Warren Buffett, the great US fund manager, often tells audiences of investors that he has a simple, if radical way of improving their returns.

He would give them a ticket containing just 20 slots and these slots would represent the number of investments they would be allowed to make in a lifetime. He reckons the discipline of having only 20 investment chances spread over an entire lifetime would have the effect of concentrating the mind wonderfully.

Out would go the random speculative punts and in would come the steadier, more carefully researched stocks that could last an investor for decades rather than a few brief years.

As David Shapiro, manager of Collins Stewart’s UK Focus fund points out, this approach of making every shot count is the way Buffett’s Berkshire Hathaway investment vehicle is run. Mr Buffett is the antithesis of the ‘little and often’ investor. He buys big but infrequently and aims to hold the stocks he purchases for a long time.

On the face of it Mr Buffett’s approach might seem a bit simplistic. Every so often he buys a chunk of shares, usually in a well-known blue chip company such as Coca-Cola or Wal-Mart, and then sits on them for years and years.

Yet if it sounds simple it is also devastatingly effective. Anyone who had invested just 68 US dollars in Berkshire Hathaway back in 1962 would now be a dollar millionaire.

Mr Shapiro echoes Charlie Munger, Mr Buffett’s business partner, in concluding: “The idea that it is hard to find good investments, so concentrate on a few, seems to be an obviously good idea. But ninety-eight per cent of the investment world doesn’t think this way. We are happy to be in the two per cent that does.”

Times Recommends

• How to sell your home in a downturn
• How to boost your spending power
• Unemployment benefits explained