Forward. During recent research into possible ways to improve our Worldwide ETFs investment system, we rediscovered a method that proved helpful when it was first introduced five years ago. That got us to thinking how would the technique measure up against other funds today. First, in this article, we make the comparison, then apply the technique. The chart above shows the weekly closing prices for Berkshire Hathaway, Inc. (BRKA) and the Dow Jones Industrial Average (DJIA).
A DRAMATIC COMPARISON
When you google 'Warren Buffett', you get 3,000,000 results. He the second richest person in the United States, third in world, net worth $50 billion. He knows what he is doing. He is Chairman and CEO of Berkshire Hathaway, Inc., a diversified investment company whose stock prices you see in the chart above indexed to 100 for same scale comparison with the DJIA.
The chart and figures show BRKA's excellent results--more than double those of the Dow annually, more than eight times the Dow over the period shown. It is probably the best stock or fund available to the public for any average investor to buy and to hold (as Mr. Buffett does).
When you google 'Copernicus', you get 3,810,000 results. When you google 'Copernicus stocks', you get 450,000 results, of which this website that you are now reading ranks first, second, and third of all results listed.
It is safe to say that Copernicus and Mr. Buffett do the same thing, that is, make investments to make money. They both wish to accumulate wealth as rapidly as possible and avoiding losing it.
Based on these common goals, a comparison of results is informative and proper. The difference, if any, will be the result of differing strategy and tactics. As it turns out the difference is dramatic, as we shall see. First, Buffett and the Market in the table below. It covers a shorter period that the graph above for reasons which will be apparent in a moment.
TABLE OF RESULTS
8 years--2002-2010
|
|
return |
total |
%max |
mos |
|
Fund |
Manager |
%/yr |
%gain |
ddwn |
dura |
|
S&P500 |
-various- |
1.8 |
44 |
-56.2 |
17 |
|
Berkshire Hathaway |
Buffett |
6.5 |
66 |
-50.6 |
15 |
NOTES
-ddwn- is drawdown.
-mos dura- is how many months
the drawdown lasts.
There are several important lessons here. One is that time spans, starting dates, and ending dates profoundly affect reported results. The chart starts in 1987, the table in 2002. Another is that strategy and tactics affect profoundly the results reported, as shown on this page and especially in future pages in this article.
Finally, the question is raised, given the wildly arbitrary and random results from investing in stocks or any tradeables, how can one believe in and/or even match competing sets of performance results?
To be continued
Go
here for Part 2
Original Posted
1/30/2011 3:34 p.m. EST
Updated
2/21/2011 2:01 p.m. EST
|
• Copernicus Group •
© 2011 The 2000 Corporation
All Rights Reserved
|
