Brain Food #718
It catches up in the end
Thoughts of the day
The stock market can be an immensely interesting mirror of human psychology and life principles.
After nearly two years, Warren Buffett's Berkshire Hathaway has caught up with and, until last week, was outperforming Cathie Wood's Ark Innovation ETF (ARKK). The latter focuses on growth stocks (including high-growth, but also high-volatility and, sometimes, overhyped tech companies), the former on a value strategy which includes choices that yield slow, steady returns.
The graph below shows the performance of the two funds since 2020. Despite Ark’s meteoric growth in 2020, it waned in 2021, and then tumbled to meet Berkshire Hathaway, which was steadily increasing in the meantime.
As Jean-Jacques Rousseau wrote, “Patience is bitter, but its fruit is sweet.” It is true that patience can be a painfully slow game, but it catches up in the end.
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