> It's a little reductive to use "past performance is not an indication of future gains" as an argument. If you extrapolate that with the premises that I am usi

> It's a little reductive to use "past performance is not an indication of future gains" as an argument. If you extrapolate that with the premises that I am using (namely, that it is possible to intentionally and consistently beat the market), there is no reason to have faith in the continued investment in anything, private or public, because you cannot use any past measure of success as guidance. No, the point is that any of these outliers that beat the market will, given time, revert back to the mean. Given this, you are simply wasting money on fees for actively-traded funds. > Facebook has done well since its IPO. But since we're throwing out its past performance entirely, we shouldn't consider it a sound investment. The market has already factored this information into the price of Facebook. Facebook, the company, may continue to perform well. But if everyone believes this, the stock will be trading at a premium compared to what its current situation looks like. Facebook, or any other company, could have ten years of record-breaking quarters and the stock not move a dime if the market already assumed there was a significant likelihood that this would happen. It could even decrease if these record-breaking quarters fell short of what the market was expecting. > I don't believe in EMH; I believe that past success for firms like those has been caused by skill and strategy… Then invest in these funds and make a killing. Funnily enough, few of the people who claim to disbelieve in the efficient-market hypothesis are billionaires. > …I feel confident taking on this bet when Protege Partners Protege Partners, LLC is losing is because I'm choosing a small, specific subset of the hedge fund industry that I believe in for the reasons explained above. In contrast, Buffett and Protege's bet is over a basket of funds, a "portfolio of funds of hedge funds." That "portfolio of funds of hedge funds" was chosen by Protege Partners exactly the way that you are doing. They picked a portfolio of hedge funds they believed were most likely to succeed over the long haul, and they are losing. Badly. At least as far as the bet goes. I suspect they've made more than the million dollars lost in the bet by marketing themselves as being confident enough in their picks to make such a bet against Buffett.