Buffett in Foresight and Hindsight
Santa Clara University Working Paper No. 00/01-37
20 Pages Posted: 22 Jul 2001
Date Written: September 2001
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: Suggested Citation