided the data needed modification.  Someone else pointed out that was incorrect.  Then you posted an image from portfolio visualizer, where it's obvious upon looking at the picture that Buffet did not "100% underperform" the S&P 500 over 10 years.  When I provided a number showing it wasn't 100% under performance, you tried to correct my math with another number that wasn't 100% underperformance.  You have tried over and over to back up this claim, and you have failed every single time.  You call someone else a "snowflake", and here you are completely unable to admit you're wrong when the data is clearly shown in an image for everyone to see.

I guess you're bored of not giving direct answers to the the same question I keep repeating: Were you wrong to say that Buffet underperformed the S&P 500 by 100% over a decade?

habanero

  • Pencil Stache
  • ****
  • Posts: 637
Re: Be fearful when others are greedy
« Reply #52 on: June 27, 2020, 12:19:45 PM »


Over the last decade Berkshire returned 121%, the S&P returned 253%.

Interpret is as you like.

Michael in ABQ

  • Handlebar Stache
  • *****
  • Posts: 1076
    • Military Saints
Re: Be fearful when others are greedy
« Reply #53 on: June 27, 2020, 12:39:47 PM »


Over the last decade Berkshire returned 121%, the S&P returned 253%.

Interpret is as you like.

I come up with approximately 120% and 170% looking at the price for each 10 years ago.
BRK.B - 80 to 175 - June 2010 to June 2020
.INX - 1,120 to 3,010 - June 2010 to June 2020

However, with dividends reinvested S&P 500 goes to about 250% per https://dqydj.com/sp-500-return-calculator/

250% - 120% = 130% underperformance by Berkshire compared to the S&P 500.

habanero

  • Pencil Stache
  • ****
  • Posts: 637
Re: Be fearful when others are greedy
« Reply #54 on: June 27, 2020, 02:30:13 PM »
The main disagreement is what is ďlast decadeĒ last 10 years or Jan 2010 to dec 2019z the latter looks better for Berkshire but still trails the index.

There is no need to argue Buffets record has been anything special for the last 5, 10 or 15 years. Because it hasnít. Prior to that? Most def.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Be fearful when others are greedy
« Reply #55 on: June 27, 2020, 08:31:37 PM »
Over the last decade Berkshire returned 121%, the S&P returned 253%.
I come up with approximately 120% and 170% looking at the price for each 10 years ago.
BRK.B - 80 to 175 - June 2010 to June 2020
.INX - 1,120 to 3,010 - June 2010 to June 2020
However, with dividends reinvested S&P 500 goes to about 250% per https://dqydj.com/sp-500-return-calculator/
250% - 120% = 130% underperformance by Berkshire compared to the S&P 500.
How did "daydj.com" get data for "June 2020" before June has ended?

Taking the last full month would be May 2020, where BRK.B closed at $185.58 on May 28th according to Yahoo Finance (https://finance.yahoo.com/).  From the same source, on June 1 2010 BRK.B opened at $70.05.

185.58 / 70.05 = 2.65, which gives a +165% return, or about 10.2% per year.
(1.102 ^ 10 = 2.64)

Michael in ABQ

  • Handlebar Stache
  • *****
  • Posts: 1076
    • Military Saints
Re: Be fearful when others are greedy
« Reply #56 on: June 27, 2020, 11:42:42 PM »
The main disagreement is what is ďlast decadeĒ last 10 years or Jan 2010 to dec 2019z the latter looks better for Berkshire but still trails the index.

There is no need to argue Buffets record has been anything special for the last 5, 10 or 15 years. Because it hasnít. Prior to that? Most def.

When I compared them on Google Finance it went back to 1996 and Berkshire was up over 600% compared to about 350% for the S&P 500.

The difference between exact start and end dates is just quibbling. Clearly Berkshire is no longer outperforming the market as it's become so large it moves the market whenever it tries to act.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: Be fearful when others are greedy
« Reply #57 on: June 28, 2020, 01:42:14 AM »
For those trying to join the disagreement between vand and myself, here's the post from earlier that started this:
Fair enough. He's underperformed the S&P by 100% in the last decade. I know plenty of peole who wouldn't tolerate that.
Note that vand claimed on May 18 that Buffet "underperformed the S&P by 100% in the last decade", so collecting data from after that date isn't really relevant to my dispute with vand.

I ignored vand being condescending and wrong a couple of times, and when it became clear this is a pattern he will not drop, I went after him.  That's why I'm picking this battle with him, and making him answer the question... was vand wrong on May 18 2020 to claim that Buffet underperformed the S&P 500 by 100% over a decade?

habanero

  • Pencil Stache
  • ****
  • Posts: 637
Re: Be fearful when others are greedy
« Reply #58 on: June 28, 2020, 03:24:09 AM »
Using your date the results from previous 10 years starting with an investment of 100 are (may 15 2010 to may 15 2020 as may 17 2020 was a Sunday).

S&P 500 total return: 310
Berkshire: 222

So S&P total return 210%, Berkshire 122%

If that is close enough to be "100% difference" in casual conversation or not I'll leave you to fight over.
« Last Edit: June 28, 2020, 03:35:45 AM by habaneroNorway »

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 2308
  • Location: Seattle, WA
Re: Be fearful when others are greedy
« Reply #59 on: June 28, 2020, 10:43:04 AM »
This thread is Exhibit A how to not invest in individual stocks. 

