1. The bet was placed because Buffett's thesis is fundamentally true - you have much better odds of receiving a good return through passive index fund investing

1. The bet was placed because Buffett's thesis is fundamentally true - you have much better odds of receiving a good return through passive index fund investing than you do through active management. However, this bet is often used (unempirically, though not necessarily strictly inaccurately) to justify the idea that active management cannot beat the market consistently. 2. Firms like Baupost or RenTec would have handily won that bet against Buffett. But like I said, Buffett wouldn't have made that bet, because Buffett is a smart better and already knows all of this. Buffett has never argued that the market is perfectly efficient and resistant to alpha harvesting; in fact, he has publicly taken the opposite position in letters to shareholders.