Bitcoin’s compound annual growth rate (CAGR) is often compared to the returns of Warren Buffett’s renowned portfolio, which includes top holdings like Apple, Bank of America, American Express, Coca-Cola, and Chevron Corp. The comparison reveals distinct risk-reward profiles and performance across different time frames.
Buffett’s portfolio has shown impressive results with a 10.03% CAGR and a 13.67% standard deviation over the last three decades, as per Lazy Portfolio ETF data. While U.S. stock portfolios have delivered similar returns, they have exhibited higher volatility in comparison.
In essence, Buffett’s investment strategy, focused on long-term value investing, prudent risk management, and strong fundamentals, has proven to be less risky yet rewarding. On the other hand, Bitcoin has displayed exceptional performance since its inception in 2011, boasting an average annual return of approximately 104%.
This figure surpasses the returns of both Buffett’s portfolio and U.S. stock portfolios on an annual basis over the past 13 years. Moreover, Bitcoin’s CAGR outshines that of gold, a traditional safe-haven asset, which has averaged a 6% annual return during the same period.
Despite its high volatility, Bitcoin is often considered a digital equivalent of gold, serving as a hedge against inflation and currency devaluation. This perception has bolstered its appeal as an asset class, leading to its adoption by companies like MicroStrategy and Tesla and the introduction of spot Bitcoin exchange-traded funds (ETFs) for institutional investors.
While Buffett’s portfolio offers stable returns and manageable risk, Bitcoin has provided significantly higher returns along with notable volatility and periodic downturns. It remains crucial for investors to conduct thorough research and analysis before making any investment decisions, as this article does not offer any investment advice or recommendations.