Since inception at the beginning of 2009, the Buffett-Munger model portfolio has outperformed the market every year. It is doing this again this year, outperforming the market by 0.6%. Since January 2009, it has outperformed the S&P 500 by 26.8% cumulatively.
This is the table of performance of the Buffett-Munger Model Portfolio. All numbers do not include dividend.
The portfolio is rebalanced only once a year, at the beginning of each year. The 25 stocks in the Buffett-Munger Screener are used to replace the existing positions in the portfolio. The turnover is usually less than 50%.
Compared with the model portfolio of Top 25 Undervalued Predictable Companies, the Buffett-Munger portfolio has more stable performance. But overall, Top 25 Undervalued Predictable Companies has better performance, as the portfolio outperformed the S&P500 by 40.5% in the period. But this portfolio underperformed the S&P 500 by 3.3% in 2011, and 2.7% so far this year.
No strategy can outperform the market all the time. But if you stick to the right framework, you will outperform the market over time. We believe that our Buffett-Munger strategy is one of them. This strategy invests in the top 25 stocks in the Buffett-Munger Screener. If you don’t know, the "Buffett-Munger Screener" is used to find companies with high-quality business at undervalued or fair-valued prices. More specifically:
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This is the table of performance of the Buffett-Munger Model Portfolio. All numbers do not include dividend.
| Year | S&P 500 | Buffett-Munger Screener top 25 | Excess Gain |
| 2009 | 23.50% | 29.10% | 5.60% |
| 2010 | 12.80% | 19.10% | 6.30% |
| 2011 | 0% | 6% | 6.00% |
| 2012 (YTD) | 9.10% | 9.70% | 0.60% |
| Cumulative | 52.00% | 78.80% | 26.80% |
Compared with the model portfolio of Top 25 Undervalued Predictable Companies, the Buffett-Munger portfolio has more stable performance. But overall, Top 25 Undervalued Predictable Companies has better performance, as the portfolio outperformed the S&P500 by 40.5% in the period. But this portfolio underperformed the S&P 500 by 3.3% in 2011, and 2.7% so far this year.
No strategy can outperform the market all the time. But if you stick to the right framework, you will outperform the market over time. We believe that our Buffett-Munger strategy is one of them. This strategy invests in the top 25 stocks in the Buffett-Munger Screener. If you don’t know, the "Buffett-Munger Screener" is used to find companies with high-quality business at undervalued or fair-valued prices. More specifically:
- Companies that have high Predictability Rank, that is, companies that can consistently grow revenue and earnings.
- Companies that have competitive advantages. They can maintain or even expand profit margin while growing business.
- Companies that incur little debt while growing business.
- Companies that are fair valued or undervalued. We use PEPG as the indicator. PEPG is the P/E ratio divided by the average growth rate of EBITDA over the past five years.
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