In this lecture at Columbia University, Joel Greenblatt discusses advice from Warren Buffett on why it is much easier for smaller investors to achieve superior investment returns. Here’s an excerpt from the lecture:
Q2 2023 hedge fund letters, conferences and more
Greenblatt: So we have another investor, Warren Buffett, who has also been able to do that and has a few things to teach us.
In the copy I had on page 233, famous line he has is – a fat wallet is the enemy of superior investment returns.
And I think that’s true. I don’t think any of you in the room have to worry about that quite yet.
Buffett has said if you’re expecting me to earn 15% a year going forward that perhaps is unrealistic. Even though he’s been able to do quite well.
It does get harder and it gets harder… There’s a big difference. I think what Buffett had said was that if you gave him a million dollars he could earn 50% a year. Still by looking at… being able to look at a whole slew of different situations he can look at 10,000 situations instead of just 1000 at most of the size companies that now he has to buy to make a dent in his portfolio.
So we should all have such problems. But I do think there’s a difference between running 5 million, 50 million, 500 million, 5 billion, 50 billion. I think the difficulty ratchets up.
You can watch the entire discussion here:
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Article by The Acquirer's Multiple.
