Warren Buffett posts worst return in a decade

Warren Buffet’s investment company Berkshire Hathaway recorded its worst sharemarket performance in a decade, despite a relatively strong rebound in US equity markets.

Despite the fact the United States remains mired in a severed economic downturn, the Standard & Poor’s 500 Index increased 23% over the course of 2009. But Berkshire Hathaway shares rose on 2.7%.

It was the lowest return since 1999, when Berkshire shares dropped 20% against a 20% rise in the S&P 500.

So has Buffett lost his touch? No analyst or commentator is prepared to go that far, but many say that Berkshire investors will need to get used to less than spectacular returns.

The sheer size of the company means that the big returns for which Buffett became famous will be harder to achieve. Buffett himself has said he will need to lower his sites.

“Reasonable return is good enough,” he said in an interview last November.

Another factor that may have weighed on investors’ minds is the sheer amounts of money Buffett has been spending in the last two years, including last year’s $31 billion acquisition of rail company Burlington National.

This business – like many of Berkshire Hathaway’s private businesses in sectors such as energy, retail and transport – remains exposed to the struggling economy.