How Warren Buffett Returned 40% Annualized Between 1980 and 2003

Buffett’s Berkshire Hathaway (BRK-A, BRK-B) is back on top again; it has has returned 18.2% year to date in 2014, double the return of the S&P 500, and better than 99% of all domestic equity mutual funds on the planet.

What’s even more amazing is that, between 1980 and 2003, Buffett returned an incredible 40% a year.

That turns $10,000 into an incredible $32.1 million, and $100,000 into $320 million.

Buffett achieved this using a technique recently divulged in two academic papers. One came out of a major Ivy League university. Another was authored by two professors from a top public business school. In both papers, the researchers analyzed all of Warren Buffett’s holdings over the past 35 years.

These academic papers are very long, 50 pages each. But I have summarized the key points from each in simple enough terms that anyone, even a novice, could understand it.

Buffett, due to his incredible size now, will never be able to put up 40% years again. But an individual investor can, and should. Warren Buffett has said it himself. In an interview with BusinessWeek he said: “If I was running $1 million today, or $10 million for that matter….. I could make you 50% a year… No, I know I could. I guarantee that.”

Follow our blog for more details on this paper.

Will Meade
President of The Billionaires Portfolio