Warren Buffett Claims He 'Killed The Dow' Investing 'Peanuts' – And Explains It's A 'Huge Structural Advantage To Not Have A Lot Of Money'

Warren Buffett Claims He ‘Killed The Dow' Investing ‘Peanuts' – And Says Not Having Much Money Is ‘A Huge Structural Advantage'

Warren Buffett once said he could make 50% a year with a small sum of money and he didn't just mean it as a throwaway line to impress anyone. He was dead serious.

He backed it up with his track record from the 1950s, when he regularly earned returns that would make most investors today wonder if they've been doing it all wrong. He called it a "huge structural advantage to not have a lot of money" – a concept that flips the usual narrative.

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In a now-famous 1999 interview with Businessweek, Buffett explained that managing a smaller amount allowed him to be nimble, find undervalued opportunities others overlooked and move quickly without the weight of billions slowing him down. "I killed the Dow," he said, referring to the kind of outperformance he achieved while investing in what he described as "peanuts." If he were managing $1 million, he said, he could guarantee a 50% annual return. And no, that's not a typo – he said guarantee.

But his comments aren't just a "flex." His words are a window into a mindset smaller investors today can adopt if they're willing to think differently. Buffett has long emphasized that extraordinary results don't come from buying what everyone else is chasing or holding on to expensive stocks, hoping time will work its magic. In his early years, he followed a strict value-investing approach, buying stocks trading well below their intrinsic value and selling them as soon as they hit fair value. Rinse and repeat. It wasn't flashy, but it was effective.

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For context, Buffett isn't saying this strategy is easy, nor is it for the faint of heart. At a Berkshire Hathaway meeting, he explained that the key to earning those returns isn't just having a small sum to work with – loving the process is essential. "You've got to find it like a biologist looks for something because they want to find something. It's built-in." In other words, you must be obsessed with searching for great opportunities, not just focused on the money.

Still, Buffett's comments highlight an advantage small investors have that large institutions like Berkshire Hathaway simply can't replicate. 

Today, Berkshire manages over $325 billion in cash and equivalents – a massive amount that's both a blessing and a curse. While that cash pile gives Berkshire a significant margin of safety, it also limits the opportunities Buffett and his team can pursue. They're too big to move quickly and most investments small enough to generate huge returns wouldn't dent Berkshire's bottom line. Buffett himself admitted, "I don't think anyone sitting at this table has any idea how to use it effectively and therefore we don't use it."

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But if you're a smaller investor, you don't have that problem. You don't need to worry about moving markets or finding billion-dollar opportunities. Instead, you can focus on niche opportunities, undervalued small-cap stocks or other areas where big institutions can't or won't play. 

The challenge is to think differently – not just from the market but even from other so-called value investors. Too many people slap the "value" label on themselves but end up overpaying for popular companies or hugging the S&P 500 in disguise. 

A good advisor can help determine if an active investing approach – as Buffett describes – makes sense for your goals and risk tolerance. More importantly, they can ensure you don't make emotional or uninformed decisions, which is where most individual investors tend to go wrong. 

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