Buffet makes $1M bet fund managers can't beat S&P after fees.

kstar · 06-09-2008, 09:11 PM

A really good bet!

Excerpt:

Quote:

Warren Buffett recently bet an ambitious hedge fund operator $1 million that they won't beat the returns of S&P 500 after their extremely hefty fees are accounted for. Buffett claims investors will do as well with a no-load index fund over the ten years of the bet. He has long been critical of the performance claims of hedge funds, and his bet is intended to put his money where his mouth is.

Source: http://kk.org/ct2/2008/06/the-millio...r-long-bet.php

Basically, you just can't beat the market. Add time, and the task gets progressively more difficult. This is one of many reasons I became a disciple of the Chicago School . .

Porsche-O-Phile · Porsche-O-Phile's Garage

This will be interesting to watch - and I believe Buffett (as usual) will end up being right.

Fees are killing investing right now. Why do you think everyone wants to be a fund manager? You don't do a helluva lot and you make insane $$$ for doing it. Ain't rocket surgery.

alf · 06-09-2008, 10:07 PM

10 years is a pretty decent horizon to flatten out the investments. Basic portfolio management stuff. Buffet will win this one, or rather not lose.

Some funds do well at certian times though, like stocks it is all about knowing more than the market. But that is not sustainable over a long period.

Question is how is it that BERK does better than the market?

RoninLB · 06-09-2008, 10:11 PM

Quote:

Originally Posted by kstarnes

Source: http://kk.org/ct2/2008/06/the-millio...r-long-bet.php

i can't pull in the site

kstar · 06-09-2008, 10:11 PM

Quote:

Originally Posted by alf

. . . snip . . .

Question is how is it that BERK does better than the market?

Simple statistical outlier.

kstar · 06-09-2008, 10:12 PM

Here's the link again: http://kk.org/ct2/2008/06/the-million-dollar-long-bet.php

I just hit it and it worked, FWIW.

Hawktel · 06-09-2008, 10:45 PM

I'd bet against Buffet on somethings, but against him on something like this? I think they can kiss that million good bye.

RoninLB · 06-09-2008, 10:45 PM

Quote:

Originally Posted by kstarnes

I just hit it and it worked, FWIW.

bingo...... thx

RoninLB · 06-09-2008, 10:51 PM

the "fee" scam that cracks me up the most is the suggested 401 accounts to many union teachers. They're so smart their losing up to 40% of their principal after 30yrs.