According to Bloomberg since 1964 Berkshire Hathaway (Warren Buffetts firm) has delivered a total return of 2,500,000%, or a (geometric) average return of 20.62% per year.

However, the CAPM predicts that Berkshire Hathaways return should only have been 9.5% on average.

Why is this problematic for the CAPM?

1. It shows Berkshire Hathaway can generate large and persistent alpha.
2. It shows that Warren Buffett can generate large returns.
3. It shows that Berkshire Hathaway was a good stock to own.
4. Not enough information is given to answer this.