After a bit of digging, I found this Q&A from the 2019 shareholder meeting: https://www.youtube.com/watch?v=geRIJQJXRVo&t=17980s
And the meeting minutes in PDF form (see page 120, question #32): https://s3.amazonaws.com/static.contentres.com/media/documen...
The text from that document...
32. It’s easy to make 50% on a million, but much more difficult on larger amounts
WARREN BUFFETT: Station 9. We’re just about — yeah, we’ve got time for a couple more.
AUDIENCE MEMBER: My name is John Dorso (phonetic), and I’m from New York. Mr. Buffett, you’ve said that you could return 50 percent per annum if you were managing a one-million-dollar portfolio. What type of strategy would you use? Would you invest in cigar butts, i.e., average businesses at very cheap prices? Or would it be some type of arbitrage strategy? Thank you.
WARREN BUFFETT: It might well be the arbitrage strategy, but in a very different, perhaps, way than customary arbitrages, a lot of it. One way or another, I can assure you, if Charlie was working with a million, or I was working with a million, we would find a way to make that with essentially no risk, not using a lot of leverage or anything of the sort. But you change the one million to a hundred million and that 50 goes down like a rock. There are little fringe inefficiencies that people don’t spot and you do get opportunities occasionally to do, but they don’t really have any applicability to Berkshire. Charlie?
CHARLIE MUNGER: Well, I agree totally. It’s just you used to say that large amounts of money, they develop their own anchors. It gets harder and harder. I’ve just seen genius after genius with a great record and pretty soon they’ve got 30 billion and two floors of young men and away goes the good record. That’s just the way it works. It’s hard as the money goes up.
WARREN BUFFETT: When Charlie was a lawyer, initially, I mean, you were developing a couple of real estate projects. I mean, if you really want to make a million dollars — or 50 percent on a million — and you’re willing to work at it — that’s doable. But it just has no applicability to managing huge sums. Wish it did, but it doesn’t.
CHARLIE MUNGER: Yeah. Lee Louley (phonetic), using nothing but the float on his student loans, had a million dollars, practically, shortly after he graduated as a total scholarship student. He found just a few things to do and did them.
It seems that this is the key to your approach. How is this part achieved?
Gaining 0.5%/day 60% of the time and breaking even 39% of the time looks great until you run into the 1% of the time where you lose 50%.
1.005^260 = 366%
and
1.01^260 = 1329%
In case anyone sees "0.5%" _daily_ and thinks "low risk".
[0]: Link to my (non-monetized and WIP) blog where I keep a collection of excerpts: https://sileret.com/projects/warren-buffet-shareholder-lette...