3 ms·
For anyone interested in this bet, Ted Seides (the losing party) did a good podcast on the topic: http://capitalallocatorspodcast.com/BetwithBuffett/ http://cap
by lpolovets 9y ago
For anyone interested in this bet, Ted Seides (the losing party) did a good podcast on the topic: http://capitalallocatorspodcast.com/BetwithBuffett/ http://capitalallocatorspodcast.com/BetwithBuffett/
My layman's understanding of hedge funds is they are better at hedging losses than increasing gains. So in good years they might underperform the broader market (e.g. gain 9% instead of 12%), but in bad years they should lose much less (e.g. lose 5% instead of 15%).
I think this bet was largely a bet on the broader market dropping after a long run-up (which would theoretically favor hedge funds), but instead the market kept rising more and more.
- goialoq 9y agoYes, this was the origin of the term "hedge" fund, but in recent ~decade has come to mean "actively managed investments" because the name sounded cool to people who don't know that the word "hedge" means something intentionally conservative and boring.
- Iv 9y agoYeah, it's hedgy.
- Iv 9y ago> I think this bet was largely a bet on the broader market dropping after a long run-up Well the bet included the 2008 crisis. That looks like even this theory is contradicted.
- valuearb 9y agoHedge funds aren't about hedging anymore. Ted got the biggest market crash in last hundred years and still got trounced. He can't admit the truth because it's destructive to his very business model. Hedge funds as a group over time always trail the market because of their high fees. Funds of Funds layer yet another layer of fees, making this bet suicidal. Ted Seides is a Wall Street con man grafting fees off poorly informed investors. He was delusional to make this unwinnable bet.