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“What we learn from history is that people don’t learn from history.” – Warren Buffett

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

The unofficial end of earnings season was over two weeks ago, but earnings-related news has dominated recent headlines. Yesterday, Nvidia’s (NVDA) report sparked a 6% decline in the stock even as the rest of the market rallied. This morning, futures are trading higher in response to some positively received reports from Dell (DELL), Autodesk (ADSK), and Lululemon (LULU).

While the tone is positive now, today is the last trading day of August, and next week starts what has been the worst month of the year for equities. If you take a look at the bottom of page one of today’s Morning Lineup you can see just how bad the next one-month period has been relative to all other one-month periods throughout the calendar.

From an economic perspective, the month will end on a busy note with Personal Income, Personal Spending, and PCE at 8:30. These reports will be followed by Chicago PMI at 9:45 and Michigan Sentiment at 10 AM. After that, expect things to quickly quiet down as traders head out for the long weekend. As far as the 8:30 data is concerned, it was mostly in line with expectations except for the reading on Personal Income which was better than expected.

They say you can’t teach an old dog new tricks, and in the case of Warren Buffett who turns 94 years young today, all he still does is win. One long-held selling point of Berkshire Hathaway (BRK/a) has been that while the stock can tend to underperform the market during strong bull markets, it’s when things start to hit the fan that the stock proves its worth.  That’s what makes its performance over the last 12 months so impressive. Even as the S&P 500 has rallied 26.2% on a total return basis over the last twelve months, BRK/a has done even better outperforming the index by three percentage points.

Over the last five years, Berkshire has separated itself from the S&P 500 by even more. As shown below, BRK/a’s gain of 130.2% has exceeded the gain of the S&P 500 by more than 20 percentage points.

Over the last ten years, the margin of outperformance hasn’t been quite as strong with BRK/a outperforming the S&P 500 by less than six percentage points.

Lastly, over a 20-year time frame, BRK/a’s performance of nearly 713% outperforms the S&P 500 by 65 percentage points.  When a stock outperforms the broader market with such consistency over so many different timeframes you can chalk it up to more than just luck. It may have taken until just before Buffett’s 94th birthday for his company to reach the trillion-dollar club but he proved long ago that he is the greatest investor in at least a generation.

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