If you are going to invest in individual stocks you want to

1) Buy low, and

2) Sell high

Right?  So is the price high or low?  What do we expect future earnings to be?   Price performance over the last ten years doesn't figure much into the decision to buy or selling going forward. 

AdrianC

  • Handlebar Stache
  • *****
  • Posts: 1115
  • Location: Cincinnati
Re: Be fearful when others are greedy
« Reply #60 on: June 28, 2020, 01:03:57 PM »
Over the last ten years, Berkshire kept pace with the S&P500 until 2019. Since then the market has pulled away. The market outperformance is completely within the last 18 months.

The market has gotten demonstrably more expensive, while Berkshire has remained relatively cheap. The valuation difference currently is striking. Berkshire has seldom ever been this cheap. The market has seldom ever been this expensive.

What does this mean? Well, thereís no telling when balance might be restored, if ever.  Iíve placed my bet - got way more money on Berkshire. Letís revisit in a couple of years.

habanero

  • Pencil Stache
  • ****
  • Posts: 637
Re: Be fearful when others are greedy
« Reply #61 on: June 28, 2020, 01:21:10 PM »
Buffet had apparantly also "lost it" during the .com era and was seen as an old man out of fashion and lagging behind. Then stuff happened. Given how large and diversified Berkshire is these days you would kind of expect them to in the long run perform not that different from the overall market. These days some of the largest holdings are also among the largest companies in the S&P 500.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2251
Re: Be fearful when others are greedy
« Reply #62 on: June 28, 2020, 03:39:29 PM »
Is it fair to hold Berkshire Hathaway to the standard of beating the S&P500 when their portfolio is about 60% equities, 35% cash, and 5% bonds? Seems kinda like laughing at a retiree with a 60/40 portfolio for not matching the return of a 100% stock portfolio.



DalioGold10

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Be fearful when others are greedy
« Reply #63 on: June 28, 2020, 06:32:04 PM »
Over the last ten years, Berkshire kept pace with the S&P500 until 2019. Since then the market has pulled away. The market outperformance is completely within the last 18 months.

The market has gotten demonstrably more expensive, while Berkshire has remained relatively cheap. The valuation difference currently is striking. Berkshire has seldom ever been this cheap. The market has seldom ever been this expensive.

What does this mean? Well, thereís no telling when balance might be restored, if ever.  Iíve placed my bet - got way more money on Berkshire. Letís revisit in a couple of years.

Good bet. I also opened my position on BRK. The stock seems to be unwanted and there is too much noise around Buffet's assumed lost vision and skills. People forget that BRK is a value play whilst S&P 500 is driven by growth stocks.

In terms of valuations, my take is that market is NOT overvalued in absolute terms. Maybe overvalued relative to historical norms, however due to low interest rates (10 yrs US treasury is 1%) the S&P 500 at 3,000 gives you an equity risk premium of 4% to 4.5% which is in line with historical averages.
The long term growth is still intact.

However, I do not exclude a crash in the next few months as investor's sentiment changes quickly due to current situation of the economy and development of COVID-19. If it happens, then you may be a happy investor locking equity risk premiums of even above 6% if you buy during the crash.

habanero

  • Pencil Stache
  • ****
  • Posts: 637
Re: Be fearful when others are greedy
« Reply #64 on: June 28, 2020, 11:23:32 PM »
Is it fair to hold Berkshire Hathaway to the standard of beating the S&P500 when their portfolio is about 60% equities, 35% cash, and 5% bonds? Seems kinda like laughing at a retiree with a 60/40 portfolio for not matching the return of a 100% stock portfolio.

Its not the long-term goal of Berk to have that much cash and treasuries.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2251
Re: Be fearful when others are greedy
« Reply #65 on: June 29, 2020, 08:49:03 AM »
Is it fair to hold Berkshire Hathaway to the standard of beating the S&P500 when their portfolio is about 60% equities, 35% cash, and 5% bonds? Seems kinda like laughing at a retiree with a 60/40 portfolio for not matching the return of a 100% stock portfolio.

Its not the long-term goal of Berk to have that much cash and treasuries.

Maybe so, but it is what it is. If I buy their stock today, I know I'm purchasing a 60/40 portfolio. BRK is not so much an equity investment as it is a little separate portfolio with its own AA.

habanero

  • Pencil Stache
  • ****
  • Posts: 637
Re: Be fearful when others are greedy
« Reply #66 on: June 29, 2020, 12:17:42 PM »
If I buy their stock today, I know I'm purchasing a 60/40 portfolio. BRK is not so much an equity investment as it is a little separate portfolio with its own AA.

Not really, the treasury holdings of Berkshire has generally been in T-bills to maximize liquidity. They have almost no duration and yield is worse that what you could get in a FDIC insured bank account. Its more correct to view it as X% equity and the rest cash and cash equivalents yielding zero. It's not like you own 40% Barclays aggregate global bonds or anything remotely similar.

Not saying it's a bad thing (after all, its a cornerstone of their investment philosophy). Just don't think its the same 40% bonds as an investor would generally hold as part of his/hers bond portfolio.
« Last Edit: June 29, 2020, 12:21:27 PM by habaneroNorway »