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Corentin Scavée

Corentin Scavée

17 May 2017
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The best investor in the world has not beaten the market for 15 years

Warren Buffet, arguably the best active investors of all time, has been praising passive investing recently. Why on earth would such an icon of Wall Street shot himself in the foot? Some critics will claim he is getting senile. Lucid people will however realize that he is simply being honest, acknowledging that even him has not managed to beat the market for the last 15 years.

The best investor has not beaten the market for 15 years

Warren is no Super Hero

Let’s face the truth, Warren is no super hero consistently outperforming the market. In fact, since 2002, he has not been doing better than the S&P 500, the main indicator of the US stock market. In other words, an investor would have been 42% better off investing in a tracker of the S&P 500 than in Berkshire Hathaway, the investment company of our dear Warren.

Why doesn’t Warren beat the market any more?

When you become as big of an investor as Warren, it is getting hard, if not mathematically impossible, to beat the market. A small investor might sometimes get lucky and find one hidden gem. But when you weigh more than 400 billion like Warren’s investment company, small hidden gems are not enough to satisfy your investor’s appetite. Thus, you end up only investing in big companies and delivering the performance of the index or less.

Warren and trackers: a love story meant to be

Reducing investment costs and optimizing taxes has always been at the heart of Warren’s investment approach. His efforts in these fields contributed greatly to making him so rich. In that perspective, Warren could only fall in love with trackers. Indeed, trackers offer a great diversification at the lowest cost while minimizing tax impact related to active trading.

Warren’s will

Warren declared recently that, upon his passing, his personal wealth will be given to his wife with the instruction to invest it passively in trackers. He recommends every investor to follow his lead and invest in trackers.

You want to follow Warren’s advice but you are not sure where to start? easyvest will help you build the right portfolio of trackers for you.

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Note: This article was written when Easyvest was authorized and regulated by the FSMA as an agent in banking and investment services.

Easyvest is a brand of EASYVEST NV/SA, with company number 0631.809.696, authorized and regulated by the Belgian Authority for Financial Services and Markets (FSMA) as a portfolio management company and as a broker in insurances, with registered office at Rue de Praetere 2/4, 1000 Brussels, Belgium. Copyright 2024 EASYVEST NV/SA. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in loss.