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Warren Buffett bet $1mm that S&P500 will outperform a hedge fund over a 10 year period.[1] That's good enough for me, I'll follow the oracle. [1] http://longb
by tbrooks 10y ago
Warren Buffett bet $1mm that S&P500 will outperform a hedge fund over a 10 year period.[1]
That's good enough for me, I'll follow the oracle.
[1] http://longbets.org/362/ http://longbets.org/362/
- comboy 10y agoThis bet ends in less than 2 years. Does anybody know what would be the result if it would end now? edit: I guess it depends on the detailed terms that they haven't disclosed, but educated guesses are fine
- OscarCunningham 10y agoI seem to remember that as of Berkshire Hathaway's annual shareholder meeting in April, Buffett was winning by a long way.
- evanpw 10y agoBuffett is winning 66% to 22%: http://www.cnbc.com/2016/02/16/warren-buffett-slips-but-still-winning-epic-hedge-fund-bet.html http://www.cnbc.com/2016/02/16/warren-buffett-slips-but-stil....
- phonon 10y ago65.67% vs. 21.87% returns so far (net after fees) http://fortune.com/2016/05/11/warren-buffett-hedge-fund-bet/ http://fortune.com/2016/05/11/warren-buffett-hedge-fund-bet/ Almost impossible for Warren to lose at this point.
- comboy 10y agoWhoa, thanks. I would have definitely taken the losing side of the bet.
- infinite8s 10y agoHis bet is on returns net of fees. There are some theories that any alpha generated by a fund is eventually just captured in the fee structure.
- emblem21 10y agoHedge funds are downstream of money with performance-driven interest. Markets (the major players that skew the averages) are downstream of banks who use money the Fed's pay the interest on. His gamble is that the elite would rather give the market unlimited welfare a la Japan to keep the signals of valid global demand alive. The Fed will not allow a correction... mostly for political reasons.
- AnimalMuppet 10y agoI don't think that was the gamble when Buffet made the bet. The gamble then was, in ten years of completely unknown (at the time) market conditions, the S&P 500 will outperform hedge funds. If you picked a different 10 years (say, 199X-200X or 200X-201X), I suspect that Buffet wins for most values of X, but I have not checked.
- Ntrails 10y ago> bet $1mm that S&P500 will outperform a hedge fund over a 10 year period. He's actually betting against a portfolio of hedge funds going as far as to include fund of funds (typically a terrible bet). I assume he is only using US Equity hedge funds too? I'd be interested to see the distribution of individual funds in his portfolio that beat the S&P vs those that didn't. In general though these numbers have huge survivor bias since numbers are self reporting and ignore dead funds. It is also worth noting that the index went from 1400 to 900 over the course of 2008. So when he started the bet is clearly going to be relevant. You could of course repeat the experiment using every possible start date from, say, 2000 - though your portfolio of hedge funds will be hard to construct. He is clearly winning, but it seems like an odd question to ask.
- shostack 10y agoPlanet Money did a recent episode on this with the guy who bet against Buffet. Really interesting. http://www.npr.org/sections/money/2016/03/04/469247400/episode-688-brilliant-vs-boring http://www.npr.org/sections/money/2016/03/04/469247400/episo...
- nostromo 10y agoThe delicious irony of a person that has outperformed the market betting that it's impossible to outperform the market... and (probably) winning. :-)