Warren Buffett’s Berkshire Delivered a 39,000x Return Since 1965. He Still Tells Most Investors to Buy Index Funds Instead.

Although Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) has compiled the single best long-run track record in modern markets, the man who built it spends most of his shareholder letters telling you not to try this at home. On Wall Street, that contradiction has hardened into one of investing’s most durable patterns. From 1965 to 2025, Berkshire posted a 19% compound annual growth rate, for a 39,000x return. But over that same span, the SPDR S&P 500 ETF (NYSEARCA:SPY), the cleanest proxy for the benchmark S&P 500, compounded at 10% a year, translating to a 405x return with dividends reinvested. The man who beat the market by nearly 100 times still says most investors should buy the market.

I loved how the Acquired podcast’s recent Vanguard episode summed it up: Berkshire is the extreme exception to a rule that has held for sixty years.

That rule is what this series calls the long memory. Approximately 85% of active managers underperform the market over the long term. This is six decades of consistent data, validated through bull markets, bear markets, inflation spikes, and zero-rate experiments. The pattern holds because fees compound the wrong way, because turnover taxes returns, and because the median portfolio manager is competing against a free, diversified, automatic rival that never sleeps and never asks for a bonus.

Berkshire is the counterexample that proves the rule. The conglomerate wholly owns GEICO, Duracell, Dairy Queen, BNSF, Lubrizol, and Fruit of the Loom, alongside disclosed minority stakes in American Express (18.8%), Coca-Cola (9.32%), Bank of America (11.9%), and Apple (6.3%), per the company’s most recent 13F filings. The B-shares trade at 15 times trailing earnings with a beta of 0.62, which is to say the stock moves less than the index it has thrashed. Over the last ten years Berkshire returned 239% while SPY returned 257%. The recent decade is roughly a tie. The six-decade record is not.

Buffett wrote the line himself in his 1996 shareholder letter: “The best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results delivered by the great majority of investment professionals.” He repeated the point in 2007 with a $1 million bet against Protégé Partners that a Vanguard S&P 500 fund would outpace a basket of hand-picked hedge funds over ten years. The index won. The proceeds went to Girls Inc. of Omaha. He repeated it again in his 2013 letter, instructing the trustee of his wife’s inheritance to put 90% into a very low-cost S&P 500 index fund, with the balance in short-term Treasuries.

Equity ownership in America crept from 4.2% in 1949 to 32% in 1989, to 54% by 2001, to roughly 60% today. The dot-com boom pulled millions of households into brokerage accounts. The 401(k) made participation a default rather than a decision. And the first wave of online brokerages did something subtler but more lasting: they made transparent how much investors were “getting ripped off by underperforming high-fee active funds”. Once fees were visible, the math did the rest. SPY now carries a net expense ratio of 0.09%. A typical active equity mutual fund still charges multiples of that, every year, in good markets and bad.

For the long-term investor, the verdict is plain. Berkshire is the most fascinating special situation on Wall Street, available today at $480.46 per B-share, with the succession to Greg Abel already underway and the cash pile still doing the patient work it has always done. You should consider it if you believe the operating businesses, the insurance float, and that cash hoard will keep compounding faster than the index. The inverse logic is equally honest: if you doubt anyone can repeat what Buffett did, the index is what he himself recommends.

Honor the pattern, not the exception. The long-term direction of Wall Street still heads higher across the decades to come, and the cheapest, simplest way to capture that drift is the one Buffett wrote down thirty years ago and has never walked back. The man who beat the market by 100 times told you exactly where to put the money you cannot afford to bet on finding the next him.

After reading every annual letter since I bought my first stocks, the part I cannot stop thinking about is how loudly he keeps saying it, and how few people on Wall Street want to hear it.