Warren, Steve, Or Bill: Qui Es Mas Macho?

Warren Buffett, aka the Oracle of Omaha, is considered by many to be one of the greatest, if not the greatest, investor of all time. And if I had been a long time shareholder of the Class A shares in his company, Berkshire-Hathaway (BRK.A), I’d be a very happy camper. But, if one had a choice among Microsoft, Apple, and Berkshire stock at the beginning of the tech revolution in 1990, would Berkshire have been the stock to own or could one have done better with Apple or Microsoft?

The 1990′s were a time of great change and also a time of great hype. Many companies with a stated mission but without a product or even a staff garnered investor interest and many of them fell by the wayside when the tech bubble burst. But some survived. The best CEOs not only had strong visions, but solid product lines to back them up—like Bill Gates and Steve Jobs.

Who ‘da man–Warren, Bill, or Steve…or Mr. Market?
If investors had been open to putting money into Bill Gates (MSFT) and Steve Jobs (AAPL) at the beginning of 1990 (January 2nd to be exact) while also putting money into Warren Buffett (BRK.A) as well as the overall market (represented here by the S&P 500), they would have realized the following returns:

Capture

[Note: All stock prices are split adjusted. "Div" means dividend. Please see the note regarding dividends below.]

I don’t know about you, but I was surprised to see Bill come out on top.  I thought for sure Steve had it sewn up.  What was even more surprising, though, was how both Bill and Steve trounced Warren—that was certainly unexpected.  (Maybe Buffett should rethink his aversion to tech.) But he shouldn’t feel too badly as Berkshire’s returns still smoked that of the S&P 500.

A note on dividends

The above chart isn’t exactly an apples to apples comparison when it comes to the return calculations including dividends.  For the S&P 500, dividends are reinvested when distributed.  However, for Apple and Microsoft, the dividends are received by the shareholder in cash and not reinvested. If they were reinvested, the total returns could be higher. Berkshire has never paid a dividend, although some of its constituent companies do.  These dividends are folded into Berkshire’s stock price.

None.

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Dr. Paul Price 5 years ago Contributor's comment
Nicely put together, Kris. You... and the article.