Short term update: also see media page and 2016 interview.
2015 has come to be an interesting year thusfar in global financial markets, where August started with near record low volatility and then abruptly segwayed into extreme tail-risk. A black swan event resulted in volatility spiking to levels we haven't seen since the global financial crisis of 2008. This time however, we have not seen Warren Buffett's Berkshire Hathaway (BRK) stock become the favored safety trade. We had noticed this in a popular New York Times article last year (also discussed with Bloomberg's Betty Liu ~8 minutes into show), nicely foreseeing the probability of his historic outperformance (let alone alpha) streak has been permanently debilitated. The chart below shows now that only in 3 of the 10 months this year, the BRK has beaten the S&P 500 (or put differently the S&P beat -who most consider the world's preeminent investor and Medal of Freedom recipient- in 70% of the months).
Further, we also see that August showed 62% of the days had BRK beating the S&P, though negligibly. But overall for 2015, only in 2 out of 10 months again did BRK beat the S&P. The S&P beat BRK in at least 70% of the days, during April, June, and October (where BRK is currently being utterly annihilated). These joint statistics above turn out to be probabilistically detrimental. And what were the odds? Well, read the articles above since we already explained it over a year ago! Unfortunately for 20th century television character James Cramer, his Buffett's "luck's about to change" comeback to our analysis has instead proven to be ludicrous. Fortune's Stephen Gandel is of equally ludicrous intellect. Lastly, if you are into these types of statistics, we can note that the S&P is beating BRK in every main time horizon: 1-day, 1-week, 1-month, 3-month, 6-month, year-to-date, 1-year, 3-year, and 5-year. And on book value bases it is not better. That's some hard probability math to get over.
2015 has come to be an interesting year thusfar in global financial markets, where August started with near record low volatility and then abruptly segwayed into extreme tail-risk. A black swan event resulted in volatility spiking to levels we haven't seen since the global financial crisis of 2008. This time however, we have not seen Warren Buffett's Berkshire Hathaway (BRK) stock become the favored safety trade. We had noticed this in a popular New York Times article last year (also discussed with Bloomberg's Betty Liu ~8 minutes into show), nicely foreseeing the probability of his historic outperformance (let alone alpha) streak has been permanently debilitated. The chart below shows now that only in 3 of the 10 months this year, the BRK has beaten the S&P 500 (or put differently the S&P beat -who most consider the world's preeminent investor and Medal of Freedom recipient- in 70% of the months).
Further, we also see that August showed 62% of the days had BRK beating the S&P, though negligibly. But overall for 2015, only in 2 out of 10 months again did BRK beat the S&P. The S&P beat BRK in at least 70% of the days, during April, June, and October (where BRK is currently being utterly annihilated). These joint statistics above turn out to be probabilistically detrimental. And what were the odds? Well, read the articles above since we already explained it over a year ago! Unfortunately for 20th century television character James Cramer, his Buffett's "luck's about to change" comeback to our analysis has instead proven to be ludicrous. Fortune's Stephen Gandel is of equally ludicrous intellect. Lastly, if you are into these types of statistics, we can note that the S&P is beating BRK in every main time horizon: 1-day, 1-week, 1-month, 3-month, 6-month, year-to-date, 1-year, 3-year, and 5-year. And on book value bases it is not better. That's some hard probability math to get over.
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