Warren Buffett is the world's most successful investor and one of the richest people in the world. But even he has admitted that he has missed out on opportunities over the years. One of the most notable omissions was Amazon. Although it's in the Berkshire Hathaway portfolio today, that's a relatively new position (first added in 2019). And when it came to Microsoft, Buffett says he missed out on that stock in its early years due to "stupidity." Those mistakes should give investors hope that they can potentially do as well or even better than Buffett has performed in the past.

Knowledge of biotech and tech stocks can give investors a big advantage

Two sectors that Buffett has generally avoided are biotech and technology stocks. From looking at Berkshire's portfolio, investors can see that the fund's primary focus is on strong brands (Coca-ColaKraft Heinz) and financial businesses (Bank of AmericaAmerican ExpressU.S. Bancorp). While tech company Apple remains Berkshire's most valuable investment, I'd argue that's become less and less of a traditional tech stock over the years -- it's no longer on the cutting edge of innovation, not in the way it was in the Steve Jobs era. However, its strong brand remains appealing to consumers, and that's why it fits into the mold of stocks that Berkshire owns.

The key thing Buffett teaches is for investors to stay within their circle of competence (i.e., invest in what you know and are familiar with). That means that investors who are familiar with technology or biotech can have a significant advantage over him, as his circle doesn't appear to extend that far. Tech and biotech stocks can often be among the most volatile investments to hold, but they can also lead to life-changing returns. 

One of the hottest healthcare stocks on the markets this year has been Vertex Pharmaceuticals (VRTX -1.46%). The company's cystic fibrosis drugs generate billions in revenue for the business, and Vertex is also pursuing a gene-editing therapy, exa-cel, which could lead to a functional cure for beta-thalassemia and sickle cell disease, two inherited blood disorders.

There's a ton of growth potential for the business, but for investors like Buffett who may avoid the sector, the stock may never enter their portfolios. In the past year, Vertex has trounced the market with gains of 54% (versus losses of 4% by the S&P 500).

Investors can also take on more risk

Another way investors can outperform Buffett is by a willingness to accept more risk. Bitcoin is a great example of that, with the billionaire investor predicting in 2018 that cryptocurrencies "will come to a bad ending." Investors who see a different future and are willing to take on that uncertainty can potentially outperform not only Buffett but the markets as a whole, by a wide margin. A key part of Buffett's strategy is to avoid losing money, and that can mean forgoing high-risk, high-reward investments such as Bitcoin.

But this, too, can extend into the healthcare industry. It's little surprise that Buffett didn't take a chance on COVID-19 vaccine makers Moderna or Novavax in the early stages of 2020 and before they ended up with authorized vaccines. Early investors took on significant risk as it was difficult to predict which companies would have ended up successful. Ocugen, for instance, was a once-promising vaccine stock that still hasn't been able to get an approved vaccine in the U.S. market.

Beating Buffett in the short term is more likely than over the long haul

Outperforming Buffett isn't impossible depending on what time frame you're looking at. Since 1965, Berkshire has averaged a compounded annual gain of 20% -- close to double the S&P 500's performance. Beating those kinds of returns over the long term is going to be far more difficult than outperforming Berkshire over a period of a few years. The volatility that tech, biotech, and other growth stocks often possess could make it difficult to outperform Berkshire's portfolio on a consistent basis.