It's not 12% return on the market. The 12% figure refers to "return on equity". That is, how fast a company can grow its equity. Buffet being a very long-term i

It's not 12% return on the market. The 12% figure refers to "return on equity". That is, how fast a company can grow its equity. Buffet being a very long-term investor who often buys controlling chunks of business, can reasonably equate this to a sort of return his investment. If you're a regular retail investor, you can't. How fast a business is compounding their equity doesn't necessarily get reflected in the value of the stock that you bought. > With bonds yielding only 3 or 4%, the right to reinvest automatically a portion of the equity coupon at 12% was of enormous value. Note that investors could not just invest their own money and get that 12% return. Stock prices in this period ranged far above book value, and investors were prevented by the premium prices they had to pay from directly extracting out of the underlying corporate universe whatever rate that universe was earning. Historical returns of stocks in the equity market are around 6-10% depend on time period considered.