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Buffett-Munger Model Portfolio Is Outperforming Again

October 03, 2013

As stock market pulls backs from its all time highs, GuruFocus Buffett-Munger model portfolio starts to outperform again. As of market close yesterday, it has gained 22.06% and outperformed the S&P 500 by 2.1%. Since inception in Jan. 2009, the portfolio outperformed the S&P 500 by 33.7% cumulatively, which is about 5% a year over the past four years and 9 months. All numbers do not include dividends.

These are the detailed performances of Buffett-Munger strategy since inception in 2009:

Year S&P 500 Buffett-Munger Screener top 25
2009 24.71% 28.65%
2010 11.65% 19.54%
2011 -0% 6.01%
2012 12.1% 11.01%
2013 19.9% 22.06%
Since Inception 87.15% 120.9%
Outperforming the S&P 33.75%


We want to note that Buffett-Munger Strategy does not outperform the market every year. When market is hot and trend dominates, it may underperform. It outperformed the S&P 500 by wide margins from 2009 through 2011, but it underperformed by 1.1% in 2012. In most part of this year, as the market keeps making new highs, Buffett-Munger strategy was underperforming. Only as market pulls back from its all time highs, Buffett-Munger strategy showed stronger resilience and is now ahead of the market.

If you are not familiar with GuruFocus Buffett-Munger strategy, here is how it works. It tries to find high quality business at undervalued or fair-valued prices:

· Companies that have high Predictability Rank, that is, companies that can consistently grow its revenue and earnings.

· Companies that have competitive advantages. It can maintain or even expand its profit margin while growing its business

· Companies that incur little debt while growing business

· Companies that are fair valued or under-valued. We use PEPG as indicator. PEPG is the P/E ratio divided by the average growth rate of EBITDA over the past 5 years.

For details, go to: What Worked In The Market From 1998-2008? Part II. Under-Valued Predictable Companies And Buffett-Munger Screener

The model portfolio of Buffett-Munger Strategy consists of the top 25 stocks in Buffett-Munger Screener as of Jan. 1 of each year. The portfolio is rebalance only once a year. The turnover is about 50% at the time of rebalance. This is the recent performance chart of Buffett-Munger Strategy relative to S&P 500. The prices are calculated daily.

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You can check out the complete list of Buffett-Munger model portfolio here. The current top stocks of Buffett-Munger strategy is in Buffett-Munger Screener.

Take the advantage of GuruFocus Value Screeners such as Buffett-Munger Screener, Ben Graham Net-Net, Undervalue Predictable Companies. If you are not a Premium Member, we invite you for a 7-day Free Trial.

Rating: 5.0/5 (4 votes)

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