// STUDY RESULT · 1995-01 TO 2026-07
Buffett: Moats & Owner Earnings
CONFIRMEDBuy businesses with durable competitive advantages at sensible prices, valued on owner earnings (true distributable cash), and hold.
| THE STRATEGY | $SPX BUY & HOLD | |
|---|---|---|
| Growth a year (CAGR) | 13.7% | 9.3% |
| Return per unit of risk (Sharpe) | 0.74 | 0.66 |
| Worst fall (max drawdown) | -56.4% | -52.6% |
// GROWTH OF $1, LOG SCALE
AMBER: THE STRATEGY · GREY: $SPX BUY & HOLD
Tested on years it never saw (from the split): 15.0% a year against 12.4% for the benchmark; Sharpe 0.74 in the training years, 0.74 after.
After 25 bps of trading costs: 12.5% a year. WITHIN RANDOM
// DECADE BY DECADE
| ERA | STRATEGY | BENCHMARK |
|---|---|---|
| 1990s | 10.9% | 24.3% |
| 2000s | 9.8% | -2.6% |
| 2010s | 13.7% | 11.6% |
| 2020s | 22.1% | 14.1% |
// THE IDEA, AS PUBLISHED
Berkshire Hathaway shareholder letters (1977-); esp. 1986 appendix · 1986
- Owner earnings = net income + D&A and other non-cash charges - maintenance capex (an estimate) and any extra working capital
- Understandable business with durable advantages, good ROE with little or no debt, honest and able management
- Buy well below conservative intrinsic value; concentrate; rarely sell
A real computation on the QuantGPT warehouse, survivorship-free, walk-forward. Gross returns, no costs except where stated. Past performance is not a promise. Findings, not advice. COMPUTED 2026-09-24 19:41 ON THE QUANTGPT WAREHOUSE: EVERY DELISTED NAME KEPT, FUNDAMENTALS AS FILED. NOT INVESTMENT ADVICE.