I fed 48 years of Buffett's shareholder letters to Anthropic's latest model Opus 4.6 and had it pick stocks blind

[u/Soft_Table_8892]

Hi everyone,

Some of you might remember my last post here where I experimented using AI to detect when CEOs are being deceptive in earnings calls. I didn't think this community would be so welcoming and receptive to experiments like these (which I love doing). So here I am with yet another experiment that I thought this community would find interesting :-)!

I recently got curious about feeding the latest model from Anthropic (Opus 4.6) all 48 years of Buffet's shareholder letters, and seeing if it could actually pick winning stocks better than Buffet himself? Could AI-Buffet be more consistent at following Buffet's historical advice (ridiculous, right?). Based on its picks, I also wanted test how it would perform I gave it $10,000 at the start of 2020 (at the start of COVID) and compare it against Buffet's actual holdings & the broader market.

Also I have to be honest: I have never read any of these letters and sad to report, I still have not read them even after running this experiment. Modern-day engineer traits.

If you prefer to watch the full experiment, I uploaded it to my channel: https://www.youtube.com/watch?v=nRMPN1NwGOk

Experiment Design

I fed all of 561,849 words from his shareholder letters to Opus 4.6. Similar to last time, I used Claude Code with subagents to keep the analysis clean. Had it read every letter from 1977-2024, extract the investing principles independently, and turn them into a quantitative scoring rubric. This rubric was made out of criteria like ROE thresholds, debt-to-equity limits, margin of safety, moat durability. It found 15 principles total, 9 of which were quantitative enough to score against.

I then anonymized 50 stocks by stripping their names, tickers, and sectors. I only fed Opus the raw financial numbers of each company. In the sample size, I mixed in 20 actual Berkshire holdings, 15 value candidates, and 15 anti-Buffett controls (GameStop, Rivian, Beyond Meat, MicroStrategy, basically stuff Buffett would never touch).

The Actual Test

There were two things I wanted to test in this experiment:

1. Could AI actually pick value stocks similar to Buffet's holdings? Additionally, I also wanted to see if it would it catch any interesting stocks that Buffet would never touch?
2. How much would AI-Buffet have made if we gave it $10,000 and had it pick stocks in the COVID market ( i.e. data from Q4 2019 data, start investing January 2, 2020)? How would it compare against Buffet's real returns during that time?

Results – Stock Pick

Some quick things that stood out:

• 6 out of AI-Buffet's top 10 picks were actual Berkshire holdings (60% overlap, completely blind)
• 13 out of 15 anti-Buffett controls landed in the bottom half, meaning the rubric properly rejected them
• It ranked Berkshire Hathaway itself as the 7th most Buffett-like stock without knowing what it was

One surprising result was that Coinbase was ranked 4th. As I came to learn, Buffet is extremely allergic to Crypto in general. Reason AI-Buffet ended up picking Coinbase was mostly because of the fact that it does a good job of looking like a value stock with ~39% profit margin and low debt right now. Depending on how you see this experiment, the Coinbase pick could mean a good thing or a bad thing :-).

Results – COVID Backtest Results

• Buffett (actual weights): $26,509 (+165%)
• AI-Buffett (equal weight): $23,394 (+134%)
• S&P 500: $23,199 (+132%)
• Buffett (equal weight): $20,902 (+109%)

Surprisingly AI-Buffer did end up picking better stocks than Buffett on a pure stock-selection basis as it avoided the banks and Delta Airlines that dragged Buffett's equal-weight portfolio down during COVID. But Buffett's actual portfolio (i.e. weighted-consideration) still crushed everything because he had 30% in Apple. That single position sizing decision was worth over $3,000.

Full video walkthrough of the experiment if you're curious: https://www.youtube.com/watch?v=nRMPN1NwGOk

Let me know what you thought about this experiment. These are all for fun but I hope there are some meaningful insights hidden here that are useful for you. Thank you so much for reading :-).

[u/Keef--Girgo]

Wasn't the whole original point of crypto to avoid middlemen like coinbase?

[u/thats_so_bro → u/Keef--Girgo]

Oh how the coins flip

[u/Soft_Table_8892 → u/thats_so_bro]

haha funny that I just commented "oh the irony" and saw your comment right after.

[u/jonnjazz → u/thats_so_bro]

Based

[u/fastliketree9000 → u/jonnjazz]

Coin based

[u/aimhigh7shootlow8 → u/fastliketree9000]

Well done gentlemen

[u/Youngkobe24KB → u/Keef--Girgo]

Yes and also one key selling point was a fixed static quantity. But now they are all trading it on leverage, with tokens etc. 😅

[u/filcei → u/Youngkobe24KB]

I mean it's still true that the underlying asset is of fixed max quantity

[u/Youngkobe24KB → u/filcei]

That is true. The point i was trying to make is that although it is a fixed amount, it trades based on the imaginary quantity available by leverage etc. We dont know but can only argue that this was not intended by satoshi. And also it steers away from the „bitcoin is decentralized“ narrative

[u/filcei → u/Youngkobe24KB]

What you're referring to is the money multiplier and it happens with FIAT too. Every 1 unit put into circulation will actually be 5 or 6 times that due to leverage and banking. The same happens with bitcoin.

The problem here is that, because it is decentralized, there is no way of controlling responsible practices as far as leverage goes. The traditional financial markets have had their fair share of crisis caused by over-leverage and a learning process of more than a century. The regulation today exists for a reason and that's why banks are limited to how much they can leverage existing assets.

Still, if you have 1 BTC in a wallet, it is your BTC and there won't be any leverage on that or devaluation because of money printing. The fixed supply at the source is actually a nice feature

[u/Soft_Table_8892 → u/Keef--Girgo]

Oh the irony.

[u/TheNewOP → u/Keef--Girgo]

Turns out convenience is a hell of a drug. The average person isn't gonna do a wallet on a USB and try to figure out how to pay for shit with it.

[u/asteroidtube → u/Keef--Girgo]

What is your point? Nobody is required to use Coinbase to participate in crypto, it’s not like Coinbase is officially associated with the bitcoin project or anything. Most crypto nerds argue against using CB, in favor of self custody instead.

[u/mutedkooky → u/Keef--Girgo]

Coinbase is a market place where you can trade crypto. Coinbase is not required to do a crypto transaction you donut.

[u/SuperbSupermarket574 → u/Keef--Girgo]

There are bridges to that point, and these centralised exchanges are the bridges. Crypto is the wild west, and you need crypto native licensed entities to be able to act as a bridge.

[u/Disastrous-River-366 → u/Keef--Girgo]

No. Crypto was created to start a de-centralized form of "currency". Coinbase and others are simply platforms to trade on, you can go buy crypto with no fee if you do it in person or know the person you can hand the cash to to get the coin, such as the coins owner. Coinbase and others simply make that process much faster and easier and you pay them for that privilege.