Can You Invest Like Warren Buffett? No. You Can Do A Whole Lot Better

So we read this article over at Slate the other day and were a little befuddled, to put it mildly. Just to get it out of the way, yes the article's central premise is factual. Buffett does have access that the average investor doesn't. He can call up pretty much any company and get a private tour of its plants, distribution channels, etc. He can directly speak to CEOs pretty much on a whim. The US government turned to him to help prevent the financial crisis. He can negotiate special deals and dividends for himself because his seal of approval on a company drives its stock price up. And in addition to his hard work, Buffett is also a very talented stock picker. All things being equal, he'll still outperform you in a head to head stock choosing matchup.

All of which sounds good until you see his performance in recent years. BRK.B has underperformed the S&P 500 over the last three years. These are the superhuman returns that get articles written about your special access? Anybody could have just bought SPY without putting any thought into the transaction and still beaten the Oracle of Omaha.

It would be one thing if Buffett were getting 25% a year like he used to. But he's down 12% over the last 12 months. If that's what being able to call up CEOs whenever you want gets you, then we'll pass.

The simple truth is that Buffett can't deploy his capital as efficiently as he used to because he's just got too much of it. So while the average investor has a stock universe of roughly 10,000 companies to choose from, he's severely restricted in where he can place his money. He also can't just jump out of a stock if it starts to turn against him. As the man himself said, "It's a huge structural advantage not to have a lot of money. I think I could make you 50% or more a year on $1 million. No, I know I could. I guarantee that."

So don't worry about all those special advantages he has, because they still don't get him the returns that can change your life. While we do offer a bunch of products to help average investors like you find good companies to buy, at the end of the day investing is pretty simple. Buy companies that are selling for less than they're worth, sell them when they reach fair value or you find an even cheaper company, rinse, and repeat. When you get to the point where you have so much money you can't find good places to put it anymore, then fly out to our beach house in Thailand and we'll all commiserate with you.