Question of the Day: How much would a $100 investment in Warren Buffet's company in 1964 be worth in November of 2020?
Answer: About $2.8 million
- From Berkshire Hathaway Annual Letter to investors: Overall gain from 1964 to 2019: 2,744,062%
- At end of 2019, that $100 would be worth $2,744,162
- Berkshire stock performance (through 11/9/20): 0.87% bringing investment's value close to $2.8 million
- Do you think it is easy/difficult to hold on to investments like this over the long-term? Explain.
- If you had the chance to meet Warren Buffett, what are two questions that you would ask him?
- Investors spend a lot of time looking for the next Warren Buffett. Do you think that is time well spent? Explain.
- Researchers often find that investors do vastly worse than if they had just made the simple choice to own an index fund (like the S&P 500). What might be some of the reasons they do so poorly?
Behind the numbers (from Berkshire Hathaway Annual Report):
- Compounded annual growth rate (CAGR) of 20.3% for period 1965-2017.
- S&P 500 CAGR was 10.0% over that same period.
While the value of stock in Warren Buffett's company was driven by his stock picking prowess, Buffett has consistently told investors "do as I say and not as I do" in espousing the value of index funds. Here's his conversation with Lebron James where he provides an answer on how 99% of the population should invest.
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
To get access to NGPF answer keys, assessments, and teacher-only resources: create a FREE Teacher Account