Is Berkshire Hathaway better than sp500?
Most of Berkshire's outperformance versus the index came earlier in Buffett's tenure as Berkshire's CEO when Buffett, now 91, racked up huge gains in the stock market. Over the past 20 years, Berkshire is just a percentage point ahead of the S&P 500 with a 10.3% annualized return against 9.2% for the index.
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“Consistently buy an S&P 500 low-cost index fund,” Buffett said in 2017. “Keep buying it through thick and thin, and especially through thin.”
Pair Corralation between Berkshire Hathaway and SP 500
But when comparing it to its historical volatility, Berkshire Hathaway is 1.05 times less risky than SP 500. It trades about 0.39 of its potential returns per unit of risk.
BRK-A does perform better in the long run, but at the cost of extra risk. SPY is a safer option with less risk but with lower returns. Because SPY follows the S&P 500 index it is designed to represent the market not beat it; Warren Buffet, however, has selected invest options he believes will outperform the market.
For five years through 2020 — an amazing year for technology stocks — Berkshire's Class B shares rose 76%, while the Dow returned 98% and the S&P 500 returned 103%. Berkshire is ahead for five years.
Since 1965, the company has provided 20% average annual returns, almost double the annual returns of the S&P 500. While past performance is no guarantee of future success, that fact alone could make BRK a great choice for long-term buy-and-hold investors.
Student investors in the University of Delaware's Blue Hen Investment Club (BHIC) at the Alfred Lerner College of Business and Economics were unfazed by the challenge and beat the S&P 500 Index again in 2021, continuing their three-year streak.
Buffett is a big fan of index funds, investment bundles that mirror a particular market index, such as the S&P 500: “In my view, for most people, the best thing is to do is owning the S&P 500 index fund,” said Buffett in May 2022.
A/BRK. B, owing to its diversification and lower overall risk profile, offers one of the better risk-adjusted return profiles in the financial-services sector and remains a generally solid candidate for downside protection during market selloffs.
Class A shares will typically grant more voting rights than other classes. This difference is often only pertinent for shareholders who take an active role in the company. Nevertheless, because of the voting rights, A-shares are often more valuable than B shares.
Is Berkshire Hathaway a good defensive stock?
Berkshire Hathaway stock stands out as one of the best defensive stocks because of its approach to investing and the multi-year track record of sticking true to its aims.
Berkshire Hathaway (BRK.B) famously doesn't pay dividends – it has better things to do with its shareholders' cash – but Chairman and CEO Warren Buffett sure loves collecting them. In 2018 alone, Berkshire raked in $3.8 billion in dividends – “a sum that will increase in 2019,” Buffett said in the annual letter.
Berkshire's two ETFs
Both are S&P 500 index funds, which means they are designed to deliver the same long-term performance as the S&P 500 index.
Berkshire is about 1.6% of the S&P 500. Money managers and endowments generally see little reason to own Berkshire.
So why is the stock lower? Berkshire has been taking a hit on its $390 billion equity portfolio, with Barron's estimating a drop of more than $60 billion since the start of the second quarter. The declines have been led by Apple (AAPL), Berkshire's largest equity investment, and No. 2 Bank of America (BAC).
Berkshire's two ETFs
Both are S&P 500 index funds, which means they are designed to deliver the same long-term performance as the S&P 500 index.
Berkshire Hathaway Inc. (NYSE:BRK-B) was in 106 hedge funds' portfolios at the end of September. The all time high for this statistic is 116. Our calculations also showed that BRK-B ranked 14th among the 30 most popular stocks among hedge funds (click for Q3 rankings).
In 2018, Berkshire Hathaway made $3.8 billion in dividend income and the amount has increased significantly ever since. In 2021, the hedge fund earned over $5.3 billion in dividends.
Voting Rights: Class B shareholder has 1/10,000th of the voting rights of a Class A shareholder since each Class A share represents a larger piece of the Berkshire Hathaway pie (there are only 709,840 outstanding Class A shares, compared to 1.39B Class B shares). Performance: BRK.
