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And he would have been wrong 1998-2008, provided that the managed hedge fund literally just kept all their money in cash.
by anoncoward111 8y ago
And he would have been wrong 1998-2008, provided that the managed hedge fund literally just kept all their money in cash.
- icebraining 8y agoBut did hedge funds keep their money in cash? Warren's point is exactly that the funds' decisions are not worth the cost.
- oavdeev 8y agoYou're talking about a hypothetical fund with 20/20 hindsight.
- yoran 8y agoI doubt anyone would pay 2% management fee and a 20% share on profit to a fund who is just going to keep the money in cash. Might as well do it myself for free.
- anoncoward111 8y agoI agree with you, but that isn't the point. The point is, "Stick it in the SAP 500" would have been a losing proposition. You would have lost 20% of your money, and lost 10 years of opportunity cost to boot.
- yoran 8y agoI get your point. But my point is that I doubt a hedge fund would have been performing better than the 20% loss of the S&P. Maybe it would have incurred a 40% loss. I think that in the investment world, action bias is very strong and literally doing nothing is not seen as a good thing. We both agree that if you could have foreseen that decade, you would have sold all your stocks in 1998, put it on a savings account, and only have taken it out again in 2008.
- anoncoward111 8y agoI am glad we agree! I also 100% agree that the SAP500 may have performed better than plenty of funds 1998-2008. I'm sure we could even dig some up that did horribly. There were even funds 2008-2018 that liquidated during the Buffett bet :)
- basementcat 8y agoManaged hedged funds that put all their money in cash would likely lose money for the investor just from all the fees.
- aoeusnth1 8y agoHey, if you know a method to tell which years are better to keep money in cash than stocks (in advance), please, let us know!
- anoncoward111 8y agoYou are missing the point. I conceded your point in the thread below. Anyone who says "just stick it in the SAP500 and you'll make some money" is hiding the fact that even with a 10 year time-frame, that statement is not always true. 1998 - 2008 was a blood bath for many, despite the fact that you had 2 legitimate booms in there.