I've had 50%+ annualized returns for

[Jurgis]

This is related to Buffett's claim that he can generate 50%+ annual returns with low amount of money.

 

Have fun.

[Jurgis]

For strategy discussion or discussion on Buffett's claim, please use http://www.cornerofberkshireandfairfax.ca/forum/strategies/buffett's-50-per-year-on-small-sums/ thread. Thanks.

[Jurgis]

3 Buffetts among us so far.  8)

[JayGatsby]

3 Buffetts among us so far.  8)

I'd be curious of the broad strategy of anyone in the "3+ consecutive" category. That's damn impressive.

[rkbabang]

3 Buffetts among us so far.  8)

I'd be curious of the broad strategy of anyone in the "3+ consecutive" category. That's damn impressive.

 

I did it in two consecutive years using leaps.  I'm no Buffet.  Reversion to the mean is real and it sucks.  I did learn a lesson though. :( 

 

[wachtwoord]

Do we count the current year? (so I know what to vote)

[Jurgis]

To be strict, we shouldn't count current year, since it's not finished. But if you prefer to count it, it's up to you. I have no control over this and nobody's gonna ask you to support your claim. We are all rational and honest human beings here I presume. ;)

[wachtwoord]

To be strict, we shouldn't count current year, since it's not finished. But if you prefer to count it, it's up to you. I have no control over this and nobody's gonna ask you to support your claim. We are all rational and honest human beings here I presume. ;)

 

I'm going to be honest that's why I'm asking. I thought it would be helpful if we all reported the same way. If current year counts 1 otherwise 0. As per your preference I will not count the current year :)

[Jurgis]

Thank you for voting.  8)

[Travis Wiedower]

I think people take a lot of what he says too literally. My interpretation is that he believes over a full cycle his expected returns would be >50%. Doesn't mean he'd get it every year. In a million iterations of 2008/2009, do you really think he'd expect to gain >50% both years in all million iterations?

[Jurgis]

I think people take a lot of what he says too literally. My interpretation is that he believes over a full cycle his expected returns would be >50%. Doesn't mean he'd get it every year. In a million iterations of 2008/2009, do you really think he'd expect to gain >50% both years in all million iterations?

 

Nobody says that. Yeah, I know I should have said "compounded annualized returns" in the poll instead of the consecutive years options. Not gonna edit now. I have idea for another poll some other time.

 

Regarding discussion, please use http://www.cornerofberkshireandfairfax.ca/forum/strategies/buffett's-50-per-year-on-small-sums/ thread. Thanks.

[BG2008]

Someone should write to Buffet and say that we deeply respect him but members on the board are actively discussing this and the suggestions were to use heavy concentration and leverage.  In the interest of preventing people from taking on oversized risk and losing their shirt in the process, can he provide more detail on what he meant and how he would do it, if it deemed to be sustainable.  In the interest of helping some people blow up, he just might respond. 

[Picasso]

Someone should write to Buffet and say that we deeply respect him but members on the board are actively discussing this and the suggestions were to use heavy concentration and leverage.  In the interest of preventing people from taking on oversized risk and losing their shirt in the process, can he provide more detail on what he meant and how he would do it, if it deemed to be sustainable.  In the interest of helping some people blow up, he just might respond.

 

+1

[Jurgis]

You guys think that two Buffett clarifications posted on the other thread are not enough?

[BTShine]

I thought he said something along the lines of "most stocks have a 52 week low that is 50% of their 52-week high, so it would be achievable to get 50% returns with small amount of capital" 

 

 

Does anyone else remember hearing something like this?

[Picasso]

This whole Buffett 50% thing has turned into a game of telephone.  It's not hard to know what he meant, but some are twisting it into their own realities with options and crazy stuff.  I think he should clarify it to a broad audience if possible.

[Jurgis]

This whole Buffett 50% thing has turned into a game of telephone.  It's not hard to know what he meant, but some are twisting it into their own realities with options and crazy stuff.  I think he should clarify it to a broad audience if possible.

 

You can only protect people from themselves so much.  ::)

[Guest cherzeca]

Someone should write to Buffet and say that we deeply respect him but members on the board are actively discussing this and the suggestions were to use heavy concentration and leverage.  In the interest of preventing people from taking on oversized risk and losing their shirt in the process, can he provide more detail on what he meant and how he would do it, if it deemed to be sustainable.  In the interest of helping some people blow up, he just might respond.

