Berkshire investors are smiling all the way to the bank. While my investment return was good in 2010, Buffett’s investment return was phenomenal. Buffett proved that despite his advanced age, he still has not lost his touch. Once again he beat the S&P 500 index. Berkshire has beaten the S&P 500 in four of the past five years.
Buffett managed to garner a 21.4% investment return for 2010, nearly 9 points higher than the S&P 500 as a whole. While measuring his performance against the S&P 500 is a useful tool, I am sure that it’s not a consideration of Buffett. Buffett invests for the long term. His returns should be measured over a decade or more.
Shares of Berkshire Hathaway (BRK.A) are up nearly 70% over the past decade. I am sure that just about any long term investor would love a 69.65% during the lost decade. Buffett believes that market performance should be measured over years and not simply a few hundred days.
I agree with this approach. My investing goal is not to beat the S&P500 on a yearly basis but to outperform the market over a 5 to 10 year time period. I allocate larger amounts of money to my best ideas and less money to the other ones. It has worked out pretty well for me so far.
The goal of this site is to teach investors how to truly Buy Like Buffett.