In 2023, a shareholder stood up at a Berkshire Hathaway (BRK.A) (BRK.B) annual meeting in Omaha and asked about the future of value investing. Charlie Munger took it: "I think value investors are going to have a harder time now that there are so many of them competing for a diminished bunch of opportunities," he said. "So, my advice to value investors is to get used to making less."
Warren Buffett, sitting next to him, did not let it stand. "And Charlie has been telling me the same thing the whole time we've known each other," he said in the same session. The two men met in 1959.
Buffett then made the actual counter-argument, which is more interesting than the quip: "What gives you opportunities is other people doing dumb things," he said. "Well, the 58 years we've been running Berkshire, I would say there's been a great increase in the number of people doing dumb things. And they do big, dumb things, and the reason they do it to some extent is because they can get money from other people so much easier than when we started."
Munger interrupted him twice during the exchange — once to say, "Well, we are making less."
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That was three years and four months ago, and the period since is now on the record. Measured from the close on Friday, May 5, 2023, the last session before the Saturday meeting, through the close on Thursday, Sept. 17, 2026, the iShares Russell 1000 Value ETF (IWD) returned about 77.4% with dividends reinvested. The iShares Russell 1000 Growth ETF (IWF) returned about 101.8% over the identical window. Growth beat value by roughly 24 percentage points across those 40 months.
On the narrow question Munger was asked, that is a point for him. Value investors did make less than other investors. Whether they made less than they used to is a different question, and the window does not answer it, because 77.4% over three years and four months is not a bad return by any historical standard. Munger did not say value investors would lose money. He said they would make less.
The scoreboard is less kind to the man who disagreed. Berkshire Hathaway Class B shares returned about 57.2% over the same window, trailing the value index by roughly 20 points and the growth index by roughly 45. Berkshire pays no dividend, so its price return and total return are the same number. Buffett's argument that the supply of opportunities grows with the supply of mistakes may well be right, but it didn't translate into Berkshire beating a value index fund over this stretch.
Three years is also short for what Munger was claiming. His argument was structural, about too much capital chasing too few mispriced securities, and a structural claim is not settled by 40 months in which artificial intelligence spending reshaped the largest index weights. Warren Buffett has warned separately that prices and the businesses underneath them can diverge for long periods before reconnecting, which is an argument that the scoreboard above is measuring a stretch rather than an ending.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.