What is a realistic return on value investing?

[CY09]

Just some maths:

Assuming a 20% return per annum, An individual who starts off with $50k at 25 years old, adds 30k annually will only be a billionaire when he is 71 or 72 years of age.

[arriyana]

True story. Warren Buffet admits that size is a handicap. He performed substantially better when the assets were small.

In fact, most people should stick to buying STI ETF or MSCI. Beating the market means you are already above average and by definition, not everyone can be above average.

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

We have a Warren Buffett here, no doubt about it! The great man himself only managed to compound Berkshire's per share BV by 19.7% p.a. from 1965-2013.

No harm to set high target. With a much smaller AUM, beating current Mr. Buffett's performance isn't a unthinkable proposition. I asked myself a question, How will Mr. Buffett perform, with a AUM of just few million non-OPM? My guesstimate is around 40%.

[yawnyawn]

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

We have a Warren Buffett here, no doubt about it! The great man himself only managed to compound Berkshire's per share BV by 19.7% p.a. from 1965-2013.

No harm to set high target. With a much smaller AUM, beating current Mr. Buffett's performance isn't a unthinkable proposition. I asked myself a question, How will Mr. Buffett perform, with a AUM of just few million non-OPM? My guesstimate is around 40%.

I read that Buffett compounded his own $$ between 1950-1956 at 50-60% p.a. During 1957 till 1969 when he closed Buffett Partnership due to retirement, he compounded the $$ at 30% p.a. compared to the 9% return of the Dow.

I doubt many people can do this. Beating the market over 20% through a market cycle is not as easy as doing it for a year or two. $33,000 invested in year 1 will be $1m in 13 years time if one can get 30% p.a over the years(the same time Buffett Partnership was in operation)

[corydorus]

Now with information available much easier and trading through internet. The barrier to entry is low and competitive. Investment knowledge is wider spread. I would say is harder now than 1950s to achieve same performance.

[CityFarmer]

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

We have a Warren Buffett here, no doubt about it! The great man himself only managed to compound Berkshire's per share BV by 19.7% p.a. from 1965-2013.

No harm to set high target. With a much smaller AUM, beating current Mr. Buffett's performance isn't a unthinkable proposition. I asked myself a question, How will Mr. Buffett perform, with a AUM of just few million non-OPM? My guesstimate is around 40%.

I read that Buffett compounded his own $$ between 1950-1956 at 50-60% p.a. During 1957 till 1969 when he closed Buffett Partnership due to retirement, he compounded the $$ at 30% p.a. compared to the 9% return of the Dow.

I doubt many people can do this. Beating the market over 20% through a market cycle is not as easy as doing it for a year or two. $33,000 invested in year 1 will be $1m in 13 years time if one can get 30% p.a over the years(the same time Buffett Partnership was in operation)

Both size and OPM, are handicaps, IMO. Mr. Buffett did it with 50-60%, so a 20-25% target might not be too unrealistic, if most things are right, including luck.

[franko.yank]

I see my post on my targets have set off a bunch of objection and the usual comparison about Warren Buffet, exaggeration on billionaire etc.

Only CityFarmer seems to understand and have a better perspective instead of jumping the gun and making all sorts of sarcastic remarks by making unrealistic assumtption.

To start off let's get real here, how many of us really are having big bucks here? For me I am 28 and only have about 40k. Realistically how many stocks can I buy with that? Maybe 3-4? So I spend so much time to find that 3 stocks in the vast universe so that I can get 10% return? Then what's the point? Might as well buy some index fund rite?

Also I want to take big risk now to make it big. What's wrong with that? Buying a bunch of blue chips for the pathetic 8-10% return not my cup of tea. After 20 years, when I am late 40s rich enough already likely I will moderate returns safer, diversify etc.

Nothing against the people here want to be safe and slowly scrinch their whole lives to build up modest amounts for their retirement @ 65, but I'm not interested in living / working till 65 trying to save $$$ all my life.

If you guys like analyzing stocks for fun and hobby, I guess it's your choice. But TBH it is much better to park money passively and spend your time on other things if your targets are set so low.

[CityFarmer]

I see my post on my targets have set off a bunch of objection and the usual comparison about Warren Buffet, exaggeration on billionaire etc.

Only CityFarmer seems to understand and have a better perspective instead of jumping the gun and making all sorts of sarcastic remarks by making unrealistic assumtption.

To start off let's get real here, how many of us really are having big bucks here? For me I am 28 and only have about 40k. Realistically how many stocks can I buy with that? Maybe 3-4? So I spend so much time to find that 3 stocks in the vast universe so that I can get 10% return? Then what's the point? Might as well buy some index fund rite?

Also I want to take big risk now to make it big. What's wrong with that? Buying a bunch of blue chips for the pathetic 8-10% return not my cup of tea. After 20 years, when I am late 40s rich enough already likely I will moderate returns safer, diversify etc.

Nothing against the people here want to be safe and slowly scrinch their whole lives to build up modest amounts for their retirement @ 65, but I'm not interested in living / working till 65 trying to save $$$ all my life.

If you guys like analyzing stocks for fun and hobby, I guess it's your choice. But TBH it is much better to park money passively and spend your time on other things if your targets are set so low.

Relax franko. Debate needed for clearer picture, and a debate will only start off with objections or opposing views. I have also gained from the debate.

I viewed the sarcastic remarks as humorous quotes, that make the forum more interesting. Isn't it?

BTW, 5% above index, shouldn't be regarded as low target, IMO

[Temperament]

MARKET WIZARDS
Final word.
There is no holy grail to trading success. The methodologies employed by the “market wizards” cover the entire spectrum from purely technical to purely fundamental—and everything in between. The length of time they typically hold a trade ranges from minutes to YEARS. Although the styles of the traders are very different, many common denominators were evident:
1) All those interviewed had a driving desire to become successful traders—in many cases, overcoming many significant obstacles to reach their gaol.
2) All reflected confidence that they could continue to win over the Long RUN. Almost invariably, they considered their own trading as the best and safest investment for their money.
3) Each trader had found a methodology that worked for him and remained true to that approach. It is significant that DISCIPLINE was the word most frequently mentioned.
4) The top traders take their trading very seriously; most devote a substantial amount of their waking hours to market analysis and trading strategy.
5) Rigid risk control is one of the key elements in the trading strategy of virtually all those interviewed.
6) In a variety of ways, many of the traders stressed the importance of having patience to wait for the right trading opportunity to present itself.
7) The importance of acting independent of the crowd was a frequently emphasized point.
8) All the top traders understand that losing is part of the game.
9) They all love what they are doing.
10) Care to add some of your view or experience?

May you succeed to be one of the wizards as described in the book "Market Wizards".
i agree with you and also always believe the world progresses only because of the "unreasonable" man.

[yeokiwi]

To start off let's get real here, how many of us really are having big bucks here? For me I am 28 and only have about 40k. Realistically how many stocks can I buy with that? Maybe 3-4? So I spend so much time to find that 3 stocks in the vast universe so that I can get 10% return? Then what's the point? Might as well buy some index fund rite?

The easier way to get rich or accumulate a significant sum of money for investment is to do well in your career than focusing on how much you can get out of 40k.

A good career ($5000 per month before CPF with 13th month bonus) = $65000 cash before expenses.
If you can save $30000, that is already 75% of 40k.

To start off let's get real here, how many of us really are having big bucks here?

You are really a newcomer in this forum.

[CityFarmer]

To start off let's get real here, how many of us really are having big bucks here?

You are really a newcomer in this forum.

Yes, a newcomer's comment indeed. The wealthiness of our buddies here (excluding me) is beyond newcomer imagination.