Warren Buffett has just released his latest annual letter to his Berkshire shareholders a few days ago. While I haven’t read through the entire thing yet, a quick scan shows Warren critisising pension funds for their over-optimistic projections of their returns.
And get this, Warren Buffett thinks that the 8% assumed by the funds is not realistic. Since most pension funds have about a quarter of their assets in bonds or cash, they will need to generate probably 9-10% on their equity holdings to achieve the overall 8%. According to Buffett, the compounded return in the Dow in the 20th century is only about 5%.
You can download and read the entire letter here: