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.

Get more of Buffett's wisdom
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.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2841146, ~/Articles/ArticleHandler.aspx, 8/31/2015 5:09:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

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 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.

Today's Market

updated 2 days ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:03 PM
IBM $147.98 Down -0.56 -0.38%
International Busi… CAPS Rating: ****
KO $39.45 Up +0.18 +0.46%
Coca-Cola CAPS Rating: ****
XOM $75.07 Up +0.22 +0.29%
ExxonMobil Corp CAPS Rating: ****