The thesis
“Obesity drug stocks are overhyped and due for a crash.”
How buffet read it
$10,000 split evenly between Eli Lilly and Novo Nordisk, the two dominant GLP-1 obesity drug companies.
2016 to today.
Rebalanced annually.
Dividends reinvested.
Benchmark: S&P 500.
LLY 50%, NVO 50% · 2,679 trading days · benchmark SPY
$10,000 became
$0
The same money in the S&P 500 would have been $45,429 over 2016–2026 — the thesis came out ahead by $21,835.
The worst stretch
−49.4%, July 2024 to August 2025 — you would have sat through thirteen months of that, and it had not got back to level by the end of the period.
the S&P 500 fell 33.7% at its worst over the same period. The thesis moved 26.0% a year against 17.8% for the index.
Where the thesis was wrong
The thesis said these stocks were overhyped and due for a crash; the backtest returned +572.6% from 2016 to 2026, against +354.3% for the S&P 500. That result depended heavily on LLY, which returned +1590.9% over the period, while NVO contributed only +91.9%. The worst drawdown was −49.4%, running from 2024-07-12 to 2025-08-07 and still unrecovered within the period, nearly half again as deep as the index's worst −33.7% stretch. In 2016 the thesis lost −22.5% while the index gained +13.6%, and annual volatility ran at 26.0% against the index's 17.8%.
Counter-test
Same money, same schedule, parked in 1–3 month T-bills instead: $12,518.
Year by year
| Year | The thesis | SPY |
|---|---|---|
| 2016 | −22.5% | +13.6% |
| 2017 | +35.6% | +21.7% |
| 2018 | +14.1% | −4.6% |
| 2019 | +21.6% | +31.2% |
| 2020 | +26.8% | +18.4% |
| 2021 | +64.3% | +28.7% |
| 2022 | +28.2% | −18.2% |
| 2023 | +57.6% | +26.2% |
| 2024 | +8.3% | +24.9% |
| 2025 | +0.4% | +17.7% |
| 2026 | +0.9% | +13.4% |
What this verdict does not include
- US-listed stocks and ETFs only, priced on end-of-day closes.
- No tax, no trading fees, no slippage, no bid-ask spread.
- Dividends are reinvested, because closes are adjusted for them.
- Survivorship is not corrected for: only instruments that exist today are held.
- Only 11 years of history exist for this. Read it accordingly.
- No single ETF in the catalogue isolates obesity/GLP-1 drug exposure; LLY and NVO are the two primary pure-play proxies.
- The forward claim — that these stocks are overhyped and due for a crash — is a prediction about the future; historical performance cannot confirm or deny it.
- AMGN and PFE also have GLP-1 programmes but are not pure plays; they were excluded to keep the basket focused.
- Start date set to 2016 to capture a meaningful pre-GLP-1-hype baseline period.
Keep this thesis
buffet re-runs it once a month and mails you the new number. Nothing else is ever sent.
Another thesis
Every verdict names something it could not test. That gap is usually the next thesis.
Run another thesis — $5