4 ms·
According to the first page of the letter, they have a pretty good track record. In 58 years, they outperformed the S&P500 39 times. That is 67% of the time, w
by mg 4y ago
According to the first page of the letter, they have a pretty good track record.
In 58 years, they outperformed the S&P500 39 times. That is 67% of the time, which according to R comes down to a p value of 0.01:
binom.test(x=39, n=58, p=.5)
=> p-value = 0.01193
On the other hand, countless investors started out 58 years ago and 1 in 50 had a performance like this or better by pure chance. So it's hard to say to what extent the performance is an indicator of capability.
- haakonhr 4y agoNot going to do the math here, but the magnitudes are quite important.. It seems like the worst years are around 20% worse than the S&P, but there are several years where their outperformance is more than 100%.
- sethev 4y agoOn it's face, it seems implausible that 1 in 50 investors were as successful as Warren Buffet.
- gtheodor 4y agoIn 1984, Warren Buffett wrote an article to address this criticism - https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-a...
- deleted 4y ago[deleted]