Comparing the compound annual growth rate (CAGR) of Bitcoin (BTC) to the returns achieved by Warren Buffett’s portfolio (which includes top holdings such as Apple, Bank of America, American Express, Coca-Cola, Chevron Corp, etc.), there is a completely different risk-reward profile. is displayed. Performance over various time periods.
Warren Buffett Portfolio: Less Risk, Same Profits as Stocks
For example, Warren Buffett’s portfolio achieved a CAGR of 10.03% over the past 30 years, with a standard deviation of 13.67%, according to data resource Lazy Portfolio ETF. In comparison, a portfolio of U.S. company stocks provides roughly similar returns but with a higher standard deviation.
That said, Oracle of Omaha’s portfolio returned impressive results despite being less volatile or riskier than its U.S. stock portfolio. His investment philosophy emphasizes long-term value investing, prudent risk management, and a preference for fundamentally strong companies.
Bitcoin Outperforms Buffett’s Risk-Averse Portfolio
In comparison, Bitcoin’s performance was truly amazing. Since trading began in 2011, Bitcoin has achieved an incredible average annual return of approximately 104%. This figure easily surpasses the annual returns of Warren Buffett and his U.S. stock portfolio on average over the last 13 years.
Bitcoin’s CAGR is also significantly higher than that of its safe haven competitor gold, which has returned an average of 6% annually over the same period. This shows that the US stock portfolio achieved a CAGR similar to Warren Buffett’s portfolio, but may not be suitable for risk-averse investors due to its high volatility.
Gold, which has delivered a modest average annual return of 6% over the past decade, offers relative stability and acts as a hedge against economic downturns.
Many traders and investors view Bitcoin as “digital gold” and a hedge against inflation and currency devaluation.
This perception has strengthened its appeal as an asset over the years. In particular, several US companies, such as MicroStrategy and Tesla, added Bitcoin to their reserves and launched a spot Bitcoin exchange-traded fund (ETF), further solidifying their position among institutional investors. did.
In other words, compared to the stable returns of Warren Buffett’s portfolio, Bitcoin is highly volatile, with its price subject to extreme fluctuations. However, in recent years, Bitcoin has shown lower volatility than many S&P 500 stocks, including Tesla, Meta, and Nvidia.
Related: Warren Buffett’s Berkshire Hathaway Has Plunged 99% Against Bitcoin Since 2015.
Warren Buffett’s portfolio represents a more conservative long-term strategy with consistent returns and manageable risk, despite its exposure to cryptocurrency neobank Nu Holdings.
In contrast, Bitcoin has delivered much higher returns over the past 13 years, despite significant volatility and several major downturns.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.