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Beating Warren Buffett--Part 4
How the Buffett Analysis Came About from
A Timely Review* of Worldwide ETFs'
Performance Results
BUFFETT BEATS BUFFETT
. . . with a little (unsollicited) help from his friends at Copernicus. We took the liberty of comparing results, thinking it would be instructive and entertaining certainly for us, possibly for you, too. The comparison (Part 3 of this series) shows sharply and clearly the dramaticdifferences in style, strategy, and tactics in investing between the two approaches. We were curious about what would happen if the two approaches were blended.
We found that
Mr. Buffett did better than himself when he fictitiously tried the investment-management algorithm in a program we designed specifically for the purpose.
Berkshire Hathaway Class A Common Stock
stock trades publicly and represents controlling-shares ownership in the investment holding company of the same name. Mr. Buffett has pretty much been the exclusive arbiter in management of its investment portfolio since 1965.
His record of success is the best in the business. No one has done so well for so long. He is the public paragon of institutional portfolio investing. He is a 'value' investor and deal maker through and through. Copernicus is a 'cycle' investor who builds digital systems that do not include value in the management-decision process. Both use prices. Mr. Buffett asks, Does the current price give me enough value for me to buy this company's stock? Copernicus asks, Is the price rising or falling.
Here's what happens when a cycle system is applied to Mr. Buffett's own portfolio. He beats his own record.
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Chart
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Berkshire Hathaway Inc vs Berkshire Hathaway
Inc
Class A Common Stock
Without & With & Copernicus
Investment-Management System
vs S&P 500 Stock Index
December 31, 1990--December 31, 2010
20 years • Weekly
Prices Indexed to 100%
System Prices Hypothetical
Berkshire and S&P500 Actual
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The advantage of the System, added to Mr. Buffett's value skills, is the timely avoidance of big drops in the stock's price. Notice the periods between 1999-2000 and 2007-2009 when the stock collapsed -36% and -50% (!) respectively, and the drops lasted over a year. The worst System drawdown was -29% and lasted three weeks. It takes guts to survive this degree of deep and extended volatility which occurs during bad bear markets. Commendations to Mr. Buffett and his thousands of followers.
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To see Timing Graph
and Rolling Returns
click here
* Gaphic summary of the recent Worldwide ETFs Review here
FINIS
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BUFFETT BEATS THE MARKET - Part 1
JUDGING THE RESULTS - Part 2
COPERNICUS BEATS BUFFETT - Part 3
BUFFETT BEATS BUFFETT - Part 4
End
Posted
March 11, 2011
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• Copernicus Group •
© 2011 The 2000 Corporation
All Rights Reserved
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