Ahead of Berkshire Hathaway’s earnings report, let’s remember this prophetic stock market warning from longtime Warren Buffett partner Charlie Munger. Source: AP Photo / Nati Harnik
- Berkshire Hathaway is about to release its third-quarter earnings report.
- Critics are balking at its underperformance of the S&P 500 this year.
- However, a prophetic statement from longtime Warren Buffett partner, Charlie Munger, which he made almost exactly a decade ago in 2009 (after the last bull market crashed), is highly relevant today.
Ahead of Berkshire Hathaway’s third-quarter earnings report today, some critics are scratching their heads. How could the “Oracle of Omaha,” the great Warren Buffett, lose so badly to the stock market’s bellwether S&P 500 index over the last year?
Berkshire Hathaway Class A Shares (NYSE:BRK.A, pictured in blue) have underperformed the S&P 500 (orange) in 2019. | Source: Yahoo Finance
Berkshire Hathaway Draws Fire Ahead of Earnings
Berkshire critics say the problem runs deeper than Warren Buffett having Kraft Heinz ketchup on his shirt. That’s because Berkshire Hathaway share prices have even (slightly) underperformed the benchmark index over the last decade as well.
Last month, one major shareholder sold off his $10 million stake in Berkshire Hathaway. David Rolfe at Wedgewood Partners then bashed Warren Buffett and Charlie Munger to his clients. He said they’d spent the last decade sucking their thumbs while other investors were making money:
“Thumb-sucking has not cut the Heinz mustard during the Great Bull Market. The Great Bull could have been one helluva astounding career denouement for Messrs. Buffett and Munger.”
But it’s evident from their investing philosophy, that Messrs. Buffett and Munger don’t think the market is really worth its current prices.