Author Topic: Buffett's 50% per year on small sums  (Read 48668 times)

Jurgis

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Re: Buffett's 50% per year on small sums
« Reply #110 on: July 08, 2020, 03:20:32 PM »
This is an evergreen topic.

The Acquirer's multiple discusses 'what would Buffett do' (WWBD) in a podcast.
https://acquirersmultiple.com/2020/07/how-would-a-young-warren-buffett-invest-today/

The funny thing is I would guess that >80% of the people on this CoBF fall into this portfolio size category, yet obviously few are within spitting distance of Buffett like returns, i.e. 50%, yet I have to believe that making 30% per year is really doable, by say at least 10% of the people on this board.  Maybe it's like the joke Munger said about Mozart, if you are asking questions about writing symphonies at 15 then you aren't Mozart.

I think that one of the best mental models is to first set your opportunity costs to >20% per year and evaluate from there.  That would steer you away from Constellation or BRK, or all manner of value traps.

There might be people who did 20% or even 30% per year in the last 5-10 years.
I am sure that I would never make myself hold their portfolios.  ::)
I am not Mozart.

But then if/when I look at the documented returns of pretty-famous or at least quotable people who started and run (hedge)funds, none of them have made 20%+ annual in last 5 or 10 years. In fact, most of them struggle against SP500.
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cherzeca

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Re: Buffett's 50% per year on small sums
« Reply #111 on: July 08, 2020, 08:06:38 PM »
I once talked to an investor who made >50% annual returns consistently investing in growing businesses in Africa.  I suggested to him that I couldn't stomach the risk of not knowing the applicability of the rule of law, lack of liquidity, currency fluctuation etc.  He said all of this didn't concern him, and it was hard to argue with his results.  I prefer to look for my lost key by the lamppost were I can see, and those >50% returns are like a key lost in the darkness where the key most likely is.

scorpioncapital

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Re: Buffett's 50% per year on small sums
« Reply #112 on: July 09, 2020, 04:22:56 AM »
How sure is it your friend was not lucky or following a multi year trend? Even today Robinhood investors are making good money on buying shares in bankrupt companies. Will this last forever?

Mephistopheles

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Re: Buffett's 50% per year on small sums
« Reply #113 on: July 09, 2020, 06:58:41 AM »
I once talked to an investor who made >50% annual returns consistently investing in growing businesses in Africa.  I suggested to him that I couldn't stomach the risk of not knowing the applicability of the rule of law, lack of liquidity, currency fluctuation etc.  He said all of this didn't concern him, and it was hard to argue with his results.  I prefer to look for my lost key by the lamppost were I can see, and those >50% returns are like a key lost in the darkness where the key most likely is.

To your point, Cherzeca, I just read this article yesterday. It's about two brothers from New Zealand who have one of the best track records of all time. 36% CAGR over 20 years (1986-2006). They tended to invest in new markets where others may not be as familiar such as Brazil, Eastern Europe, Russia, before everyone else did.

https://www.institutionalinvestor.com/article/b150nr9k08bfxb/secrets-of-sovereign
https://macro-ops.com/the-chandler-brothers-the-greatest-investors-youve-never-heard-of/

cherzeca

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Re: Buffett's 50% per year on small sums
« Reply #114 on: July 09, 2020, 10:24:23 AM »
I once talked to an investor who made >50% annual returns consistently investing in growing businesses in Africa.  I suggested to him that I couldn't stomach the risk of not knowing the applicability of the rule of law, lack of liquidity, currency fluctuation etc.  He said all of this didn't concern him, and it was hard to argue with his results.  I prefer to look for my lost key by the lamppost were I can see, and those >50% returns are like a key lost in the darkness where the key most likely is.

To your point, Cherzeca, I just read this article yesterday. It's about two brothers from New Zealand who have one of the best track records of all time. 36% CAGR over 20 years (1986-2006). They tended to invest in new markets where others may not be as familiar such as Brazil, Eastern Europe, Russia, before everyone else did.

https://www.institutionalinvestor.com/article/b150nr9k08bfxb/secrets-of-sovereign
https://macro-ops.com/the-chandler-brothers-the-greatest-investors-youve-never-heard-of/

he had a filter of EV=3X cash flow.  he also had a somewhat unique MO of hiring recent business/accounting college grads to monitor investments in Africa...good pay and "adventure" which apparently yielded no shortage of talent...so that he did everything from his stateside desk

Jurgis

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Re: Buffett's 50% per year on small sums
« Reply #115 on: July 09, 2020, 10:31:10 AM »
It's interesting. People talk Africa and unknown markets for 30%+ returns. But then you look at Fairfax India and Fairfax Africa and they've done really crappily. And small/micro cap value international investors with small capital pools that I follow have not done greatly either.
"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
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"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

cherzeca

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Re: Buffett's 50% per year on small sums
« Reply #116 on: July 12, 2020, 10:06:53 AM »
It's interesting. People talk Africa and unknown markets for 30%+ returns. But then you look at Fairfax India and Fairfax Africa and they've done really crappily. And small/micro cap value international investors with small capital pools that I follow have not done greatly either.

it is my understanding that some the third party money this investor that I talked to used came from prominent Africa-located businessmen who offered sourcing and insight (ground-based wisdom), and were happy to have this investor wear a beard for them, offer professional investment management etc...so like everything else, you have to have good intel

LanceSanity

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Re: Buffett's 50% per year on small sums
« Reply #117 on: July 17, 2020, 06:28:05 PM »
Has anyone heard of Abdiel Capital? They've been making over 50% a year for 5 years

AzCactus

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Re: Buffett's 50% per year on small sums
« Reply #118 on: July 20, 2020, 08:01:01 AM »
Lance, do you have any letters or writings about their thoughts on market, portfolio selection etc?

Jurgis

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Re: Buffett's 50% per year on small sums
« Reply #119 on: July 20, 2020, 08:19:25 AM »
https://whalewisdom.com/filer/abdiel-capital-advisors-llc#:~:text=Abdiel%20Capital%20Advisors%20is%20based%20out%20of%20New,and%20a%20top%2010%20holdings%20concentration%20of%20100.0%25.

Looks like mostly software/cloud growth portfolio. Not surprising that they did well, although still kudos for 50%+ annual (if true).
If they were a mutual fund/ETF, I might invest with them. Although likely right now is not a great time with growth names trading in the stratosphere.

Edit: I took a brief look at their portfolio.
I have to say additional kudos for investing in AYX and APPN years ago. Both of these are not your standard recent-startup-hyper-growth-gonna-conquer-the-world companies. Both have been established long time ago and apparently only recently got into (hyper)growth phase. IMO such companies are difficult to find: most old companies don't just start (hyper)growing, so the natural tendency in the growth universe is to discard old companies that have not done much for years. Noticing that old company is at inflection point can make you the 50%+ annual returns. 8) If this was not a fluke, then Abdiel seems to have done good DD.

See https://en.wikipedia.org/wiki/Alteryx https://en.wikipedia.org/wiki/Appian_Corporation
« Last Edit: July 20, 2020, 08:42:26 AM by Jurgis »
"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"