On the recent Vanguard episode of the Acquired podcast, hosts Ben Gilbert and David Rosenthal returned to one of investing’s most enduring paradoxes.
The greatest active stock picker of the modern era has spent decades telling ordinary investors not to try to be him
Warren Buffett wrote in Berkshire Hathaway’s 1996 shareholder letter that “the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results delivered by the great majority of investment professionals.” That endorsement helped legitimize passive investing for a generation. Yet the man who wrote it has built the single most powerful counterexample to his own advice.
The Gap Between the Rule and the Exception Gilbert laid out the math on the show. From 1965 to 2025, the S&P 500 delivered roughly a 10% compound annual growth rate, turning a dollar into about 405 dollars with dividends reinvested. Berkshire compounded at roughly 19% over the same 60 years, a 39,000x return.