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We often hear how difficult it is to beat the market.
They tell us that only a select few can do it with any consistency.
Let’s take a quick look at five of the most famous investors with a roughly quantifiable, recent track record.
Presumably these five can beat the market, even if the other 99.999999% of us cannot, right?
Using public data, we estimated the annualized returns these elites realized over their final trackable decade.
The surprise: only one of them beat the S&P 500! Take a look at the data below.
Stanley Druckenmiller (~19.1%) is considered the best macro investor,
betting on interest rates, currency values, geopolitics, etc. as opposed to trying to value individual businesses.
His family office outpaced the market over the last 10 years by aggressively betting on macroeconomic shifts,
including shorting fixed income and maintaining concentrated equity positions in e.g. artificial intelligence.
Warren Buffett (~13.1%).
Berkshire Hathaway’s performance over the past decade is very close to the S&P 500.
Unlike Druckenmiller, Buffett analyzes business fundamentals carefully and makes concentrated bets on individual businesses
like Google, American Express, ... when he views their fundamentals favorably relative to market price.
Bill Ackman (~11.7%):
had a rough start to the last ten years, and lost substantially to the S&P 500 in the early part of this century.
However, he turned things around with a famous COVID-era hedge in 2020, which he immediately
traded for beaten down stocks very near the market bottom in early 2020.
After that, megacap tech investments and restaurants like Chipotle kept him flying high,
earning almost as much as the S&P 500 (though with a much rougher ride).
Ray Dalio’s (~6.7%)
all-weather investing prioritizes capital preservation across global asset classes.
It severely lags most equity indices, but aims to avoid the downturns of those indices.
Despite this, the strategy lost almost 20% in 2022 and lost over 3% in 2018.
It got all the downside of the S&P 500, but with less than half the upside!
Proof again that even the most famous investors can completely miss the mark.
Dalio also ran a “pure alpha” fund with significantly different investment goals.
While we don’t have details, most estimates indicate this fund returned substantially
less than the all-weather fund for the final 10 years Dalio managed it, likely below 5%.
Cathie Wood’s (~5.5%) flagship ARKK ETF has experienced massive
volatility over the last 10 years, including a 153% return in 2020, 23.4% loss in 2021,
and a 67% wipe out in 2022.
The net result of all the volatility was a 5.5% annualized gain over 10 years,
but the psychology associated with the ups and downs led almost all ARK buyers to
substantial losses (it once ranked
#3
on the most wealth-destroying funds according to Morningstar).
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