InvestNow News 5th July – Milford – Value is in the eye of the beholder
Stephanie Perrin, Investment Analyst – May 21, 2019
Warren Buffett is heralded as the greatest value investor of all time. Investment Analyst Stephanie Perrin looks at why he avoided investing in technology stocks and how this has affected Berkshire Hathaway returns.
Tens of thousands of investors recently undertook the annual pilgrimage to Omaha, Nebraska to hear words of wisdom from Warren Buffett, otherwise known as the ‘Oracle of Omaha’, at the 2019 Berkshire Hathaway annual shareholders meeting.
Buffett is heralded as the greatest value investor of all time and it’s easy to see why – since he took the helm of Berkshire Hathaway in 1964, he’s generated an annual return of just over 20%, more than double the annual return of the broader US market (the S&P 500). Put another way, an investor who put US$10k into the US market in 1964, would have around $1.5m by the end of 2018. Not a bad investment. But if that same investor had put that money into Berkshire shares, they would have a whopping US$247m by the end of 2018[1]. This illustrates the incredible power of compounding, which is the snowball effect that occurs when your earnings generate even more earnings.