Warren Buffett Underperformed the Stock Market His Last 24 Years Investing: Don’t Make One Crucial Mistake That Crushed His Returns

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Warren Buffett is the most celebrated investor alive, but a fresh analysis from the Rational Reminder Podcast delivers an uncomfortable finding: across roughly the last 24 years, Berkshire Hathaway (NYSE:BRK-B) has lagged the total US stock market. The lesson buried inside that statistic is more important than the headline itself.

The Felix Finding: A Comparison Hostage to Dates

On episode #414 of the Rational Reminder Podcast (“Answering Your Financial Questions”), portfolio manager Benjamin Felix revisited a claim he made on episode 335: that Berkshire had underperformed VTI for 22 years ending October 2024. A listener re-checked the math on March 10, 2025 and found the opposite result. Felix then ran the numbers again with data through May 22, 2026, and found Berkshire had again underperformed VTSAX by roughly 3 basis points annualized over about 24 years starting January 1999.

Three basis points is a rounding error, and that is the point. The result flips based on the day you measure it. Our own pull of the data illustrates how fragile these snapshots can be: BRK-B is up 1,080.67% since November 1, 1999, while VTI has returned 216.81% since its May 31, 2001 inception. Different starting points, different stories.

Buffett himself has acknowledged that cash has “hurt them while US stocks have gone on just an absolute tear”. And going forward, the comparison gets even more complicated: Buffett stepped down as CEO at the end of 2025, so any returns from here reflect Greg Abel’s leadership, not Buffett’s stock-picking.

The Crucial Mistake: Underestimating Cash Drag

The structural force behind Berkshire’s recent lag is cash drag. When a portfolio holds large idle cash balances while equities compound, the cash mechanically pulls down the total return. Treasury bills are wonderful when the market crashes. They are a serious headwind when the market melts up.

Berkshire’s balance sheet shows just how much capital is sitting in short-duration instruments. As of Q1 2026, Berkshire held $58.12 billion in cash and cash equivalents plus $339.26 billion in short-term investments, for a combined liquidity pile of $397.38 billion. That is set against total assets of $1.25 trillion and total investments (short and long-term combined) of $1.00 trillion.

The trend is the story. The combined cash position has climbed from $146.7 billion at the end of 2021 to $373.3 billion at the end of 2025. And in 2025, Berkshire conducted zero equity repurchases despite generating $45.97 billion in operating cash flow. Investors can verify these figures directly via Berkshire’s filings on SEC.gov.

How to Apply the Lesson

Felix’s recommendation: use rolling return periods, such as 5-year or 10-year rolling windows, rather than fixed start and end dates. Rolling windows smooth out the influence of any single market peak or trough and give a far more reliable picture of long-run performance.

Three practical takeaways for investors:

• Be skeptical of cherry-picked windows. Any comparison anchored to one start date and one end date can be reverse-engineered to fit a thesis.
• Respect the math of scale. As Buffett has said repeatedly, beating the market gets structurally harder as a portfolio gets larger. There simply aren’t enough opportunities to move a trillion-dollar balance sheet meaningfully.
• Account for cash drag in any holding. A fund or company carrying tens of percent of assets in T-bills will lag a rising equity market by design. That is a feature when volatility hits, and a bug when it doesn’t.

Buffett’s lifetime record remains “unquestionably market beating”. The narrower question, whether the last quarter-century alone proves active management still works at scale, is the one worth interrogating, with rolling windows rather than convenient endpoints.

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