Even Warren Buffett Gets Killed in the Stock Market

August 18, 2014 9:32 AM



Yesterday Warren Buffett’s Berkshire Hathaway stock price broke $200,000. Buffett’s performance over the years is an amazing feat.

Since 1980, when the price was in the $200-300 range, the stock has compounded at an annual rate of 21% per year. That’s good enough to double your money every three-and-a-half years.

But those returns didn’t always come easy to Buffett or his investors. There were times when his patient style of value investing was out of favor and the stock experienced large losses. Here are the biggest losses in Berkshire Hathaway stock since 1980:


It’s hard to believe when you see the size of his returns, but every six to seven years Buffett suffered a large double-digit loss.

In one of Buffett’s most famous quotes on investing in the stock market he states, “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.”

This is an unfortunate reality that investors in risk assets need to understand.

It’s unrealistic to assume individual investors should expect to see the same outsized returns that Buffett has earned over the years. But it’s also unrealistic to assume that it’s possible to make money in the stock market without occasionally seeing large losses. You can’t earn the rewards without accepting some risk.

Photo: JD Morris

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