Markel Q4/16 Conference Call Excerpt

“First, we earned 13% on our equity investments during the year, which exceeded the S&P 500 return of 12% by 100 basis points. More important than any one year though is the longer-term record. With the 2016 results on the books, we now enjoy a 27-year record of excellent equity investment returns with that 100-basis-point advantage in place for 27 years now.”

  • Over 27 years 100 basis points is quite a big difference but I bet most people would underestimate the power compounding can have on an investment. Using a 10% vs 11% return over 27 years results in a 28% difference in the ending sum. Small changes add up to very big things. I recently watched a Chuck Akre interview on Wealthfront in which he highlighted his own focus on investing in businesses which have an ability to reinvest free cash and capitalize on internal tax efficient compounding opportunities.
Markel Q4/16 Conference Call Excerpt