Buffett's Berkshire Returns Beat S&P 500 by Nearly Double Over Six Decades

Warren Buffett's tenure at Berkshire Hathaway produced a total return of 5,502,284% from 1964 to 2024, a figure that translates to compounded annual growth of approximately 19.9%. This performance was nearly twice the annualized return of the S&P 500, which stood at 10.4% over the same six-decade span, according to data presented by The Motley Fool. While it is highly unlikely that most investors can replicate this exact playbook, the article highlights specific mindsets and behaviors from Buffett's career that remain applicable to modern portfolios.

Buffett's approach was defined by a rejection of penny stocks and trend-chasing. Instead, he targeted companies that were undervalued by the broader market but possessed high-quality characteristics, including steady cash flows and business models he personally understood. His portfolio often included products he used and enjoyed, such as shares in The Coca-Cola Company. The article advises investors to emulate this by purchasing stocks in companies they believe in, root for, and expect to generate long-lasting returns.

A central tenet of Buffett's strategy was a long-term holding period, avoiding the status of a short-term speculator or day trader. He stated that his "favorite holding period is forever" for companies he deeply believed in. This perspective does not preclude selling stocks to take profits or cut losses when necessary, but it demonstrates how a long-term investing approach can help build wealth over time, even if an investor never matches Buffett's specific annualized returns. The suggested behavior is to keep investing consistently and hold stocks for the long term, potentially for decades.

Despite being one of the most successful stock pickers in history, Buffett has famously advised that most people should buy low-cost S&P 500 index funds. The article notes that purchasing funds like the Vanguard S&P 500 ETF can serve as a strong foundation for an investment portfolio in a simple, low-fee manner. It argues that while individual stock picking is acceptable for those who enjoy following markets, many investors should not attempt to mimic Buffett's specific selection process. Instead, following his advice to regularly buy the S&P 500 offers a viable path to building significant wealth over many years without needing to beat the market.