2007-12-13 19:42:55
Berkshire Hathaway Hits $150,000 for the First Time
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Believe it or not, people actually have the audacity to try and say that Warren Buffett's results aren't impressive.
"What is his annual return?" they will say, "My portfolio had a gain of 120% last year, why should I be impressed with a 20% return a year?"
Believe it or not, people actually say this.
First off, to answer those people: when your portfolio is small, it is not hard to garner a 120% return in one year. Doubling a $10,000 portfolio is not the hardest accomplishment in the world. Seeing consistent double digit returns when you are managing literally hundreds of billions of dollars? That's nearly impossible, and the reason why Buffett is the greatest investor EVER, bar none.
Berkshire Hathaway famously refuses to split their stock. So when you see the $150,000 share price, you will get a good idea of how much the stock has appreciated since Buffett first started buying shares. I believe in 1962, when Buffett started purchasing shares, the stock was trading at around a couple of dollars per share. So from then until now, one share has appreciated from $3-$4 to $150,000.
The returns just keep on coming as well. Berkshire Hathaway continues to outperform in a lackluster market. Shares closed over $100,000 for the first time on October 23rd, 2006, and have since jumped almost $50,000 in just over a year.
To give you an idea of how big Berkshire Hathaway is, at the end of 2006 the company had over $43 billion dollars in cash; 61.53 billion dollars in equity investments; 108 billion dollars in shareholder equity; 98 billion dollars in revenues and net earnings of $11 billion dollars. And the stock has grown considerably since that point.
Here are some more numbers for you:
Berkshire Hathaway has had an average annual gain of 21.4% since 1965, compared to 10.4% for the S + P 500
Cumulative gain of 361,156% since 1965, compared to 6479% for the S + P 500.
One dollar invested in Berkshire Hathaway in 1965 would now be worth $3612.56, compared to $65.79 investing in the S + P 500.
The S + P 500 has only outperformed Berkshire Hathaway five times since 1965
Berkshire Hathaway has survived it all; recessions, dot com boom and bust, housing booms and housing busts, and it is still putting in outsized returns for its investors. People called a "dinosaur" in the late '90s when he refused to invest in high-flying Internet companies; well, Berkshire Hathaway has tripled in value since then, no small feat for a $220 billion dollar company.
People still continue to call Buffett a dinosaur and say that his methods are antiquated.
I got one thing to say to them. "Show me the money."
Filed under: General Market News
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