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Stocks B / Berkshire Hathaway


Subject:  Re: Buffett/Jayhawk Q&A Date:  7/19/2005  1:54 PM
Author:  mhirschey Number:  106555 of 254416


The simulation I described was based upon the backdrop of U.S. equity returns, and reasonable expections concerning adoption of a fundamental approach.

Over the last 100 years, the U.S. stock market has returned about 10% per year with a standard deviation of 20%. Read the Intelligent Investor, and note the returns of the disciples of "Graham and Doddsville." Based on that record, it's fair to assume that a diligent, patient and prudent value investor might have a higher expected return, say 15%.

That's where I got the expected return of 15% and a S.D. of 20%.

My only point is that Buffett's results are at the far upper tail of what one might have expected from such an approach. Buffett has been very, very good. He has also benefited from some good luck. Charlie says they got lucky on the Buffalo News, for example. I agree.

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