Has Warren Buffett lost his touch?

WARREN Buffett’s birthday present arrived early this year. On Aug 28, two days before America Inc’s favourite great-grandpa turned 94, his bricks-to-motor-insurance conglomerate, Berkshire Hathaway, reached a market value of US$1 trillion. It became only the eighth American company to claim that title and, as a child of the Nebraskan heartland, the first not to emerge from the West Coast tech scene.

Its class-A shares now change hands for US$715,000 – 55,000 times what they were worth when Buffett took control of a struggling textile mill in 1965. In that period, the total return, including dividends, of the S&P 500 index of America’s biggest firms has risen just 400-fold. When Berkshire’s longtime shareholders wish Buffett many happy returns, his customarily folksy response might be: Right back at ya.

Amid all the celebrating, though, spare a thought for those who poured their savings into Berkshire shares more recently. If you blew US$200,000 on one 10 years ago, you would have more than trebled your money. That would have been a better investment than buying a house in America, whose average value has doubled in that time. But it is roughly what you would have got if you had put the cash in the S&P 500. If you invested instead in Apple, as Berkshire did in 2016, you would be a millionaire nearly twice over.