An excerpt appeared in Value Investor Insight. Savor this: Imagine if a friend had introduced you to Warren Buffett in 1972 and told you, “I’ve made a fortune investing with this Buffett guy over the past ten years, you must invest with him.” So you check out Warren Buffett and find that his investment vehicle, Berkshire Hathaway, had indeed been an outstanding performer, rising from about $8 in 1962 to $80 at the end of 1972. Impressed, you bought the stock at $80 on December 31, 1972. Three years later, on December 31, 1975, it was $38, a 53% drop over a period in which the S&P 500 was down only 14%. You might have dumped it in disgust at that point and never spoken to that friend again. Yet over the next year it rose from $38 to $94. By December 31, 1982 it was $775 and on its way to $223,615 today—a compounded annual return of 20.8% over the past 42 years. I may print out the above and frame it.
