Top 5 Promising Stocks for the Next Decade

Warren Buffett's hedge fund generated high returns by investing in stocks that outperformed the market. He aimed for returns in the 20% to 30% range and managed to achieve this over a 10-year period. Despite underperforming in some years, his overall strategy proved successful. Investors can generate similar returns by following his stock picks, as analyzed in a free newsletter. Additionally, a biotech stock pick is highlighted, which is expected to return over 50% within 12-24 months.
Nov. 26, 2023 08:14
Top 5 Promising Stocks for the Next Decade

Warren Buffett, a renowned hedge fund manager, is known for his successful stock market investing strategies. He started his hedge fund in 1956 with an initial capital of $105,100. At that time, hedge funds were referred to as "partnerships." Buffett would take 25% of all returns above 6%.

For instance, in 1958, the S&P 500 Index had a return of 43.4%. If Buffett's hedge fund had not outperformed the market and instead invested like a closet index fund, he would have earned 9.35% in hedge fund "fees" from the 37.4% excess return.

However, in 1958, Buffett's hedge fund failed to beat the S&P 500 Index and only returned 40.9%. He pocketed 8.7% of this return as "fees." Despite underperforming the market in 1958, his investors were not concerned because he had outperformed the market significantly in 1957. In that year, Buffett's hedge fund returned 10.4%, and he only took 1.1 percentage points as "fees." As the S&P 500 Index lost 10.8% in 1957, Buffett's investors were thrilled to have beaten the market by 20.1 percentage points.

From 1957 to 1966, Buffett's hedge fund achieved an annual return of 23.5% after deducting his annual fees of 5.5 percentage points. In comparison, the S&P 500 Index had an average annual compounded return of only 9.2% during the same 10-year period. If an investor had initially invested $10,000 in Buffett's hedge fund in 1957, their capital would have grown to $103,000 before fees and $64,100 after fees (meaning Buffett made more than $36,000 in fees from this investor).

Buffett's primary wealth-building strategy is to generate high returns in the range of 20% to 30%. He has been investing and compounding his returns for over 65 years.

So, how did Buffett manage to consistently generate high returns and outperform the market? In a free sample issue of our monthly newsletter, we analyzed Buffett's stock picks from 1999 to 2017. We identified the best-performing stocks in his portfolio, which can serve as a recipe for achieving better returns than Buffett himself.

If you enter your email below, you can receive our FREE report. In the same report, you will also find a detailed bonus biotech stock pick that we expect to generate a return of over 50% within 12-24 months. We initially shared this idea in October 2018, and the stock has already returned more than 150%. We still believe it is a favorable investment.