Buffett Missing Goal as Berkshire Lags S&P 500 Test

Your next video will start in

Recommended Videos

  • Info

  • Comments


Jan. 2 (Bloomberg) -- Berkshire Hathaway is poised to report that it failed to increase net worth more rapidly than the Standard & Poor’s 500 Index during the past five years, according to analyst estimates. (Source: Bloomberg)

Own mark, is berkshire hathaway?

Let's talk about we will -- what we are measuring, book value of berkshire hathaway.

A measure of the companies working versus what the stock price has been doing.

If you look at what the s&p 500 has done over the past five years it has returned about 128% , and it does include dividends.

At the same time, the book value of berkshire hathaway, according to estimates, is north of 80% but still a far cry from 128%. warren buffett pointed out earlier this year he was not sure he was going to make it.

If you look at book value through the end of september, there you have the actual number.

126,766, 80% gain on the nose and now analysts are looking for a gain in the low to mid 80's. just out of curiosity, what is the first -- what does the first potential miss and 44 years mean to you?

A couple of different ways.

The two more important things is, one, the s&p 500 has climbed a whole heck of a lot in the past five years.

The other thing is berkshire is getting really -- he is just suffering from the comparison?

Yeah, i think it is a difficult comparison for a lot of people.

And just the size of berkshire.

A $290 billion company, which means if you want to have the sort of percentage increases berkshire has enjoyed throughout its history, 20% compounded annual book value gains per year , you just need to create a whole lot more value every year.

It is just a big number in absolute terms.

Doesn't give him -- and julie, i would like your input, too -- does it give him less bragging rights?

He is warren buffett.

I don't think it takes that much away from his legacy.

And if you look at berkshire hathaway and the folks who are investing in the company, at least people we talk to our decade-long investors, in many cases.

If he is trying to attract sort of new money to the stock or newer money, then, yes, it becomes more of an issue.

But in terms of affecting warren buffett's legacy, if you are looking on a five-year time horizon, his measure he is grading himself against, -- basically no, no way.

You are really sleeping this morning, deirdre.

As far as what kinds of investments he is getting into, any kind of critique we could pull away from an investor standpoint?

Certainly one of the big ones people talk about his ibm.

He spent about 11 billion dollars in 20 11. it lacked the s&p 500 since then.

A lot of people have been scratching their heads about that.

A lot of analysts and investors i spoke with basically said the investor base in berkshire hathaway will be incredibly forgiving.

Buffett has made them so much money over the years.

At the end of the day he might be his own harshest critic.

Wedding list bandit out.

Any other facts and figures we should keep in mind -- looking at berkshire hathaway stock and it was up 33%. not including dividends.

If you look at purely on that level, it actually outpaced the s&p 500 by a little bit last year.

Despite the investment in ibm which happen to be the only dow stock that fell last year.

Pick one out of 30 and you pick that one -- not the best one to pick.

Julie hyman, thank you very much.

And nice to have you both with me this morning.

We will talk about google glass.

Moving and shaking this hour, google ceo larry page getting more people a chance to own google glass, the wearable computer.

Or is a catch.

Only u.s. medicines -- u.s. residents that use the all access subscription service get the latest e-mail to buy the device.

It is advertised at the launch of google music service for google glass uses.

We tell price, 15 hundred dollars.

Google has intentionally kept sales of the device limited today.

All eyes and cameras were in

This text has been automatically generated. It may not be 100% accurate.


BTV Channel Finder


ZIP is required for U.S. locations

Bloomberg Television in   change