Buffett Partnership Letter 1966 Annual
1966 annual - first decade summary, 36 point advantage over Dow
Buffett Partnership Letter 1966 Annual
Warren E. Buffett | January 25, 1967
The First Decade
1966 marked Buffett Partnership's 10th anniversary.
| Year | Dow | Partnership | Limited Partners |
|---|---|---|---|
| 1957 | -8.4% | 10.4% | 9.3% |
| 1958 | 38.5% | 40.9% | 32.2% |
| 1959 | 20.0% | 25.9% | 20.9% |
| 1960 | -6.2% | 22.8% | 18.6% |
| 1961 | 22.4% | 45.9% | 35.9% |
| 1962 | -7.6% | 13.9% | 11.9% |
| 1963 | 20.6% | 38.7% | 30.5% |
| 1964 | 18.7% | 27.8% | 22.3% |
| 1965 | 14.2% | 47.2% | 36.9% |
| 1966 | -15.6% | 20.4% | 16.8% |
1966 Highlights
- Partnership gained 20.4%
- Dow declined 15.6%
- 36 point advantage - all-time record
- Buffett: "The celebration was appropriate - an all-time record (both past and future) was established for our performance margin relative to the Dow."
10-Year Cumulative Performance
| Metric | Dow | Partnership | Limited Partners |
|---|---|---|---|
| Cumulative | 122.9% | 1156.0% | 704.2% |
| Annual Compounded | 11.4% | 29.8% | 23.9% |
Why the Big Margin in 1966?
"This pleasant but non-repeatable experience was partially due to a lackluster performance by the Dow. Virtually all investment managers outperformed it during the year."
Several highest-priced Dow components (Dupont, General Motors) were particularly poor performers.
Trends in Business
"We now find very few securities that are understandable to me, available in decent size, and which offer the expectation of investment performance meeting our yardstick of ten percentage points per annum superior to the Dow."
Three factors: changed market environment, increased size, substantially more competition.
Source
Warren E. Buffett, January 25, 1967.