Warren Buffett thinks this investing strategy could even make a monkey rich

My test of Buffett's "monkey strategy" shows that it probably does work.

Monkey staring.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

You don't have to be an investing genius to make a lot of money with stocks. Don't take my word for it. Just listen to what Warren Buffett, one of the greatest investors of all time, says.

Buffett wrote to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders last year about a way that any investor could amass significant gains. But the Oracle of Omaha didn't stop there. Buffett thinks this investing strategy could even make a monkey rich. 

Monkey business

Buffett's underlying premise is that "ownership of stocks is very much a 'positive-sum' game." His reference was to a term used in game theory that describes a situation where the total of gains and losses will always be greater than zero. In other words, all players will be winners over the long run.

It's important to remember that Buffett views buying stocks as buying a part of a business. That's an accurate take. In fact, he wrote in his most recent letter to Berkshire shareholders that he and his longtime right-hand man Charlie Munger "are not stock-pickers; we are business-pickers." 

So what is Buffett's strategy that he thinks will make even a monkey rich? There are only three steps involved:

  1. Throw 50 darts at a list of all of the stocks in the S&P 500 index. 
  2. Buy the 50 stocks the darts land on.
  3. Hold those stocks for the long term.

That's it. Buffett did mention that the monkey should be "patient and level-headed." In particular, he warned that the monkey shouldn't be tempted to make changes along the way. The legendary investor stated, "All that's required is the passage of time, an inner calm, ample diversification, and a minimization of transactions and fees."

Testing Buffett's strategy

Just out of curiosity, I decided to test Buffett's "monkey strategy." I'll admit that I deviated a little from his prescribed approach, though. My wife wouldn't be happy with me throwing 50 darts in our house. (She doesn't trust my aim that much.)

Instead, I closed my eyes and randomly pointed to 50 different stocks that were members of the S&P 500 two decades ago. Why go back 20 years? I figured that was a sufficient period to meet Buffett's long-term hold criterion. 

The average total return (including stock appreciation and dividends) of the 50 stocks in my "monkey portfolio" during this period was 741%. An initial investment of $10,000 spread across those stocks would be worth around $84,100. 

In case you're wondering, the biggest winner was Altria (NYSE: MO). The tobacco giant delivered a total return of 3,050%. Some investors think that Altria is still a smart stock to buy now. 

Fourteen other stocks that I chose randomly were at least 10-baggers. No stock delivered a negative return during the period. However, Lumen Technologies (NYSE: LUMN) came close with a total return of only 7%. Considering inflation, I'd chalk Lumen up as a loser.

An even easier approach

Granted, my single test of Buffett's strategy doesn't prove that it works. I suspect that a large enough number of tests to be statistically valid would deliver a smaller total return than what I obtained.

In fact, I'm confident that would be the case. Why? There's an even easier investing approach that Buffett also really likes: Buying an S&P 500 fund. Following this strategy would have generated a total return of around 485% over the last 20 years.

Also, I didn't include the costs associated with buying 50 different stocks. That makes investing in an S&P 500 fund even more attractive than Buffett's monkey-and-darts approach.

However, I truly believe that Buffett is onto something. And I wish that I had a patient and level-headed monkey following his approach to help me invest years ago. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Keith Speights owns Berkshire Hathaway (B shares). The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Berkshire Hathaway (B shares). The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

More on International Stock News

Delighted adult man, working on a company slogan, on his laptop.
International Stock News

Prediction: This artificial intelligence (AI) stock will be worth $5 trillion in 5 years

Amazon is integrating artificial intelligence (AI) across many areas of its business.

Read more »

Robot humanoid using artificial intelligence on a laptop.
International Stock News

Google must win at artificial intelligence or its search business could crumble. Does this make Alphabet an AI stock to buy?

Here's a deeper look into how Alphabet is faring in the battle for AI supremacy.

Read more »

A delivery man wearing a cap and smiling broadly delivers two boxes stacked on top of each other at the door of a female customer whose back can be seen at the edge of a doorway.
International Stock News

2 "Magnificent Seven" stocks billionaires are buying

The Magnificent Seven includes some of the most profitable and dominant tech companies in the world.

Read more »

Happy man working on his laptop.
International Stock News

Prediction: This artificial intelligence (AI) stock will be the biggest winner of 2025

Artificial intelligence will be one of the biggest growth opportunities this century.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Could Warren Buffett's last move as Berkshire Hathaway CEO be buying this beaten-down "Magnificent Seven" stock?

Buffett is a value investor at his core, and he doesn't often buy shares of expensive companies.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Prediction: This artificial intelligence (AI) stock will be worth $5 trillion in 3 years

Let's take a closer look at the catalysts that could propel this stock toward that valuation.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
International Stock News

This Artificial Intelligence (AI) chipmaker just got a game-changing boost from Amazon, and Nvidia investors should be paying close attention

Amazon just made a notable investment in Nvidia's top rival.

Read more »

Happy man working on his laptop.
International Stock News

A once-in-a-decade opportunity: Here's why I'm buying Alphabet stock like there's no tomorrow

Alphabet's stock rarely gets this cheap, and right now could be a once-in-a-decade opportunity to scoop up shares at a…

Read more »