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2008 was not a very good year either for a Berkshire shareholder. While the stock outperformed the S&P be several points, the stock had a -31.8% return. Buffett was criticized for his purchase of preferred shares in Goldman Sachs and General Electric near the end of 2008, due to many investors belief the companies were insolvent. However this criticism quickly went away, when Bloomberg reported several months ago that Buffett has a several billion dollar paper gain on the Goldman deal, in addition to a hefty 10% a year dividend.
The past three years the S&P 500 outperformed Berkshire stock. This is the first three year winning margin over Buffett since the tech bubble years. However, the important statistic is Buffett’s 10 year record. Buffett beat the S&P 500 in 6 out of 10 years. As many other value investors note, Buffett would rather underperform in bull markets, if he can outperform in bear markets. I think he largely accomplished this in 2008, even if 2008 was his worst year ever. Berkshire had a 76% total return for the past ten years in contrast to the S&P 500’s 24.1% negative return. For the record BRK has produced annual gains of 27.7% since 1977 versus 8.8% for the S&P 500.
| BERKSHIRE HATHAWAY STOCK VS. S&P 500 INDEX ANNUAL GAINS |
| Year | BRK.A Close | BRK Pct. Change | S&P Close | S&P Pct. Change |
| 2009 | 99,200 | +2.7% | 1115.10 | +23.5% |
| 2008 | 96,600 | -31.8% | 903.25 | -38.5% |
| 2007 | 141,600 | +28.7% | 1468.36 | +3.5% |
| 2006 | 109,990 | +24.1% | 1418.30 | +13.6% |
| 2005 | 88,620 | +0.8% | 1248.29 | +3.0% |
| 2004 | 87,900 | +4.3% | 1211.92 | +9.0% |
| 2003 | 84,250 | +15.8% | 1111.92 | +26.4% |
| 2002 | 72,750 | -3.8% | 879.82 | -23.4% |
| 2001 | 75,600 | +6.5% | 1148.08 | -13.0% |
| 2000 | 71,000 | +26.6% | 1320.28 | -10.1% |
images courtesy of Cnbc.com
disclosure: long GS and GE
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