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Published: May 16, 2020 at 1:54 p.m. ET, By Howard Gold<\/p>\n
Who is the Greatest of All Time? Michael or LeBron? Willie or the Babe? Aretha or Ol\u2019 Blue Eyes?<\/p>\n
When it comes to investing, Warren Buffett, chairman of Berkshire Hathaway BRK.B, is unquestionably the greatest who ever lived, posting an extraordinary record over more than five decades. From 1965 through 2018, Berkshire racked up a 20.5% compound annual return<\/a>, more than double that of the S&P 500 SPX including dividends.<\/p>\n Buffett also is a beloved multibillionaire in an age when the superrich are vilified. His homespun wisdom and Midwestern humility have made him the most sacred of all cows to a business media hungry for wit and personality. His paeans to free-market capitalism, along with his Democratic politics, haven\u2019t hurt him with that group, either.<\/p>\n Read: Warren Buffett\u2019s \u2018outdated view\u2019: One longtime fan is considering dumping his entire Berkshire stake<\/a><\/p>\n But now, after profoundly underperforming the S&P 500 throughout the entire 11-year bull market, it\u2019s fair to ask whether Buffett is still, well, Buffett. Even at the company\u2019s virtual annual meeting, held in Omaha on May 2, some questions by shareholders, curated by CNBC\u2019s Becky Quick, struck this listener as unusually sharp.<\/p>\n At times, Buffett seemed uncomfortable amid PowerPoint slides and the absence of his longtime friend and business partner, Charlie Munger, who didn\u2019t make the trip. His bullish comments about America seemed oddly discordant while a pandemic ravages our economy.<\/p>\n Meanwhile, intimations of mortality hung over the proceedings. Munger is 96 and Buffett turns 90 in August. The two, Buffett said, \u201care not going any place voluntarily, but we probably will go someplace involuntarily before that long.\u201d Then he quickly added, \u201cCharlie\u2019s in good health, incidentally. I\u2019m in good health.\u201d<\/p>\n Questions put to Buffett<\/strong><\/p>\n No wonder shareholders asked about how Berkshire will fare without Buffett and Munger at the helm.<\/p>\n The right question, however, is how Berkshire is doing with them. Consider:<\/p>\n I emailed those questions to Berkshire but got no response by deadline.<\/p>\n Index fund versus Berkshire stock<\/strong><\/p>\n Buffett himself acknowledged how tough it will be for Berkshire to beat the S&P 500 from here on. \u201cBerkshire is about as sound as any single investment can be,\u201d he told the annual meeting, \u201cbut I would not want to bet my life on whether we beat the S&P 500 over the next 10 years.\u201d<\/p>\n \u201cIn my view, for most people, the best thing to do is to own the S&P 500 index fund,\u201d he said, echoing past statements<\/a>.<\/p>\n \u201cI would make no promise to anybody that we will do better than the S&P 500. But what I will promise them is that I\u2019ve got 99% of my money in Berkshire.\u201d<\/p>\n But not apparently his heirs\u2019 money. \u201cI haven\u2019t changed my will and it directs that my widow would have 90% of the funds in index funds,\u201d he said.<\/p>\n Follow the money \u2014 the future money. Warren Buffett is saying, almost in so many words, that an S&P 500 index fund is a better investment now than Berkshire Hathaway\u2019s stock. There simply aren\u2019t many new tricks this 90-year-old can learn, especially when growth investing, indexing and trillions of dollars of Fed buying power have stolen much of Berkshire\u2019s thunder.<\/p>\n More than anyone else, he must know he\u2019s had a marvelous run but that the curtain is coming down on the Buffett era. These days, even on Broadway<\/a>, the show won\u2019t go on.<\/p>\n\n
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