By Yen Yee
Warren Buffett, the sage of Omaha, the world’s richest man, the most famous value investor of this century. As an investor, he has everything going for him – the network to tap on, a cheap source of funds to invest in and the investing know how.
His investment holding company Berkshire Hathaway has an enviable track record, pulling in approximately 20% returns per annum for the past 50 years.
However, the larger the company grows, the faster he is losing his ‘winning’ advantage. An advantage that retail investors like you and I have – the ability to make huge returns.
Maintaining a 20% return of investment becomes tougher for Warren Buffett
For a small investor with a $100,000 account, a gain of $50,000 would be a 50% return. Whereas for Buffett who is dealing with billions of dollars, a $50,000 gain would be less than a 1% return.
And, he admits it too when he said:
“It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.” – Warren Buffett in Businessweek, 1999
“If we’re going to buy 5% of a company, to make that purchase …read more