Buffett’s picks are mostly low PE stocks— by definition has low expected future returns—

That presumably should be corrected to read:
Buffett’s picks are mostly low PE stocks— by definition has low expected future growth rates, not low future returns.

Low PE stocks have high current returns. To generalize, their future earnings are typically assumed to be flattish, so future returns are also fairly high on purchase price, just not rising fast or far. WYSIWYG earnings yields, more or less.


Incidentally, Berkshire's large purchases are in any case not usually at super low P/E ratios.
Consider BNSF at around 20 times then-current owner earnings, and Precision Castparts at 22.9 times trailing EPS.
Apple was neither wildly cheap nor wildly expensive when the big buying took place at around 14-17 times then-current earnings.
OXY's ten year average earnings per share in the last decade are actually negative (around -$0.66), so that would correspond to an infinite P/E ratio : )

Jim

Berkshire Hathaway FAQ

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