MediumTex wrote:
dualstow wrote:
MediumTex wrote:
If Warren Buffett's experience wasn't driven by luck, then why aren't all value investors billionaires?
Because they're not as good?
My theory is that once an investment guru becomes a household name their exceptional performance has probably just about run its course.
It was probably about ten years ago that Warren Buffett's popularity began seeping outside the investment community and into mainstream America. When you look at BRK's performance over that ten year period, it has been about the same as the Permanent Portfolio, but the PP gave you those gains with far less risk.
WB is a billionaire now because he is brilliant in raising other people`s money AND good at investing it and was born in the right time and place. Without that he would probably be now only a millionaire like many other good investors. The Graham-and-Dodd Style Investing reduces risk on other ways than the PP, because it looks at real values not the prices paid at the market. This was perfectly visible as the dot-com bubble busted. Reasonable valued stocks were not affected by the bubble-bust, but the index funds were full of dot-com stocks because of the runup.
From the annual letters (last number is outperformance, second is S&P 500 performance):
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 (9.1) 15.6
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.2) (11.9) 5.7
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 (22.1) 32.1
The market was very inefficient in these years, nowadays its more reasonable at pricing stocks, even if it currently overvalues consumer stocks a bit.
Btw. the PP seems to be popular now, too
, so following your arguments it is doomed to underperform in the future
.