- the AGM of BH which will be held May 4, 2013
- the issuing of the yearly shareholder letter, which was done yesterday.
The report is very basic, no photo's, no fancy colour schemes, and the first page immediately gets down to business: the performance of the book value per share of Berkshire Hathaway versus the S&P 500.
The compounded annual gain of BH from 1965 to 2012 is 19.7% per year, the overall gain is a whopping 586,817%! Outstanding numbers.
But the outperformance versus the S&P 500 has significantly come down:
- from 1981 until 1998 BH outperformed the index every single year, often by a wide margin
- from 2004 until 2012 BH underperformed 4 years out of 9 years, and only outperformed the index by a wide margin in one single year (2008)
The numbers for the S&P 500 are also quite good, 9.4% per year, overall 7,433%. Yes, people who invested in US stocks over the last 4 to 5 decades would have done very well.
I estimate the comparable long-term gains for the Malaysian stock market to be much lower, and that while Malaysia's GDP has been growing much faster than the GDP of the US. A disconnect that I think has to do with the much lower corporate governance.
In plain English: majority shareholders and or management in the US have been more willing to share the spoils with the minority shareholders than in Malaysia.
Higher corporate governance standards and increased enforcement should improve this situation.