Summary
- The world's greatest investor has largely been silent.
- Once again, many have written off the world's greatest investor, suggesting he is past his best before date.
- Did Warren Buffett miss out on an incredible investment opportunity? Or is he going to show us up - once again?
- But maybe even Warren Buffett can't fight the Fed. Maybe government agencies have taken away Warren's ability to go value hunting.
There's no doubt that Warren Buffett is the world's greatest long term investor. The performance of Berkshire Hathaway (BRK.A) (BRK.B) demonstrates that with clarity. And most of Buffett's Alpha is created during and through those severe market corrections. That's when Mr. B gets to be 'greedy when others are fearful'. But in the stock market correction created by the first modern pandemic, in stepped (marched) the fed. And they came in with guns a blazin' like never before. They shot down the stock market correction. Will Warren Buffett gets his chance to be greedy?
Here's Berkshire Hathaway vs the market from 1985. The outperformance is even much greater pre-1985.
Portfolio 1 is Berkshire Hathaway.
Source: portfoliovisualizer.com
We see that initial burst out of the correction in 1987.
And, of course, Mr. Buffett was written off in the late 1990s as he had 'missed' the great tech run up that turned into the dot-com bubble and bust. Uncle Warren didn't really understand technology. Or so he offered. But he did understand buying stocks when they offer long term value.
Missing out on dot-com stocks
In this chart we see Mr. Buffett 'missing out' on those market gains in 1999 and into the year 2000. US stocks continued to rise on everything dot-com.
Source: portfoliovisualizer.com
Those gains quickly evaporated of course for too many who were invested in the US stock market. The evaporation was more complete for those who truly embraced the tech stocks and tech-heavy science and technology funds, or the Nasdaq 100 (QQQ).
In that period from 1997 through to the end of 2002, Berkshire Hathaway delivered a CAGR of 13.46% while the market delivered 3.46% annually.
The lost decade for US stocks
Of course, it was the lost decade for US stocks. Here's a chart from the beginning of the decade to near the end of that brief bull market run that came after the dot-com crash.
