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Renowned stock picker Warren Buffett believes investors would be as well off simply buying the stock market as they would owning a stake in Berkshire Hathaway.
“I think the financial result would be very close to the same,” Buffett told the Financial Times when asked whether it would be better to put a share of Berkshire or a share of the S&P into a child’s investment account.
Buffett, the chairman and CEO of Berkshire with a personal worth north of $80 billion, has served as a model for a generation of investors with a frugal, bargain-based buying strategy. That’s begotten both a no-frills investing philosophy as well as modest Midwestern lifestyle marked by regular trips to McDonald’s, a taste for Coca-Cola and folksy business mantras.
Though arguably less seductive than short-term tactics that try to time the market, Buffett’s method has long served as a blueprint for those looking for steady, reliable return over the long term.
Notwithstanding Buffett’s value-hunting prowess and dramatic lifetime outperformance, Berkshire has over the last 10 years underperformed the S&P 500 — the broad market index that tracks the largest stocks in the American economy.
Buffett has long been candid about how difficult it is for Berkshire to keep up with the stock market. He told CNBC in February that “it has been a tough time to beat the S&P.”
“I think it’s the best investment — because most people don’t know how to pick stocks. And — most of the time I don’t know how to pick stocks,” he told CNBC’s Becky Quick earlier this year.
“It’s — it is not an easy game. And by definition people are going to do average,” Buffett added. “I mean, if you take everybody in aggregate, and if half of ’em are paying big fees and jumping around and paying brokerage commissions, the other half have to do better.”
Buffett will join other Berkshire leaders on the first weekend of May at Berkshire’s annual shareholder meeting in Omaha, where he will discuss the portfolio’s performance and investment opportunities. CNBC will provide live coverage of the event.