+2

[Travis Wiedower]

I actually did write a letter to Buffett last year. He hasn't responded  :(

[BG2008]

I actually did write a letter to Buffett last year. He hasn't responded  :(

 

I think we need to add the element of "people will be hurt" if Buffet doesn't clarify rather than "please satisfy my curiosity". 

 

I've looked into this a lot and frankly and can say that concentrating on your best ideas when you can "afford" early on via earnings or young age really does move the needle.  But it also depends on your strategy.  If you're the 500-hour-per-investment kind of guy with a deep expertise in a particular sector that are not known to blow up or face rapid transformations (this would most likely preclude energy, early stage tech, early stage biotech etc), you can probably compound at high % for a few years.  50% is very hard. 

[KCLarkin]

According to this article, he made 50% per annum over 5 years in PetroChina.

http://fortune.com/2014/10/31/warren-buffett-best-investments/

 

If true, I don't think it is unreasonable he *might* do similar numbers with smaller capital. I don't think you need leverage. But you'd need pretty good turnover. And high concentration. And you might need to start in 2009 not 2016.

 

 

[Tim Eriksen]

According to this article, he made 50% per annum over 5 years in PetroChina.

http://fortune.com/2014/10/31/warren-buffett-best-investments/

 

If true, I don't think it is unreasonable he *might* do similar numbers with smaller capital. I don't think you need leverage. But you'd need pretty good turnover. And high concentration. And you might need to start in 2009 not 2016.

 

A lot of people have had single positions average 50% per year for a few years, but that is a far cry from one's overall portfolio. 

 

I think the following was from Packer on this subject a number of years ago.

 

It is not doable.  No one has a public record of success picking stocks like this.  Even the 70 year old Warren would make misjudgements and mistakes that would reduce his rate back to 30% over a few years.  In his 50% there are several assumptions I think he has overlooked:

1) He has the intelligence of hundred companies feeding him daily information to help inform his choices today.  Without this back drop he wouldn't have nearly the handle on what the overall economy is doing as he does now.  That would handicap his results.

2) He is assuming that the competition is the same as it was in the 1950s - it isn't

3) Many of the things he did to juice his early results are much more difficult in todays climate due to competition, greater regulation etc.  The Hayden Ahmanson affair comes to mind where his lawyer pal went around Nebraska offering 100 per share.  Today the company would have been required to publicly disclose that they were planning a share buyback and were going private.    

4) Greater investor sophistication leads to fewer of the workout type things he did such as Dempster Mill, Sanborn Map.  Many fewer companies are allowed to get so cheap that they have more cash and securities on the balance sheet than the market value.  I saw one once.  

5) The baseline is higher now than the 50s.  They were coming off of the great depression remnants.  Times were very different.  Buffett rode the wave.  Had he been born in the 1950s rather than in 1930 we may never have heard of him.  

 

[KCLarkin]

Tim, those things are true. But he also has more experience and access to many more opportunities globally.

 

But I think you missed my point. There is no way for most people to compound at 50% because they have diversified portfolios. But a portfolio of 1-3 stocks might have a chance. More likely, he would do 30% or so.

[Graham Osborn]

Since I tried to emulate Buffett's "50%" strategy last year I can say that it is not amenable to conditions of anemic GDP growth (as opposed to the 1950s).  There are guys like Lazarus over on the Silicon Investor value thread who may well be doing 30-50% some years, but you need to be willing to diversify and stomach some real short-term pain to use this strategy.  I believe Buffett could have succeeded at it today, but he would not have had 50% returns and would probably have had some big losing years as well.

 

Quantum used leverage and exceeded Buffett's TR (they were doing 100% some years) but again, they were abetted by the tremendous bull market in equities since the 1950s.

 

I've made a personal decision not to shoot for the stars with microcap investing if I can get maybe 20% with better liquidity.  We are currently at the start of a depression anesthetized with QE, and I have zero interest in being long-only in a bunch of illiquid microcaps when the specter of rampant inflation rears its ugly head.  When the average PE of the market is say 5-10, I will certainly give due consideration to Buffett's method.

 

OT: This certainly won't be the first time I've thumbed my nose at Buffett, or more accurately Ted Weschler.  I'm currently looking at shorting DVA, which is a major BRK holding and apparently hand-picked by Ted.  And I'm short GRA, which Ted helped turn around.  The thought of that idiot running a significant chunk of BRK's investment portfolio makes my blood curdle.  He apparently has no fear of leverage.

[sae85400]

I have seen people average 50% for short period of time, they hit a huge first year(100%+) and follow it up with decent years..

 

Example 1: 104.33%, 49.82%, 29.47% 31.23%

Example 2: 158.99%, 36.23, 9%, 12.47%