Berkshire's 10-Point Gap With the S&P 500 Has a History

Berkshire Hathaway is trailing the S&P 500 by roughly 10 percentage points in 2026, a shortfall it has posted nine times since 1990, and in seven of those nine cases it beat the index the following year.

Berkshire Hathaway Inc. (BRK.B) is heading into the closing stretch of 2026 roughly 10 percentage points behind the S&P 500, a gap wide enough to make owners of the most famous compounding machine in American finance ask whether something has changed. The historical record offers a partial answer: this has happened before, repeatedly, and it has usually been followed by a year in which Berkshire came back out in front.

Since 1990, the conglomerate has closed out a year this far behind the index nine separate times, according to the analysis published by Motley Fool. In seven of those nine instances, Berkshire beat the S&P 500 over the next twelve months. That is a hit rate of roughly 78% on an illustrative basis — and it is drawn from a sample of nine, which is the first thing any investor should notice about it.

Where the shares stand after the latest session

Berkshire's Class B shares last closed at 510.37, up 0.66% on the day, with a session range of 506.00 to 510.63 and a previous close of 507.00, as of the last trade on Friday, 11 September 2026 at 20:00 GMT. The Class A shares, which have never been split and carry the full voting weight, last changed hands at 766,000.00, a gain of 0.62% from a prior close of 761,245.00 and at the top of a 759,500.00 to 766,000.00 range.

The benchmark itself has been firmer. The SPDR S&P 500 ETF (SPY) closed at $764.29, up 0.85%, while the Nasdaq 100 proxy (QQQ) finished at $714.88, up 0.87%, and the Dow 30 tracker (DIA) at $525.79, up 0.97%. On that single session Berkshire's B shares lagged all three, a miniature version of the year-to-date pattern.

Why a conglomerate falls behind a momentum tape

The mechanics of a 10-point shortfall are not mysterious. Berkshire is a diversified operating business — insurance underwriting and float, a railroad, energy utilities, manufacturing, retail and services — sitting alongside a large marketable securities portfolio and a very large cash and Treasury bill position. When index returns are being driven by a narrow band of high-multiple technology and artificial-intelligence-linked names, a company whose earnings power is spread across freight volumes, utility rate bases and property-casualty loss ratios simply does not have the same exposure.

Cash is the second drag. Short-term Treasuries pay a coupon, not a capital gain. In a year when the index compounds at a high rate, every dollar parked in bills is a dollar earning the risk-free return rather than the equity return. That is by design — it is the price of optionality, and it is the reserve that funds the kind of purchase Berkshire has historically made when prices break — but it is a mathematical brake on relative performance during a strong market.

The third factor is the one that has no precedent in the data set: the transition of leadership away from the investor whose name has been synonymous with the company since the 1960s. Succession risk is not a number that shows up in a filing. It shows up in the multiple investors are willing to pay for the same book of assets, and it can compress that multiple for a period without anything deteriorating operationally.

What nine observations can and cannot tell you

Seven out of nine is a striking ratio, and it is also a small one. Nine annual observations across more than three decades is not a sample that supports statistical confidence in the ordinary sense. There is no way to separate a genuine mean-reversion effect from the simpler explanation: over most rolling periods since 1990, Berkshire has been a good business bought at reasonable prices, so a year in which it beats the index is not a rare event to begin with.

There is also a structural argument that cuts against naive extrapolation. Berkshire today is vastly larger than the Berkshire of the early 1990s. The arithmetic of size means the acquisitions capable of moving the needle are fewer, and the universe of sellers willing to transact at Berkshire's price is smaller. A rebound that came easily when the company was a fraction of its current market value is a heavier lift now.

The more durable case for the shares is not the historical pattern at all. It is the underwriting economics, the regulated utility and rail cash flows, the buyback mechanism that retires stock when management judges it cheap, and the cash that converts a market dislocation from a threat into an opportunity. Those are reasons to own the business. The nine-observation table is context, not a forecast.

What to watch through the rest of the year

Three things will determine whether the gap narrows or widens. First, market breadth: if leadership rotates out of the highest-multiple index constituents and into cash-generative industrials, financials and energy, Berkshire's relative position improves without the company doing anything. Second, capital deployment — any material acquisition, or a step-up in the pace of share repurchases, would signal that management sees value at current prices. Third, insurance results, where underwriting profitability and catastrophe experience swing reported earnings more than most observers expect.

For long-horizon holders, a 10-point year is uncomfortable rather than alarming; Berkshire has been designed for decades of ownership and has spent stretches of most of them behind the index. For anyone treating the historical pattern as a trade signal, the honest framing is that seven-of-nine on nine data points is an observation worth knowing, not an edge worth sizing a position around.

Key facts

• BRK.B last close: 510.37, +0.66%, as of 11 Sep 2026 20:00 GMT
• BRK.A last close: 766,000.00, +0.62%, as of 11 Sep 2026 20:00 GMT
• 2026 shortfall vs S&P 500: About 10 percentage points
• Historical record since 1990: 9 years this far behind; outperformed the next year 7 times

Frequently asked questions

How far is Berkshire Hathaway behind the S&P 500 this year?

Berkshire Hathaway is trailing the S&P 500 by roughly 10 percentage points in 2026. That is a wide gap by the conglomerate's standards, but not an unprecedented one: the company has finished nine separate years this far behind the index since 1990, according to the historical record cited in the analysis.

What happened after previous years when Berkshire lagged this badly?

In seven of the nine years since 1990 in which Berkshire finished about 10 points or more behind the S&P 500, the stock beat the index over the following twelve months. That works out to roughly a 78% hit rate on an illustrative basis, though nine observations is a small sample from which to draw statistical conclusions.

Where did Berkshire shares last close?

Berkshire's Class B shares last closed at 510.37, up 0.66% from a previous close of 507.00, with a session range of 506.00 to 510.63. The Class A shares finished at 766,000.00, up 0.62% from 761,245.00. Both figures are as of the last trade on 11 September 2026 at 20:00 GMT.

Why would a large cash position hurt relative performance?

Cash and short-term Treasury bills earn the risk-free rate, not the equity market return. In a year when the index compounds strongly, every dollar held in bills mathematically drags on relative results. Berkshire holds that reserve deliberately, because it funds acquisitions and buybacks when prices fall, but the cost shows up in strong markets.

Does Berkshire's sector mix explain the gap?

Partly. Berkshire's earnings come from insurance underwriting and float, a railroad, regulated utilities, manufacturing and retail. When index returns are concentrated in high-multiple technology and AI-linked names, a diversified operating conglomerate has far less exposure to the drivers of the benchmark's gain, and it lags without anything going wrong operationally.

Is the historical pattern a reliable buy signal?

No. Nine annual observations across more than three decades cannot support statistical confidence, and Berkshire is now far larger than it was in the early 1990s, which makes needle-moving acquisitions harder to find. The pattern is useful context. The stronger case rests on underwriting economics, utility and rail cash flows, and buyback capacity.

Sources

• Berkshire Hathaway Stock Is Trailing the S&P 500 by About 10 Points This Year. History Says That Usually Doesn't Last. — Motley Fool

Photo: Matthis Volquardsen · Pexels Licence — source