Since its stock market debut in 2011, Bitcoin has delivered an impressive average annual return of approximately 104%, outperforming Warren Buffett's portfolio and the US stock markets.
If we compare the Compound Annual Growth Rate (CAGR) of Bitcoin with the returns obtained by Warren Buffett's portfolio - whose main holdings are Apple, Bank of America, American Express, Coca-Cola and Chevron Corp - risk profiles are observed. very different reward and returns at different time frames.
Warren Buffett Portfolio: Less Risk, Same Profits as Stocks
For example, according to the Lazy Portfolio ETF data resource, Warren Buffett's portfolio has returned a CAGR of 10.03% with a standard deviation of 13.67% over the past 30 years. By comparison, stock portfolios of US companies have delivered more or less similar returns, but with a higher standard deviation.
In other words, the Oracle of Omaha portfolio has generated impressive results despite being less volatile or risky than US stock portfolios. Its investment philosophy emphasizes long-term value investing, prudent risk management, and a preference for fundamentally sound companies.
Bitcoin Outperforms Buffett's Risk-Averse Portfolio
By comparison, Bitcoin's performance has been extraordinary. Since its market debut in 2011, Bitcoin has delivered an impressive average annual return of around 104%. This figure easily exceeds the returns of Warren Buffett and US stock portfolios each year, on average, over the past 13 years.
Bitcoin's CAGR is also much higher than that of its rival, gold, which has achieved an average annual return of 6% in the same period. This shows that although US stock portfolios have achieved a CAGR comparable to Warren Buffett's portfolio, their higher volatility could make them unsuitable for risk-averse investors.
Gold, with its modest average annual return of 6% over the past decade, offers relative stability and acts as a hedge against economic downturns.
Many traders and investors consider Bitcoin “digital gold” and see it as a hedge against inflation and currency devaluation.
This perception has increased its attractiveness as an asset over the years. Notably, several US companies, such as MicroStrategy and Tesla, have added Bitcoin to their reserves, followed by the launch of spot Bitcoin exchange-traded funds (ETFs), which have further cemented their status among institutional investors.
That said, Bitcoin remains highly volatile, with its price subject to extreme fluctuations, compared to the stable returns of Warren Buffett's portfolio. In recent years, however, Bitcoin has shown lower volatility than many S&P 500 stocks, such as Tesla, Meta, and Nvidia.
Warren Buffett's portfolio represents a more conservative, long-term strategy with consistent returns and manageable risk, despite having exposure to a pro-crypto neobank, Nu Holdings.
Instead, Bitcoin has provided much higher returns, albeit with significant volatility and several large declines over the past 13 years.
