Warren Buffett v. Bill Dunn

This chart is an interesting comparison of trend following trader Bill Dunn v. legendary trader Warren Buffett. Also here is a podcast to go along with the chart. And for those who have asked I am starting podcasts up again. You can subscribe here to get my podcasts via iTunes and your iPhone.

17 thoughts on “Warren Buffett v. Bill Dunn

  1. I will post a Buffett comparison to David Harding too for last 20 years. Harding has done much better than Dunn.

  2. Seems everyone has beaten me to it……a blend could be the way forward.

    Are you able to generate a chart of the performance of a portfolio of 50% Buffett and 50% Dunn??

  3. Buffet is a buy and hold guy……… You could say he is an investor, Not a trend trader.

  4. What is a guy who sells PG to buy GE while selling options by the bushel? Id that investing or trading?

  5. What this comparison does tell you is that Buffet is a better investor for at least two reasons: 1) Dunn manages hundreds millions dollars, while Buffet has billions under management. I worked for a company which manages billions dollars and I know bloody well how much harder it is to manage large amounts and outperform; 2) the graph shows that during the 20-year period Buffet outperformed Dunn for more than 10 years

  6. The point of the posting was to show how well trend following does even though it is largely unknown still. Also, making a correlation/connection to assets under management for the average person means little – there is only one Buffett.

  7. A few comments about Buffett in response to William F. above:

    1.- Nobody knows exactly what Buffett is doing. He could say just about anything to justify his results, but for all we know he may well be following a long-term trend following strategy.

    2.- I am a firm believer in Trend Following as a strategy, but that doesn’t mean there aren’t arbitrage opportunities not available to the rest of us. FOR EXAMPLE: I don’t have enough money to buy all the shares of a closed-end investment fund that has more cash on hand than it’s NAV. All I can do as a trader is buy the shares and hope for the best. However, if I could buy ALL the shares I could take over the company, liquidate the assets, and earn the difference between what I paid and its Net Asset Value. Buffett has been taking advantage of just such opportunities.

    3.- Even if you buy Buffett’s stock, you may not be able to enjoy the benefits of point #2 above, because everybody already knows what he is doing, and the stock price includes a premium because of that.

  8. The chart says it’s better to be with Buffett. Why ? Because being with Buffett means doing nothing just having Berkshire shares. And trend following means performing some activity, i.e. selling, buying, monitoring the trend etc.
    I am a lazy person so I am with Buffett.

  9. I find the comparison fascinating. Even though they have radically different styles, they have roughly the same shape in their equity curves.

    What this means is that there is no real difference between technical or fundamental strategies. If both are well thought out and executed with accuracy, then both can be equally successful. However, as you pointed out Micheal, it is much easier to transfer the skills of trend following over those of Warren Buffet. That is perhaps the greatest advantage. In addition, it appears that the premise that technical analysis is based on mainly that the price reflects all information seems to be true! I did not fully believe it until this chart was displayed.

    Thank you for the helpful illustration Micheal. I am looking forward to your film.

  10. I don’t even see it close to that way George. For one Buffett is not purely a stock picker. If he was, then yes comparisons work. BRK is a massive firm that does far more than be a vehicle for WB’s picks.

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