Subject: Re: Correlation S&P vs BRK movements
Digression...

There is a different feature comparing BRK's price to that of the broad market. It has been very prominent in recent years, which is not the same as saying it will continue.

My observation:
If Berkshire has had a strong trend of either outperforming or underperforming the average US large cap in the last part of the year, 2-6 months say, then that relative-to-market trend tends to exactly reverse in the new year.

Check this chart carefully, ratio of Berkshire price to S&P equal weight, see if you see the same thing.
https://stockcharts.com/sc3/ui...

One might go considerably further out on the limb and say that if there hasn't been such a trend (BRK has been tracking the market very closely around Q4), one will start shortly after the new year. e.g., end 2015/2019/2024, maybe this year?

This sounds like astrology, but there is a good explanation. Money managers are almost always evaluated on calendar years. Their only risk is not loss of money, as it's not their money, but career risk from underperforming their index. They like to take on more such "risk" early in the year when they optimistically think they're smart and can beat the market. That's after being very averse late in the year when they don't want to risk hurting their year-to-date relative-to-market performance--they've already estimated their bonuses and in their heads it's already their money.


Is it actionable? Speculation: market tracking has been strong just lately (though not the perfection of late last year). If that continues to year end, look for a new strong over- or under-performance trend early in the year. If you see it, jump on board for 2-3 months.

Jim