Tuesday, February 3, 2015


Reformed Borker (Bork Bork Bork!) - Buffett's million dollar bet was a slam-dunk. Quote:

Results are in for the seventh year of what’s sometimes called The Million-Dollar Bet—Warren Buffett’s 10-year wager that the S&P 500 would outperform a sampling of hedge funds—and, for now at least, it’s looking like a rout for the CEO of Berkshire Hathaway.

Under the terms of the wager, Buffett is betting (with his own money, not Berkshire’s) on the stock market performance of an S&P 500 index fund while Protégé Partners, a New York money manager, is banking on five funds of hedge funds (the names of which have never been publicly disclosed) that Protégé carefully picked at the outset. Through the seven years, Vanguard’s 500 index fund, as represented by its Admiral shares, is up 63.5%. That’s the portfolio carrying Buffett’s colors. Protégé’s five hedge funds of funds are, on the average—the marker the bet uses—up an estimated 19.6%. (The “estimated” takes into account that not all of the five funds have final figures for 2014).

Oh and by the way, Berkshire Hathaway has outperformed SPY over the same period.

Maybe this is because hedge funds are run by stupid idiots, while BRK is run by an investing genius.

Or maybe it's only because of the parasitic sucking of that 2%/20%.

But holy shit, who lets a hedge fund manage their money when they underperform the S&P 500 by two thirds? That's money you'll never get back, guys.

You have to wonder why the hedgies didn't buy railways, Apple, credit cards or biotech. Any of those would have boosted their returns above SPY over the past 6 years.

Then again, why should they when they're getting paid 2%/20%?

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