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Now throw in all the other active funds and average them out. Also Berkshire would not have been the better investment over the last decade. Can you guarantee m

Now throw in all the other active funds and average them out. Also Berkshire would not have been the better investment over the last decade. Can you guarantee me Berkshire will pull ahead before I retire?

Invictus0 4y ago
What a silly thing to stay. Let me just ignore that and explain why Berkshire works. It's possible to beat the market because it's possible to buy $1 for $0.95. That's the whole trick. It takes a lot of work, a lot of smart people, and you have to make big enough deals to cover the cost of paying the managers, but yes, these opportunities exist and they are abundant. The real mistake is thinking that the market is a bunch of random number generators with no rhyme or reason to it. But no, there are no guarantees--the SPY doesn't come with a guarantee either.
- IMSAI8080 4y ago
  That makes no sense at all. What you're saying is it's possible to hire people who can see the future. Index tracking works because the market as a whole generally trends upwards if you wait long enough. This would be expected as the world generally gets richer and technology generally improves. The problem is you can't predict which exact company is going to do the improving. So just buy a very wide spread of companies and take the average. 80% of active managers fail to beat the market because they cannot see the future. The other 20% are lucky (today). If you want a lesson in the dangers of active management, look up Neil Woodford.
  - svnt 4y ago
    You only need to hire people who can see the future from the perspective of the market. It is entirely possible, and it is the reason why insider trading is heavily regulated.
blitzar 4y ago
Berkshire is up 280% vs S&P up 180% for the last decade. That said Berkshire is a pretty poor example as it has a pretty diverse range of holdings, its basically a passive index of its own.
- lotsofpulp 4y ago
  https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ This site says SP500 with dividend reinvested is 270%. I also feel like SP500 has a lot less risk because politicians are very incentivized to provide a backstop to SP500 price, but not as much to BRK. Also, BRK is squeaking out 280% vs SPY 270% by being 25%+ invested in a single company, Apple. That is a lot of extra risk for not a lot of extra return.
- IMSAI8080 4y ago
  That's incorrect, you forgot the dividends. I went with an analysis from last year where Berkshire was behind and was doing worse than the S&P. Now they're about evens. Berkshire is now an S&P500 tracker.

Invictus0 4y ago

What a silly thing to stay. Let me just ignore that and explain why Berkshire works. It's possible to beat the market because it's possible to buy $1 for $0.95. That's the whole trick. It takes a lot of work, a lot of smart people, and you have to make big enough deals to cover the cost of paying the managers, but yes, these opportunities exist and they are abundant. The real mistake is thinking that the market is a bunch of random number generators with no rhyme or reason to it. But no, there are no guarantees--the SPY doesn't come with a guarantee either.

IMSAI8080 4y ago
That makes no sense at all. What you're saying is it's possible to hire people who can see the future. Index tracking works because the market as a whole generally trends upwards if you wait long enough. This would be expected as the world generally gets richer and technology generally improves. The problem is you can't predict which exact company is going to do the improving. So just buy a very wide spread of companies and take the average. 80% of active managers fail to beat the market because they cannot see the future. The other 20% are lucky (today). If you want a lesson in the dangers of active management, look up Neil Woodford.
- svnt 4y ago
  You only need to hire people who can see the future from the perspective of the market. It is entirely possible, and it is the reason why insider trading is heavily regulated.

blitzar 4y ago

Berkshire is up 280% vs S&P up 180% for the last decade. That said Berkshire is a pretty poor example as it has a pretty diverse range of holdings, its basically a passive index of its own.

lotsofpulp 4y ago
https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ This site says SP500 with dividend reinvested is 270%. I also feel like SP500 has a lot less risk because politicians are very incentivized to provide a backstop to SP500 price, but not as much to BRK. Also, BRK is squeaking out 280% vs SPY 270% by being 25%+ invested in a single company, Apple. That is a lot of extra risk for not a lot of extra return.
IMSAI8080 4y ago
That's incorrect, you forgot the dividends. I went with an analysis from last year where Berkshire was behind and was doing worse than the S&P. Now they're about evens. Berkshire is now an S&P500 tracker.