There might be someone (some family) who compounded over the last hundreds of years. If anyone suggest a 10% (annual) logic or 20% logic, for his sons to compound next 400 years, it is better than current expectation amount of Buffet. Since most does not have > 50 years (from 30 to 80), he can compound roughly > 4000 times if he cannot exceed annual 20%. I like to remember the two numbers, 1) annual 20% and 2)4000 times. ← ( 1.18^50 = 3927.357 ) Save 10K or 50K at 30 yo, to make 40M or 200M at 80 yo. Nothing is more valuable than your 50 years. (also remember that you will pay 40M to credit card company (with APR 18%) if you revolve 10K during the next 50 years from 30 yo) If Buffet lives 10 more years, with keeping 18% in the future as before, his asset should be 1.18^10 = 5.233836 > 5 times.
I recall posting this once before... 7200 sq ft walk-out ranch, 5-car garage, on 2.5 acres. Making one's life a financial success in the markets isn't easy, but it's doable. I doubt there is such a thing as "consistent 20%". If you can average around 20% for a few years and avoid getting clobbered when the market takes a big dive, you're probably on one of the right tracks.
Yes, Blake and Zadeh... two of the names. When you say "crackdown on the practice", has more than one meaning. There was nothing inherently "wrong" about mutual fund timing. In fact, there was much good and common sense behind it for us "timers" and our clients. 1. Originally the mutual fund managers were happy to have our business (MF timers). We were small in number and assets managed then... but as we got to be more numerous fund managers decided we were more trouble than we were worth and began limiting trading to the point we could hardly be effective and had to take more "buy and hold"-type risk. (Mutual fund timing then was no different than ETF trading today.... except that MFs, with a couple of exceptions, are priced only at the close instead of real-time.) 2. The SEC hassled Zadeh on the reporting of results in Barrons and IBD. The big issue was that not all contestants had "adviser fees" deducted from their contest account results. (That made only a 1-2% difference at most, but was enough for the SEC. The year I won the $500,000 division of Mutual Funds, I did have adviser fees deducted... my results were "net of fees".) If I recall, 1999 was the last year of the US Investing Championships and MMVR. Due to SEC hassles, Zadeh stopped the contest in the middle of the year and returned our entry fees. (Too bad for me... I likely would have won the MMVR with 144% return... my best year.) 3. Some of the market timers were getting unfair and illegal "past posting" treatment from the mutual funds. (Never applied to me, however.) The SEC looked into that... stopped the practice, levied fines and charged violators. Of course, with real-time fills.... had ETFs come along before mutual funds, there would likely not be a mutual fund industry. How important was the US Investing Championships? Well, it gave us "no-names" the chance to make a bit of a name for ourselves. There was no prize money. The prize was notoriety. Besides winning the $500K MF division in 1994, I'd also finished 2nd, and 9th, in prior years. The management fees I generated from new accounts over the next couple of years are estimated to have been $2 Million.... which of course was the entire point of the contest. FWIW....
It's fun to think about when one is new to trading but reality has nothing to do with it. One does not even need to reach billions for the slippage to kill any edge one has, for most instruments millions will do. People seem to consistently overestimate the available liquidity.
All trader should have TaxRate=(tax+commission)/(ProfitBeforeTax) > 0%, during as long as 50 years (from 30 to 80). Some trader (stupid) have TR >100%. Otherwise (reasonable trader) 0%<TR<100%. Probably the former (patriot) is more portion than the latter. That is why most (more than 90%) traders ends up as a loser. Claim) I guess that successful trader can be considered as TR < 50%, isn't it?
And that is the reason why newbies (who think they are pro's) make statements like: you should be richer than Buffett you should own half of the world you cannot make xxx% consistently These newbies want to "protect" other newbies not to overestimate the chances to make money. But fact is that they apparently miss already the most basic part of trading: available liquidity/volume. They are busy all day simulating how much you can or cannot make. Instead of calculating and simulating they should be trading. Because trading is the only way to make money and to see what YOU are able to make. Statistics about others will not influence (improve) your performance, nor will it garantee that you will perform like these statistics. The only thing these newbies are consistent in is posting.
Also, please note that, with advance of computer about 20 years ago, that kind of simulation was cheaply possible. Of course, it has been only 15 years (from late 1990's) since many traders can participate the stock exchange conveniently even from home. Before 30 years ago they should take train to Wall street by himself. Therefore, it is only 20 or 30 years, when many started modern style of trading with plenty of day trading in front of cheap PC with cheap internet. My guess is that there was no big volume of trading like today, at the time of roughly 30 years ago. (?) Most likely Buffet with roughly 50 years of trading experience did NOT use PC and internet 50 years ago.
To be a honest trader, he should keep all the record for commission and tax every year, up to 50 years. He can sometime change broker any time with any reason, to lose previous trading history in previous broker. If serious, tell me all the commission and tax, for your entire life. Of course TaxRate is more important than absolute amount of total profit. I hope to say "During my last 50 years of trading, my final TR was 50%. It is time to be dead soon" The most stupid trader will say "My entire TR was 80% or 100% for 50 years". He is too much patriot. Federal Tax Rate ranges from 10% to 39.6%, as shown in http://www.tax-rates.org/federalincometax Although some state do NOT have StateIncomeTax, the highest (?) CA has 13.3% as in http://www.tax-rates.org/taxtables/income-tax-by-state
Well, if one make a position trade that will run for 3-6 months you may scale into the trade over serval days. Large liquid index ETF's like SPY, QQQ and IWM can swallow a couple of millions per session easily. At that level of capital I guess one runs strategies like a Long-Short equity book with equal balance over 20+20 equities or a global macro portfolio. At hedge funds it is not uncommon that the round-trip for a single trade is over 1 year in duration.