Berkshire Hathaway Stock Vs S&P 500 Chart
Introduction
Berkshire Hathaway is a holding company that owns a diverse range of businesses. It is also famous for its chairman Warren Buffett, one of the most successful investors of all time. The S&P 500, on the other hand, is a stock market index that tracks the performance of 500 large companies listed on US stock exchanges. In this article, we will compare the performance of Berkshire Hathaway stock with the S&P 500 index over the years.
History of Berkshire Hathaway Stock
Berkshire Hathaway stock has a long and storied history. In 1962, Warren Buffett began buying up shares of the company, which at the time was a struggling textile manufacturer. Over the years, he transformed Berkshire Hathaway into a holding company that owns a diverse range of businesses, including GEICO, Duracell, and Dairy Queen.
Performance of Berkshire Hathaway Stock
Berkshire Hathaway stock has been a consistent performer over the years. Between 1965 and 2019, its annualized return was 20.3%, compared to just 10% for the S&P 500 index. However, it's worth noting that Berkshire Hathaway stock has had its ups and downs. In 2019, for example, it underperformed the S&P 500 index, returning just 11% compared to the index's 31.5% return.
Factors Affecting Berkshire Hathaway Stock
There are several factors that can affect the performance of Berkshire Hathaway stock. One is the performance of its subsidiaries. If one of its major subsidiaries, such as GEICO, has a bad quarter, it can drag down the performance of the entire company. Another factor is the whims of Warren Buffett himself. As the chairman and largest shareholder of Berkshire Hathaway, his decisions can have a big impact on the company's stock price.
History of the S&P 500 Index
The S&P 500 index was created in 1957 as a way to track the performance of the US stock market. It includes 500 large-cap stocks listed on US exchanges, including companies like Apple, Microsoft, and Amazon. The S&P 500 is often used as a benchmark for the performance of the US stock market as a whole.
Performance of the S&P 500 Index
Over the long term, the S&P 500 index has been a strong performer. Between 1928 and 2019, its annualized return was 9.8%. However, like Berkshire Hathaway stock, it has had its ups and downs. In 2008, for example, it lost 37% of its value due to the global financial crisis.
Berkshire Hathaway Stock Vs S&P 500 Chart
So how does Berkshire Hathaway stock compare to the S&P 500 index? The chart below shows the performance of both over the past five years:
Analysis of the Chart
As the chart shows, both Berkshire Hathaway stock and the S&P 500 index have performed well over the past five years. However, the S&P 500 has outperformed Berkshire Hathaway stock, returning 72% compared to 64%. This is likely due in part to the fact that the S&P 500 includes a diverse range of companies, while Berkshire Hathaway is more concentrated in a few key sectors.
Conclusion
While Berkshire Hathaway stock has been a consistent performer over the years, it has struggled to keep up with the S&P 500 index in recent years. However, investors should keep in mind that past performance is not necessarily indicative of future results. Both Berkshire Hathaway stock and the S&P 500 index are subject to market fluctuations and other factors that can affect their performance.