Jurgis

Another person who wished to remain anonymous send me this via private message:

If you can answer, how do you assign probabilities to the inside view? Maybe an example would help. :) Thanks and good luck.

So I am in the camp that it is very hard to impossible to make 50% annualized returns for long term consistently. (Although by now we have 6 people in the poll who marked to have done so). However, IMO people think about this in wrong way - and my poll did not help: you don't have 50% returns on years of market swoons. But you have 300-400% return couple years after market swoon which returns you to over 50% returns annualized. Same with undervalued nanocaps. Sure, they might not move for a year. But if/when they move, they can move 100-300% making up for waiting time. And, yeah, it is possible to have 100%+ yearly return without leverage or options. (No, I'm not one of the 6 Buffetts in the poll).

You can only protect people from themselves so much. ::)

You guys think that two Buffett clarifications posted on the other thread are not enough?

Nobody says that. Yeah, I know I should have said "compounded annualized returns" in the poll instead of the consecutive years options. Not gonna edit now. I have idea for another poll some other time. Regarding discussion, please use http://www.cornerofberkshireandfairfax.ca/forum/strategies/buffett's-50-per-year-on-small-sums/ thread. Thanks.

You can't find such mutual fund for couple of reasons: 1. Nobody runs 10M mutual fund. 50% becomes way harder to achieve if you look at 100M+ funds. 2. Even if they ran 10M fund, by the time you get performance record, it would be 1B+ fund. Good performers soak up capital like sponges. 3. Mutual fund issues with cash outflows during crashes (2008-2009-2010) kills performance. Also holding cash to satisfy outflows kills performance. Also getting cash inflows you can't deploy kills performance. You might find a fund that runs 20% for 5+ years. Unlikely for 10+ years. I've had another thread on trying to find mutual funds that outperform SP500, but Morningstar free screener is broken :'( and I could not get far with this project. Still looking for pointers for a free fund screener that works.

It is going to be difficult to hit that "key" while touch typing quickly. It isn't really a key that you can feel it is just an area on a touchpad. That will be annoying, especially if you have to take your eyes off the screen to look at it every time. IMO they should have squeezed "Esc" into the top row somehow. Or even put physical key left of the touch bar. But what do I know, I'm not a Mac user. 8)

Thank you for voting. 8)

I think you are misinterpreting my last statement. I did not say that outside view is not used. I said: So let's ask this: do you combine outside view probabilities with inside view probabilities in your process? If so, how do you calculate inside view probabilities?

I was contacted privately by one person who says that they have had compounded annualized return over 50% for 5+ years. (So their claim is a bit different from selections in poll, but pretty much what we would consider "performance" of an investor). The person chose to remain anonymous.

To be strict, we shouldn't count current year, since it's not finished. But if you prefer to count it, it's up to you. I have no control over this and nobody's gonna ask you to support your claim. We are all rational and honest human beings here I presume. ;)

It's also possible that someone started with 1K or 10K and now has 57K or 570K after 10 years. Anyway, I'd be interested if some of these people stepped into the light. If they are interested in double confidentiality, I'd be happy to correspond via private messages and not disclose even their CoBF identities to others.

3 Buffetts among us so far. 8)

Poll says that we have 3 people with 10 years+ of 50% annualized returns... :o Just sayin' (OK, people could be trolling. And for 10 years answer I did not specify how the return should be calculated, and it's possible that the people voting have 50% annual returns interspersed with 50% losses in between. Or maybe we have 3 real Buffetts among us.) 8)

I thought that was part of OPs question and two people gave answers from Buffett directly that he meant public markets... ::) (though he might do both).

For strategy discussion or discussion on Buffett's claim, please use http://www.cornerofberkshireandfairfax.ca/forum/strategies/buffett's-50-per-year-on-small-sums/ thread. Thanks.

Poll posted at http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/i've-had-50-annualized-returns-for/ for resident Buffett wannabes ... and regular people too. 8)

This is related to Buffett's claim that he can generate 50%+ annual returns with low amount of money. Have fun.

Just for fun, this deserves a poll.

Seems like US/foreign micro/nanocaps then. I'm still doubtful, but I'll let our nanocap experts to comment. ;) Edit: just to counterargue a bit my claim people may not post best nanocap ideas due to low liquidity, building positions themselves. OTOH, we'd still see post-mortem 50%+ claims perhaps. In reports, letters to investors, etc. IMO I don't see enough of them to agree with Buffett. But surely he knows better. 8)

Since you seem to be lonely here, I'll +1 that I liked Base Rate View somewhat. I and friends had a long discussion (to be continued perhaps) about "Thinking Fast and Slow". My one big conclusion from the discussion (in)applicable to investing: - You can possibly get outside view probabilities - not always but perhaps - You can have inside view - It's very hard to impossible to assign probabilities for inside view for various reasons (humans cannot think probabilistically, there's no prior data set for inside view, etc.) - So that's why almost nobody combines outside view probabilities to inside view probabilities in their process - or produce probabilistic models for investing. There are exceptions - somewhat. That's where people like Thorp make/made their money. Even he used mostly outside view + heuristics. I'm not sure he explicitly assigned inside view probabilities and did integration with outside view. Edit: when you can construct probabilistic models, they tend to work really well, like Thorp's friends/proteges who shoveled gains in Asian horse racing, etc.

I think consensus is that 50% is hard to unachievable. Arb? - not at this time. Value stocks in foreign exchanges? - maybe. Doubtful you can get 50%, but maybe. Moaty situations in small caps? - I doubt there's many (any?). US micro/nanocaps? - If you select best ideas from CoBF and other microcap investors, yeah, you could make maybe 20-30% a year. I don't see 50%. Distressed debt? - maybe, but situational. Picasso is da man. Control situations? - really? from what I've seen here most of them are tough and rather crapshoot. Spinoffs? - not really. Am I missing any other ideas/areas? Edit: I somewhat skipped really situational ideas like levered Florida houses in 2010 or so...

I possibly should have looked in more depth and considered buying (some) PIC vs TESB.

I guess I'm not a Prince'pled guy. :P Good if it works for you. :)