Warren Buffett VS S&P 500 Analysis

At Alpha Rho Technologies LLC, we’ve analysed both options to help you make an informed decision. 

Here are the key takeaways from our report:

• Returns: Over most timeframes, the median returns for both Berkshire Hathaway and the S&P 500 are similar, around 12%. However, Berkshire Hathaway’s mean returns are higher, averaging 12.36% compared to the S&P 500’s 10.34%.
• Risk: Both investments have experienced significant drawdowns of more than -50%. However, the S&P 500 tends to recover more quickly, taking 1,773 days on average compared to 1,894 days for Berkshire Hathaway. In addition, while Berkshire Hathaway offers higher average returns, it also comes with slightly higher volatility—19% vs. 17% for the S&P 500.
• Risk-Reward: Even though Berkshire Hathaway might appear more risky, on a risk adjusted basis it generates an average yearly alpha of 5.24%. This means that after equalizing both assets in terms of risk, Berkshire Hathaway generates an excess return of 5.24% over the S&P 500.

Why not own both?

Efficient frontier analysis suggests that a balanced portfolio with both assets can reduce risk and enhance returns. The optimal mix is 51% Berkshire Hathaway and 49% S&P 500 (via the SPY ETF). This combination maximizes returns while lowering volatility.
 

Partner with us:

Alpha Rho Technologies LLC is currently offering its analytics software for asset managers or individuals interested in generating these types of reports. Contact us for more information.

Disclaimer:

This is NOT investment advice, the content here is for informational purposes ONLY.