Warren Buffett: How I Would Invest Today For 50% Annual Returns

During his recent Berkshire Hathaway Annual Meeting, Warren Buffett discussed how he would achieve a 50% annual return with less than $1 million by deeply investigating small investment opportunities, akin to his past practices with railroad stocks detailed in Moody’s manuals.

He emphasizes the necessity of passion for the process over merely desiring financial gain, likening this passion to that of a biologist’s quest for discovery. Buffett highlights the importance of leveraging one’s unique strengths and interests in investing. He encourages continued learning and engagement with the field, suggesting that genuine interest in investment is crucial for significant success, a point of connection he shares with other experts across various disciplines.

Here’s an excerpt from the meeting:

Buffett: The answer would be, in my particular case, it would be going through the 20,000 pages. Since we were talking about railroads, I went through the Moody Transportation manual a couple of times, that was 1500 or 2000 pages, and I found all kinds of interesting things when I was 20 or 21.

I don’t imagine there’s anybody here that knows about the Green Bay and Western Railroad Company, but there were hundreds and hundreds of railroad companies, and I liked to read about every one of them.

Green Bay Western, in those days, everybody had a nickname for railroads. That was just what Northern Pacific was the Nipper, TB Snow was one of them in the East that used to go up to Cornell, and the Green Bay Western was known as Grab Baggage and Walk, GBNW.

And they had a bond that was actually the common stock, and they had a common stock that was actually a bond, and that could lead to unusual things, but they wouldn’t lead unusual things that would work for you with many millions of dollars.

But if you collected a whole bunch of those, which I set out to do. And actually that’s what impressed Charlie when I first met him because I knew all the details of all these little companies on the west coast that he thought I would never have heard of.

I knew about the Los Angeles Athletic Club, or whatever it might be, and he thought he was the only one that knew about that, and that became an instant point of connection.

So, to answer your question, I don’t know what the equivalent of Moody’s manuals or anything would be now, but I would try and know everything about everything small, and I would find something.

With a million dollars, you could earn 50% a year, but you have to be in love with the subject. You can’t just be in love with the money; you really got to just find it like a biologist looks for something because they want to find something. It’s built in.

You can watch the entire meeting here: