Warren Buffett shares how he would earn a whopping 50% per year if he had less than $1 million in 2024
Investing legend Warren Buffett is renowned for generating oversized returns. From 1965 to 2023, his company Berkshire Hathaway has delivered compounded annual gains of 19.8%, substantially outperforming the S&P 500’s 10.2% annual return during the same period.
Today, Berkshire’s stock portfolio totals over $370 billion. However, Buffett believes that the massive size is actually a disadvantage and that he could achieve better results if he were managing smaller amounts of money.
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In 1999, he told Bloomberg Businessweek that “it’s a huge structural advantage not to have a lot of money.”
This perspective comes from personal experience.
“Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers,” he said.
And he was confident that he could do it again, stating, “I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that."
Twenty-five years later, that confidence hasn’t been shaken.
Read 20,000 pages
During this year’s Berkshire annual shareholders meeting, an audience member asked Buffett what method he would use to achieve that 50% annual return today starting with less than $1 million.
“The answer would be, in my particular case, it would be going through the 20,000 pages [of Moody's Manual],” Buffett said.
Moody's Manual was a series of publications by financial services company Moody's on publicly traded stocks. These texts provided detailed information on various industries, companies and securities.
“I found all kinds of interesting things when I was 20 or 21,” he said.
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Buffett says he was able to acquire extensive knowledge of how different industries and companies functioned, even little-known ones, thanks to his dedicated research. He believes this type of behavior can provide an edge.
“I don’t know what the equivalent of Moody’s Manual or anything would be now, but I would try and know everything about everything small, and I would find something,” he said.