Author Topic: Buffett's 50% per year on small sums  (Read 46625 times)

InspireByReason

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Re: Buffett's 50% per year on small sums
« Reply #10 on: October 27, 2016, 02:25:55 PM »
Well I don't have a huge dataset to show off with but so far I'm hovering around the 50% gain mark for my first year with a highly focused deep value portfolio. I think to do what I do you have to either be extremely confident and/or insane. I haven't been able to figure out which one it is yet.


Gregmal

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Re: Buffett's 50% per year on small sums
« Reply #11 on: October 27, 2016, 02:50:35 PM »
Maybe for a few years but I'd imagine if you did it long enough you'd run into the same issues Buffett is talking about. That said I just don't see how this can be done through investing, especially in an environment like this one. Definitely possible, although still incredibly difficult, if you're trading actively though.

Don't know if anyone here follows or what the consensus is on a fellow by the name of Timothy Sykes, but definitely using a strategy similar to the one he employs would give you the best shot IMO. Basically just taking advantage of less liquid or manipulated situations where the guy on the other end of the trade is not, lets be polite, a sophisticated investor.

MG2014

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Re: Buffett's 50% per year on small sums
« Reply #12 on: October 27, 2016, 03:31:40 PM »
Have you considered that he wouldn't be investing in public markets at all with such 'small' sums? Maybe he'd do mini LBO's with small private businesses.

Jurgis

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Re: Buffett's 50% per year on small sums
« Reply #13 on: October 27, 2016, 03:41:05 PM »
Have you considered that he wouldn't be investing in public markets at all with such 'small' sums? Maybe he'd do mini LBO's with small private businesses.

I thought that was part of OPs question and two people gave answers from Buffett directly that he meant public markets...  ::) (though he might do both).
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rb

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Re: Buffett's 50% per year on small sums
« Reply #14 on: October 27, 2016, 06:40:14 PM »
Hey, forget the 50%. I'd be happy as a clam if i could do 20% consistently. You can count me in the camp which doesn't think 50% is possible. But then I'm not Buffett. Here's my thoughts.

There are definitely a lot less of those companies out there today.
1. As Buffett said in that quote technology today made it really easy to find these companies so the market is a lot more efficient from that respect.
2. You have a ton of PE shops today that employ a lot of people to look for these companies and then snap them up.

If you're looking at small companies. Then they're probably not very good companies. Because the fact is that compounders compound so good companies tend to get big. So then you're looking at some special situations that are miss priced on an asset base. But if the companies aren't good then you need to get some control in order to release/realize the value. I don't know how you do that with 1-10 million given today's market caps. Maybe you find the company build a position and then release your research to PE shops press release style?

All that being said sometimes the market creates situations where you find good companies with the characteristics that Buffett talks about such as MSFT or CSCO circa 2011-2012. But that was a specific situation at a specific point in time. To say that there's always something like that going on is a big stretch imo.

no_free_lunch

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Re: Buffett's 50% per year on small sums
« Reply #15 on: October 27, 2016, 06:56:44 PM »
I am with rb, 20% would be great.

I think that if this was possible then you should be able to find evidence of people doing it.   Maybe not 50%, but I can't even find a fund that has done 20% over the past decade.  I am not sure what kind of opportunities there are in public markets for sub $1m that there isn't for say a fund with $50-100m aum so it seems you should be able to find an example.

Uccmal

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Re: Buffett's 50% per year on small sums
« Reply #16 on: October 27, 2016, 07:48:10 PM »
I am with rb, 20% would be great.

I think that if this was possible then you should be able to find evidence of people doing it.   Maybe not 50%, but I can't even find a fund that has done 20% over the past decade.  I am not sure what kind of opportunities there are in public markets for sub $1m that there isn't for say a fund with $50-100m aum so it seems you should be able to find an example.

The lack of someone actually doing it seems to suggest it is not possible.  Buffett is not the only investment genius and the entire field is vastly more competitive than 60 years ago (when Buffett incidentally wasn't doing 50%.) Between all these board members we would know someone who was doing this and we dont.   Occams Razor. 

I just looked up Buffetts compound rate of return from the start of the partnerships to their wind up and it was (only) 31.6%.  It didn't hurt one bit that he started at the exact start of the baby boom driven bull market, and the cunning bastard got out right before the crash. 
« Last Edit: October 27, 2016, 08:01:21 PM by Uccmal »
GARP tending toward value

Jurgis

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Re: Buffett's 50% per year on small sums
« Reply #17 on: October 27, 2016, 09:18:22 PM »
The lack of someone actually doing it seems to suggest it is not possible.  Buffett is not the only investment genius and the entire field is vastly more competitive than 60 years ago (when Buffett incidentally wasn't doing 50%.) Between all these board members we would know someone who was doing this and we dont.   Occams Razor. 

Poll says that we have 3 people with 10 years+ of 50% annualized returns...  :o
Just sayin'

(OK, people could be trolling. And for 10 years answer I did not specify how the return should be calculated, and it's possible that the people voting have 50% annual returns interspersed with 50% losses in between. Or maybe we have 3 real Buffetts among us.)  8)
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rb

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Re: Buffett's 50% per year on small sums
« Reply #18 on: October 27, 2016, 09:22:38 PM »
Well if that's true these guys should step into the light. If they're doing it with small companies we can even set up a CoBF cabal where we pull funds together and get sizable positions to extract value.  If the research is for real I'm down for at least half a mil a pop.

Jurgis

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Re: Buffett's 50% per year on small sums
« Reply #19 on: October 27, 2016, 09:34:32 PM »
Well if that's true these guys should step into the light. If they're doing it with small companies we can even set up a CoBF cabal where we pull funds together and get sizable positions to extract value.  If the research is for real I'm down for at least half a mil a pop.

It's also possible that someone started with 1K or 10K and now has 57K or 570K after 10 years.

Anyway, I'd be interested if some of these people stepped into the light. If they are interested in double confidentiality, I'd be happy to correspond via private messages and not disclose even their CoBF identities to others.
"Human civilization? It might be a good idea." - Not Gandhi
"Before you can be rich, you must be poor." - Nef Anyo
"Money is an illusion" - Not Karl Marx
--------------------------------------------------------------------
"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"