| | | Again. I disagree with the "size of the account doesn't matter", since I believe account size has a part with investing strategy.
The investing strategy you suggested I follow: "durable advantages". Ok. With a $1000 account you follow Buffett and invest in Coke in 1988 at $2.45. In 2018 that coke stock is worth $42.70. That amount grows at a CAGR of 10%. 10% CAGR on $1000 for 30 years = $17449 (ex dividend). So you beat the market, but was it really worth it? $16449 profit in 30 years.
I remember a question asked at a Berkshire Hathaway conference in the 1900's or early 2000's. How would you invest with a small sum of money today? He essentially said look deep in the market for something severely under priced. Not give me $1000 worth of Coke. That's because investing strategy is largely determined by account size.
Similarly, a 10x, for example, in a small/mid cap is insignificant for him. Let's say he invests 10% in a $1B company. $100M. $1B. Wow. But wait, Berkshire is worth $300B. Less than one percent of his large account. Now a 10% stake in ATVI for a 25% gain if the deal goes through ($78 to $95) has much more significant gain for Buffett.
Small account. $1000 in the $1B company for a 10x. $10,000. ATVI. $1250.
If we go on the basis you can get larger gains in smaller companies (lower sealing and more inefficiencies), than big caps, the size of account does matter with investing strategy. And Buffett's investing style, IMO, doesn't fit mine. Though I do implement parts of his strategy in mine, but certainly won't copy it.
Account size does matter with investing strategy. If you disagree, that's fine. |
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