“I personally prefer holding Berkshire to holding the market,” Munger said at the conglomerate's annual shareholder meeting, streamed exclusively on Yahoo Finance. “I'm quite comfortable holding Berkshire. I think our businesses are better than the average in the market.”
While Berkshire shares gained 2% in 2020, the S&P 500 increased over 18% during the same period with dividends reinvested. The market also outperformed Berkshire stock in 2019 when the company’s shares saw an 11% increase in value while the S&P 500 experienced a 31.5% gain.
Those two years combined marks one of the biggest discrepancy between the company’s stock performance and that of the market.
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Responding to a question from shareholders about the longer term value of the company in comparison to the market Munger said: “These are just accidents of history, and things are fluctuating at all times. But on a composite basis, I'd bet on Berkshire over the market.”
Berkshire Hathaway saw a 20% compounded annual gain from 1965 to 2020, compared with 10.2% for the S&P 500 Index. However, on a trailing five-year basis, Berkshire has gained 94% as of May 4 compared with 102% for the S&P 500.
But, according to Berkshire CEO Warren Buffett, Berkshire stocks are more of a long-term savings vehicle for investors, rather than a get-rich-quick scheme.
“We have a very unusual group of shareholders, I think, who look at Berkshire as a lifetime savings vehicle, and one they don't have to think about,” Buffett said. “If they don't look at it again for 10 or 20 years, that we'll have taken care of the money reasonably well.”