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Investments can have a dual mandate - high returns BUT also low volatility. Many hedge funds will admit their returns may not beat the S&P500, but will counter

Investments can have a dual mandate - high returns BUT also low volatility. Many hedge funds will admit their returns may not beat the S&P500, but will counter that their returns have lower volatility -- achieving more consistent gains over time. To answer your question, sounds like the answer is still no, but it is worth noting that this whole conversation is ignoring the volatility side of the conversation.

watsocd 9y ago
You are correct except that doing this over 10 years somewhat removes the 'ignoring the volatility' argument.
- icelancer 9y ago
  >>You are correct except that doing this over 10 years somewhat removes the 'ignoring the volatility' argument. Only lessens it slightly. There are plenty of bad 10-year periods you wouldn't be happy with if you were 50-55 years old with all your money in stocks, not to mention an index fund tracking the S&P500 rather than the full index. Obviously holding index funds that are primarily stocks is the play when you are younger, but risk-adjusted returns matter a lot more for someone with big money as they approach retirement. It's worth exchanging returns for lower volatility down the line. Not that I think this bet could have turned out any other way, of course...
- TuringNYC 9y ago
  Depends on whether there was a major market correction in those 10 years. A better betting period would be 20 years, which almost certainly guarantees 1 and possibly 2 or 3 market corrections. Hedge funds would argue that they perform better in downcycles, possibly even with negative correlation to the market.
smeyer 9y ago
But the opposing bettor got to pick the funds, it's not like Buffett forced anyone to pick funds with risk profiles less likely to result in beating the market.
misnamed 9y ago
I would like to see them compare themselves to a stock and bond portfolio of similar volatility. Ordinary investors can reduce volatility with bonds for a lot less in fees.
valuearb 9y ago
Ted Seides got the worst market crash in a hundred years and still got crushed. Volatility and hedging never matter in the long run, fees do and Teds structure is a fee maximization device that's a winner for him but a loser for investors.

watsocd 9y ago

You are correct except that doing this over 10 years somewhat removes the 'ignoring the volatility' argument.

icelancer 9y ago
>>You are correct except that doing this over 10 years somewhat removes the 'ignoring the volatility' argument. Only lessens it slightly. There are plenty of bad 10-year periods you wouldn't be happy with if you were 50-55 years old with all your money in stocks, not to mention an index fund tracking the S&P500 rather than the full index. Obviously holding index funds that are primarily stocks is the play when you are younger, but risk-adjusted returns matter a lot more for someone with big money as they approach retirement. It's worth exchanging returns for lower volatility down the line. Not that I think this bet could have turned out any other way, of course...
TuringNYC 9y ago
Depends on whether there was a major market correction in those 10 years. A better betting period would be 20 years, which almost certainly guarantees 1 and possibly 2 or 3 market corrections. Hedge funds would argue that they perform better in downcycles, possibly even with negative correlation to the market.

smeyer 9y ago

But the opposing bettor got to pick the funds, it's not like Buffett forced anyone to pick funds with risk profiles less likely to result in beating the market.

misnamed 9y ago

I would like to see them compare themselves to a stock and bond portfolio of similar volatility. Ordinary investors can reduce volatility with bonds for a lot less in fees.

valuearb 9y ago

Ted Seides got the worst market crash in a hundred years and still got crushed. Volatility and hedging never matter in the long run, fees do and Teds structure is a fee maximization device that's a winner for him but a loser for investors.