Buffett in Foresight and Hindsight

Santa Clara University Working Paper No. 00/01-37

20 Pages Posted: 22 Jul 2001  

Meir Statman

Santa Clara University - Department of Finance

Jonathan Scheid

Assante Asset Management Inc.

Date Written: September 2001

Abstract

The price of Berkshire Hathaway shares increased at a rate more than double the rate of the S&P 500 Index, from $18 on May 10, 1965, when Warren Buffett took control of the company, to $71,000 by the end of 2000. We show that while some investors saw Berkshire Hathaway?s amazing performance in foresight, investors as a whole did not. We use this evidence to discuss the pitfalls of hindsight in the assessment of investment foresight.

Keywords: Buffett, Cognitive Biases, Behavioral Finance, Market Efficiency, Performance Evaluation

JEL Classification: G14

Suggested Citation

Statman, Meir and Scheid, Jonathan, Buffett in Foresight and Hindsight (September 2001). Santa Clara University Working Paper No. 00/01-37. Available at SSRN: https://ssrn.com/abstract=277161 or http://dx.doi.org/10.2139/ssrn.277161

Meir Statman (Contact Author)

Santa Clara University - Department of Finance ( email )

500 El Camino Real
Santa Clara, CA 95053
United States
408-554-4147 (Phone)
408-554-4029 (Fax)

Jonathan Scheid

Assante Asset Management Inc. ( email )

1190 Saratoga Avenue, Suite 200
San Jose, CA 95129
United States

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