Warren Buffet is a great communicator but an awful poster boy for the premise that investment managers are a waste of money. If you looked at his latest letter to Berkshire-Hathaway shareholders (see previous post), you saw the evidence.
In the long run, like from 1965 through last year, Buffet hasn't just beaten the market, he's trounced and trummeled it:
Berkshire-Hathaway average annual return: 21.5%
S&P 500 average annual return: 10.3%
Buffet's record demonstrates that some people really can produce superior long-term returns,
Can these superior performers be identified? Yes, at least if you're Yale's David Swensen. Over 20 years, the managers he chose for Yale's endowment racked up a 16% annual return.
As long as people like Buffet and Swensen exist, affluent investors will hope for above-average returns. And they'll be willing to pay for investment advice.
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