Fair enough, there is a slight bit more to the buffet bet than I trivialized. The short portion of the hedge fund will have been losing as we are in a bull mar

Fair enough, there is a slight bit more to the buffet bet than I trivialized. The short portion of the hedge fund will have been losing as we are in a bull market. The full length of a cycle should see this effect reverse (and indeed 2008 shows this). So Buffet did have to pick a bull market in making this bet, but he still had better than 50/50 odds regardless. You also have other costs specific to hedge funds over active funds, such as higher brokerage from more frequent trades, and short interest. These have the same drag as the management fees, and I should have included that also in the description.