So, how did Warren Buffett manage to generate high returns and beat the market?
Warren Buffett has been investing and compounding for at least 65 years. You can get rich by returning 20% per year and compounding that for several years. We see several investors trying to strike it rich in options market by risking their entire savings. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).Īs you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.īetween 19 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That would have been 9.35% in hedge fund “fees”.Īctually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. Warren Buffett took 25% of all returns in excess of 6 percent.įor example S&P 500 Index returned 43.4% in 1958. Back then they weren’t called hedge funds, they were called “partnerships”.
He launched his hedge fund in 1956 with $105,100 in seed capital. Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. They have not yet started to move their money to safer shores.īecause most Americans have never experienced anything like this in their lifetime. They don’t seem to realize that, in times like these, the consequence of complacency is catastrophe. It’s already happening all across America! But what you’ve seen so far could be just the beginning.Īnd still, most investors don’t see the handwriting on the wall. What they don’t tell you is that it’s also the biggest threat to average Americans.ĭriving the cost of food and gas to the highest levels of all time, making almost every home in America unaffordable, gutting the value of our dollar. Slowly at first, and with greater haste today, the biggest investors in the world have begun to quietly move their capital to safer havens.
Just a temporary flurry.īut then it showed its true colors – a new kind of INFLATION that accelerates with alarming speed, that threatens to bury almost anyone or anything in its path. It started out as a little more than a dusting of snow on a partly cloudy winter day. They see a giant avalanche heading their way. Right now, Washington and Wall Street are running scared. I have seen the best of times and the worst of times.īut I have never seen anything like this before. I have been tracking the rise and fall of economies, markets and investments for over fifty years. I’m Martin Weiss, founder of Weiss Ratings.
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