Berkshire's Buy-and-Hold Zealots: Missed Out

Buffett's Performance has Lagged Since 2008

Many long-term holders of Berkshire Hathaway (BRK.A, BRK.B) take great pride in the fact they will never sell their shares. Buffett’s favorite holding period is “forever” so why should they feel any differently?

Warren Buffett (Trades, Portfolio) judges Berkshire’s performance by measuring the company’s growth in book value. On that basis the firm has trailed the S&P 500’s total return during five of the previous six years.

Berkshire's stock price did better than the company's growth in book value would have suggested. That is because Berkshire’s price to book value ratio expanded. The share price outshone the broad market during four of the six years since the end of 2008.

The chart shown below makes the race appear to be almost a dead heat. The period shown extends from Dec. 31, 2008 through Feb. 27, 2015. The final stats show the cumulative nominal movement of the S&P 500 ETF (SPY) was + 133.44% versus Berkshire Hathaway’s 128.96%.

That 3.47%, 6.2-year, edge is almost indiscernible to the naked eye.

Berkshire doesn’t pay dividends, though.

Continue reading at: Gurufocus.