Warren Buffett made his first $100,000 in the 1950s (during his 20s) when he was still managing his own capital.

$100,000 in 1950 is roughly $1,100,000 in 2021, so I think this would be a good case study.
So how did he do it? Let’s take a look at what he said…

“If I was running $1 million today, or $10 million for that matter, I’d be fully invested.

Anyone who says that size does not hurt investment performance is selling.

The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money.

I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”

You know the insurance company GEICO?

When Buffett was 20 years old, he visited GEICO’s headquarters to do due diligence, and 2 days after talking with management, he put 75% of his net worth into GEICO.

Because Buffett wanted to grow his capital as quickly as possible, he focused on finding a few great companies and invested as much money as he can into them.

He had no rules on position sizing nor diversification. In fact, the more he liked a stock, the more he buys.

Now, ask yourself… Do you have the guts to allocate the majority of your net worth into a very concentrated portfolio?

Anyway, to multiply your capital as quickly as possible, you have to invest in asymmetric (low risk, high reward) opportunities…

Now, I’m not saying you should invest in Bitcoin, but the diagram above is a good illustration of what asymmetry means.

Most people assume that investing in asymmetric opportunities comes with more risk, but this can’t be further from the truth.

If you are risking every dollar for a 10x potential return, you can be wrong 9 out of 10 times and still break even. Those are insanely great odds!

Because great investors know they will be wrong on a lot of their investments, they always position themselves so they can be wrong the majority of the time and still make a huge amount of money.

I know someone who started out with ~$10,000 in 2009 and now has ~$5M in 2021, just from investing in assets with asymmetric upside.

I’m not saying he didn’t add more capital over the years, but the guy doesn’t even have a full-time job. He simply finds undervalued and “hidden” assets, and if the opportunity is actually really good, he pours most of his capital into those companies.

While turning $1,000 to $1,000,000 may seem impossible, it’s not all that difficult to turn $10,000 to $1,000,000 in 10 years or less, especially if you were to make concentrated bets on high-conviction trades with asymmetric payoff.
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