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A Foolish Take: Warren Buffett Has Crushed the Market for More Than Half a Century

By Dan Caplinger - Feb 26, 2018 at 11:01AM

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The Oracle of Omaha had another market-beating year in 2017.

Even if you don't invest, you've probably heard of Warren Buffett. The investor behind the megaconglomerate Berkshire Hathaway (BRK.A 3.75%) (BRK.B 4.02%) has a devoted following of fans in the investing community, and his down-to-earth attitude toward money gives the billionaire a reputation for being an approachable straight shooter.

Buffett's biggest claim to fame is the track record of strong returns that he's put together at Berkshire Hathaway. Over a history that spans more than 50 years, Buffett has more than doubled the overall stock market's return, producing average annual gains of nearly 21% compared to the S&P 500's 10%.

Graph showing value of $1,000 invested in S&P versus Berkshire Hathaway over time

Data source: Berkshire Hathaway. Chart by author.

The most impressive thing about Buffett's outperformance is how the power of compound returns has produced life-changing wealth for his early shareholders. Since 1964, Berkshire shares have risen by more than 2,400,000% -- turning every $1,000 invested back then into $24 million. By contrast, the S&P's performance translates into total returns of 15,500% -- still impressive, but $155,000 is a lot less than $24 million.

Buffett only managed to top the S&P by a 10th of a percentage point in 2017, but he's optimistic about Berkshire Hathaway's future. Though there's already a team in place to ensure the 87-year-old's legacy will endure after he's no longer able to run the company, Berkshire investors hope that Buffett will stick around for years to come.

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Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$417,401.43 (3.75%) $15,101.43
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$278.28 (4.02%) $10.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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