At the beginning of last year, Berkshire Hathaway’s 3-year alpha was at an all-time low of -12.3%. Buffet’s long-term track record is still excellent, as his company’s stock has outperformed the S&P 500 index by 10 average percentage points over 58 years.
Currently, Warren Buffett is a 92-year-old man and it is certain that he will not be the head of the company forever. A lot of investors are worried that stocks will do badly after his retirement. Some are hoping that he will use the release of this year’s annual report to inform when he will hand over the reins of the company to Greg Abel, his successor.
It’s possible that the company will perform just as well without Buffett because a stock selection algorithm was discovered that had the same success as the company in backtesting.
How Is Warren Buffett Doing in Bear Markets?
In his annual report, he will write about his views on the stock market outlook. It’s especially important for Berkshire Hathaway investors, as this stock tends to outperform the market the most during bear markets.
The relationship between Buffett’s alpha and bear markets becomes the epitome of the well-known saying, “You should be afraid when others are greedy, and be greedy when others are afraid.”