28 February 2009: Buffett's letter: beware of geeks bearing formulas
In the depths of the financial crisis, Warren Buffett released his annual letter to Berkshire Hathaway shareholders, reporting the worst year in his tenure as book value fell. He also skewered complex derivatives and risk models, warning investors to beware of geeks bearing formulas. Just over a week later, the stock market hit its bottom. Admitting mistakes while staying calm proved to be the right posture.
The lesson: Complexity is often where risk hides, and simple honesty is underrated in financial writing.
What it meant for investors
$1,000 in Berkshire Hathaway at the start of 2010 → $7,576 today, vs $6,071 in the S&P 500.
We start the clock at the start of 2010, the first year in our price data after the event. That is 7.6 times the money, and $1,504 more than a plain index fund made over the same years.
What Berkshire Hathaway teaches: Being willing to look foolish during a mania, and keeping cash for the moment others are forced to sell, is a durable source of returns.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2010 | $66.00 | $7,576 | $6,071 |
| 2012 | $76.00 | $6,579 | $5,312 |
| 2015 | $150 | $3,333 | $3,301 |
green = beat the S&P 500 · red = lost money
What if you bought Berkshire Hathaway? Every starting year and the full story →
More Berkshire Hathaway history
- 14 February 2013: Berkshire and 3G buy Heinz
- 10 May 1965: Warren Buffett takes control of Berkshire Hathaway
- 30 August 1930: Warren Buffett is born in Omaha
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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