Buffett's $1 Million Bet: Index Funds vs. Hedge Funds

Warren Buffett made a $1 million bet in 2007: that hedge funds would not outperform index funds over the next 10 years. WSJ's Nicole Friedman checks the numbers and handicaps Buffett's chances of winning the bet on Lunch Break with Tanya Rivero. Photo: Bloomberg

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[danbuchner]

384 people are hedge fund managers. ;-)

[daka]

We have to mention that 1million $ bet for Warren is like us betting 2$ 😅

[youreyesarebleeding]

YOU CAN'T JUST PICK RANDOM STOCKS AND LEAVE
haha index funds go

[jacobwhite]

Well she says that it’s due to the great performance of SP500 but she misses the point that they started in 2007 before the crash ... if they had started 2008 Index Funds would have done even better

[zainabe]

Regarding that remark "Warren Buffet is ironically a stock picker".
A speculator is always is a stock picker, but a stock picker isn't always a speculator. Warren sees his huge stocks acquisitions as a long term-investment, and that he's usually part of the board of directors. Take that to your average retail "stock pickers" trders, can they do that?

[chelseaxhf]

well, there is a reason for SP 500 select 500 companies, why it is not 600 or 200? When a group of very smart person select the SP500 system, they have done statistic study to prove 500 is number to balance between risk and return.
People think, with the technology improvement, there is a better chance to build portfolio to to beat SP. But, the reality is no. If you look at long term, 5 or 10 years. Average investor is better stick with index fund, accept the average return & risk and live on with happy life.

[Faraz]

What was the performance of Jim Simon's Medallion fund during this time period?

[Nik-rxrj]

Weird, it's almost like Warren Buffet is good at investing or something. You'd almost think he knows what he's talking about.
weird. /s

[Lukas-tfnu]

you never stood a chance in this battle you started. Now watch as wsj slowly starts to die day by day

[tulsideviakashahidakhan]

Same talks are going on in India now a days. Only difference is, here the fees are not that high for active funds too.

[chiefrocka]

Not one white kid in the charity adverts
That’s diss custin

[Turbo_GT]

He himself charged 4-5% during his partnership 😂😂 he knows that

[kishores]

Obviously these analysts are sore losers

[jonitalia]

Lol how about the cat that outperformed pros

[Jacob-hvtl]

worst media outlet in history. no arguement

[billsmith]

Buffet whom I generally like, doesn't even follow his own advice. He owns one collective stock Berkshire Hathaway. He has beaten the market many times/years, if he really believed in what he says he would say/act in a manner accordingly. Basically, he would buy the S&P not Berkshire Hathaway. The fees on the other hand he is correct, the size of these hedge funds keep administrators from moving in/out of any fund quickly in order not to damage a stock's price. That makes beating the market impossible. However the fee you pay is so you don't have to actively watch your stock.

[itsmesaltax]

I don't understand - I could name 10 mutual funds that have outperformed the S&P? One being Lindsell Train Global Equity. another being fidelity global technology, this one has doubled the return of S&P 500 over last 5 years. Am I missing something?

[kiethmergard]

I find myself wishing I could make this bet with him, except I would manage my own porfolio and he'd choose an index fund

[drkInxgud]

except if you get ur money into medallion fund ....

[pranjayarora]

jim simons generated average cagr of 69%(39% after deducting expense ratio (2)buffet loses this bet(3)always question never believe even in richest