Warren Buffett Bet, Year 7: Back To Winning

Seven years ago, Dividend Growth Investor (DGI) asked me if I’d like to participate in the Warren Buffett bet. For those unfamiliar, in 2008 Buffett famously challenged the hedge fund industry:

Can you beat the S&P 500 over a period of 10 years?

Buffett won as the hedge fund got clobbered by the S&P 500.

But I like fun experiments and a little drama, so I agreed. Here is how it’s going.

Warren Buffett Bet: Year 7

The first 4 years of the bet, I was in the Win column. Year 5 saw me get clobbered, but here we are in year 7, and I’m back in the win column. So, here’s how much you’d have if you invested $100:

• S&P 500: $247.34
• Carl fund: $252.34

I’m surprised that it’s this close. I have no idea if I’ll end up winning or losing, but given that I have 3 volatile holdings, I’ expected the difference to be more’m surprised by how close it is.

How My Picks Fared In 2024

Here is how each pick has performed from the start:

BABA (Alibaba): 9.39% gain

Still a dud.

• In most years, I’d be happy with a 9% gain. But the benchmark returned 25%, so this was a huge underperformance.
• To add insult, if you look at the chart above, this thing was waaaaay up in October. And then if fizzled out.

S&P 500 (the benchmark): 25.02% gain

25% return! Are you kidding? Wow, just wow. How are active fund managers supposed to compete with this?!??

BRK-B (Berkshire Hathaway): 27.09% gain

Warren Buffett keeps cranking away.

GOOG (Alphabet/Google) 35.13% gain

If I had to own one stock for the next 10 years, this would be it. Don’t underestimate Google’s progress in the AI space, or anything else. Read about Google’s quantum computing efforts here. Or just consider this from the article:

Second, Willow performed a standard benchmark computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion (that is, 10²⁵) years — a number that vastly exceeds the age of the Universe.

AMZN (Amazon): 44.39% gain

I don’t know what to say here. Amazon is a behemoth. It’s biggest risk is being broken up.

I’m Now A Dividend Growth Investor?!??

Mr. DGI will be tickled when he reads this. Hi DGI and Happy New Year old friend!

I’m a growth investor. I like younger companies that are in full disruption mode. In many ways, these companies are the opposite of dividend payers that are mature and more static in their business.

But now, the stock I hold tighter than any other, has started to pay a dividend. Google, what are you doing? Do you have no better way to allocate your capital? Thoughts:

• Still innovating: While Google isn’t what it once was, it’s still doing loads of cool things. See Waymo. See Willow. Google is still in growth mode.
• $$$$$: Google has $100,000,000,000 in cash. That’s a lot of money. They. probably can’t find anything to do with it all. How do you spend 100 billion?!??
• Reinvesting? While I reinvest my dividends in real life, I’m far too lazy to figure all of the numbers out for the purposes of this bet. So, you’ll see in the chart above that I just added the dividends as cash. I realize that I’m missing out on some very small returns there, but so be it.

Static Stocks

I decided at the start of this experiment that I’d hold the same four stocks for the duration of the experiment. The main reason I did this was because that’s how I like to invest; only buying companies with very wide moats that I can hold for decades. If I didn’t make this deal with myself, would I have sold Alibaba? No clue. And if I did, would it turn out to be a mistake? Maybe it will redeem itself? Who knows.

I’m not sure what to think about this experiment. If nothing else, I think it makes the case for index funds. My performance is almost the same, so why take a lot of risk and spend time farting around when you can just buy VOO or VTI?

Come back 1/2026 for another juicy update!

More 1500 Days!!!

You can also find me (and the dinosaurs) at:

• YouTube: My channel is mostly devoted to home improvement, but I have some other material coming up soon too.
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