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Comment by maxlybbert | Hacker News Reader

If I'm doing the math right, that's only about 16% annualized ( http://en.wikipedia.org/wiki/Rate_of_return#Geometric_averag... ). Which, for the record, is much better than I've ever done. But Buffet is being a little sneaky there: it's really a good example of compound interest over long time periods.

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It's not sneaky. This is the way returns are calculated in the industry. 1.09 * 1.09 * 1.09 would be 3 years of 9% returns compounded. In the same way if the total return over 3 years is 50% you take the cube root of 1.5 to figure out what return each year would give you the same. In this 50% over 3 years example it would be around 14.5% a year.

I've certainly seen journalists give out such a simplistic number, usually phrased as "$1 invested when the company went public would be worth $XXX today." And when the numbers are presented in a chart, it shows basically the same thing (often labeled the "growth of $1" or "growth of $100"). But when the numbers show up in a table, they are annualized. That allows you to compare the different cells in the table ( http://blog.greaterthanzero.com/post/57991351347/measuring-i... ).

Sneaky? The first thing in the report is returns broken down by year

Your math is wrong - it's a 21.6% annualized gain.

Thanks. I don't know why, but I annualized for 65 years, instead of the correct 50.

Buffett claims he can achieve 50% annual growth if he had less money to invest. Berkshire as it is now is currently too big to achieve 50% growth.

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