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You'll Never Believe Why Warren Buffett Thinks You Can Beat His Returns

Warren Buffett has put together an amazing track record at Berkshire Hathaway, with sustained long-term returns that have made his shareholders rich. Yet Buffett himself thinks that you have a big advantage over him. What is it? 

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about how Buffett has said that you have a huge structural advantage not to have a lot of money to invest. As Dan points out, Buffett thinks making 50% annually on just $1 million is a lot easier than trying to come close to those returns with the billions he has to invest, because it's easier to focus on big ideas and bet big. By contrast, Buffett has had to choose big companies like ExxonMobil  (NYSE: XOM  ) , Coca-Cola (NYSE: KO  ) , and IBM (NYSE: IBM  ) that definitely don'thave 50% annual return potential -- but anything smaller doesn't move the needle for his returns and runs the risk of moving the market in a small, illiquid stock. Dan concludes that it's important to use your advantages as much as you can, and having conviction to be smart with your stocks is a strategy that would make Buffett proud.

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Buffett has never been shy about sharing his views. Now, you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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