At the Berkshire Hathaway shareholders meeting, Buffett emphasized that investment opportunities in the stock market are superior to those in real estate, backed by 40 years of data.
At the Berkshire Hathaway annual shareholders meeting in early May 2025, 94-year-old Warren Buffett emphasized that investment opportunities in the U.S. stock market are far greater than in real estate. He cited data from the past 40 years showing that returns from the S&P 500 index have significantly outperformed those of the housing price index, and he emphasized the ease and efficiency of stock trading. Buffett's perspective responded to current market concerns about the sluggish housing market and stock market volatility, and he expressed his confidence in the long-term growth of the U.S. economy.
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05/21 22:18
At the Berkshire Hathaway shareholders meeting, Buffett emphasized that investment opportunities in the stock market are superior to those in real estate, backed by 40 years of data.
At the Berkshire Hathaway annual shareholders meeting in early May 2025, 94-year-old Warren Buffett emphasized that investment opportunities in the U.S. stock market are far greater than in real estate. He cited data from the past 40 years showing that returns from the S&P 500 index have significantly outperformed those of the housing price index, and he emphasized the ease and efficiency of stock trading. Buffett's perspective responded to current market concerns about the sluggish housing market and stock market volatility, and he expressed his confidence in the long-term growth of the U.S. economy.
Stock Market and Real Estate: Buffett's Clear Choice
At the recent shareholders' meeting, a shareholder asked Buffett why he continues to increase his stock investments but shows little interest in real estate. Buffett answered without hesitation: "There are too many opportunities in the stock market. At least in the U.S., the opportunities provided by the stock market far exceed those in real estate."
He further illustrated by mentioning his late longtime partner Charlie Munger, who was keen on real estate transactions in the last five years of his life, but for Munger, "at most, it was just a hobby." Buffett believes that if a young Munger had to choose between stocks and real estate for a lifetime, he would still choose stocks.
Historical Data Support: A Stark 40-Year Rate of Return Gap
Buffett's view is not baseless. He cited the performance of the U.S. stock market and real estate over the past 40 years as evidence. According to data, since 1988, the U.S. residential price index "S&P CoreLogic Case-Shiller U.S. National Home Price Index" has risen by 374%. In the same period, the S&P 500 index rose by 2218%, and if dividends were reinvested, the total rate of return would be as high as 5006%.
This data shows that in the long term, the potential for capital appreciation of U.S. stocks far exceeds that of real estate. Buffett emphasized that although past performance cannot guarantee future results, such historical trends are enough to illustrate the attractiveness of the stock market.
Operational Efficiency: The Advantages of Stock Trading
In addition to rates of return, Buffett also pointed out the ease of stock trading. He stated: "When you walk into the New York Stock Exchange, you can complete transactions worth billions of dollars in just five minutes, with complete anonymity. The execution of stock trades is immediate."
In contrast, real estate transactions are much more cumbersome. He noted that when dealing with cash-strapped sellers in real estate transactions, signing a contract is just the beginning, and various details need to be negotiated afterward, making the process lengthy and highly uncertain. This inefficiency makes him uninterested in real estate investment.
Confidence in the U.S. Economy
Buffett's optimistic attitude towards the U.S. stock market is rooted in his trust in the U.S. economic system. He humorously stated at the meeting: "If I were to be born today, I would negotiate in the womb until they said I could be born in the United States."
This statement reflects his high regard for the U.S. system, innovation capability, and capital market. Buffett believes that the U.S. provides the best soil for business growth and investment returns, which is why he has long insisted on investing in American companies.
Investment Style and Asset Allocation
Although Buffett once stated in 2015 that real estate is a good investment during inflationary periods because it does not require continuous capital input, he still prefers stocks in practice. He emphasized that the stock market offers a wider range of choices, higher liquidity, and efficiency in capital allocation.
Moreover, Buffett's investment style has always centered on the "circle of expertise," focusing on businesses and industries he understands. His relative unfamiliarity with the real estate market may also be one reason he chooses to avoid this field.
Market Context: Sluggish Real Estate Market and Luxury Housing Boom
Buffett's remarks also contrast with the current overall situation of the U.S. real estate market. According to recent reports, due to high interest rates and high housing price pressures, the overall U.S. real estate market is sluggish, with March's annualized seasonally adjusted existing home sales at only 4.02 million units, hitting a half-year low. Many potential buyers choose to wait and see, with no signs of improvement in the spring peak season.
However, the luxury housing market is rising against the trend. Sales of luxury homes priced over $10 million have grown significantly in Los Angeles, New York, Miami, and other places, indicating that the wealthy tend to shift funds to real estate as a hedge during market instability.
Even so, Buffett still insists that stocks are the more promising asset. His stance contrasts sharply with some investors' behavior of "selling stocks to invest in real estate."
