This 50% thing is back again! This was around almost 20 years ago (Businesweek interview) and people kept on asking WEB about it every chance they got. As far as I know, no one has achieved 50% a year even on small sums since then (if they did, they'd have a large fund by now or at least be famous). I think back then WEB just said 50% to pick a number that would indicate large returns v/s small returns. To think that WEB, CM, or anyone could do 50% for even 5 years in a row without leverage is almost silly, hopeful, and not grounded in reality (given where asset prices and rates are today). It's been 20 years but the 50% refuses to go away! It seems some part of the audience is just awed by that 50% number and wants to achieve it without much practical consideration. What do you guys/girls think?
He was fairly specific now and in the past. He said if he was managing small sums ($1M), he could achieve 50% annualized returns no problem for a little while. Once it got closer to 1B, things would start to slow down. So he was talking about small investors and only achieving that 50% annualized return for say a decade or slightly more...not over 30-50 years or anything.
In the past, he said there were many ways to make the 50%, but today, it would be based on unique arbitrage opportunities and he said he knows of a few ways, but he won't say. That's when Charlie said or you could do what Li Lu did...create and find opportunities to make money. Buffett then turned to Charlie and said, Charlie weren't you doing certain real estate deals in your early days which were generating close to 50%? And Charlie said yes.
So, both of them think gifted (1 in 5,000-10,000) investors could do 50% a year with small sums. On this message board, we know of 3-4 people who did that over a decade or so. There are probably another 20 or so who did well over 20%-30% over a decade as well. Cheers!
