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Buffett’s Wager

Posted: February 27th, 2018, 10:59 pm
by forrado
I think we all by now about the million-dollar charity wager that Warren Buffett struck with hedge-fund managers Ted Seides and Jeffery Tarrant of Protégé Partners back in 2007 that the S&P 500 would outperform a portfolio of funds of hedge funds – net of fees, costs and expenses – over 10 years. The wager having now been settled, full performance details of the outcome have been made known and are available to peruse at …

https://www.trustnet.com/news/794482/warren-buffett-prepare-to-see-your-portfolio-halve-in-value

What amused me was Girls Inc of Omaha, Buffett’s chosen charity, in fact got a cheque for $2.2-million rather than the expected million dollars. And, how Buffet parlayed the initial matched stakes of $320,000 aside to $2.2-million …

"Warren Buffett gives Girls Inc. $2.2 million from an investment bet"
http://www.omaha.com/money/buffett/warren-buffett-gives-girls-inc-million-from-an-investment-bet/article_6f3be5bf-97d5-5cab-8475-07e7f158ae53.html

Re: Buffett’s Wager

Posted: March 1st, 2018, 8:02 pm
by LooseCannon101
How can Protege Partners who made this bet with Warren Buffett, still charge their clients 2% of funds under management and 20% of profits?

Anyone with an ounce of sense would have dropped this outfit and similar hedge funds and put their money immediately into an S and P 500 index tracker, world equity index tracker or a highly diversified global investment trust.

In my opinion, more can be learnt about the world of investing in a few sentences spoken by Warren Buffett, than the received 'wisdom' of the whole asset management industry.

Re: Buffett’s Wager

Posted: March 3rd, 2018, 9:08 pm
by GeoffF100
Interestingly, Buffet also under-performed the S&P 500 over the same period:

https://www.albertbridgecapital.com/dre ... nwarrented

Re: Buffett’s Wager

Posted: March 5th, 2018, 12:00 pm
by gryffron
This is the best advert for tracker funds I have ever seen. And should be part of school "finance" education.

Gryff

Re: Buffett’s Wager

Posted: March 5th, 2018, 1:10 pm
by Dod101
gryffron wrote:This is the best advert for tracker funds I have ever seen. And should be part of school "finance" education.


Not necessarily. I have felt for a long while that Berkshire Hathaway could not continue to grow as it did in its earlier (and much smaller) days.

For a start, adding even a large company (by most peoples' standards) would not necessarily make a huge difference to the outcome of BH in any one year and it is in any case getting more and more difficult to find great companies for him to buy so he is left to pile up more and more unproductive cash. I should imagine were he 30 years younger that he might have started the process of liquidation himself so as build another Berkshire Hathaway. As I have said before it would not surprise me if that is what his successors do.

The fashion is now to promote trackers and they may be fine for some but they are not the final answer. There is no such thing in investing anyway. Like everything else in life fashions in investing go in and out of favour.

Dod

Re: Buffett’s Wager

Posted: March 6th, 2018, 11:46 am
by hiriskpaul
GeoffF100 wrote:Interestingly, Buffet also under-performed the S&P 500 over the same period:

https://www.albertbridgecapital.com/dre ... nwarrented

I detect a hint of sour grapes in that article! The bet was about getting the best return over 10 years. If the hedgies chose to deliver absolute return or something else that is there look out. They might have done better if there had not been such a long running bull market, but somehow I doubt it because of those obscene fees.

Interesting that Buffett chose an S&P tracker for the bet instead of his own company. A mark of his genius or pure luck?

Re: Buffett’s Wager

Posted: March 6th, 2018, 12:13 pm
by vrdiver
hiriskpaul wrote:
GeoffF100 wrote:Interesting that Buffett chose an S&P tracker for the bet instead of his own company. A mark of his genius or pure luck?

I suspect it was a pointed barb: for the hedgies to lose against the Sage of Omaha would have been disappointing, but honourable. To lose against a passive tracker is an altogether different level of embarrassment!

Re: Buffett’s Wager

Posted: March 6th, 2018, 12:30 pm
by GeoffF100
Here is an article on the wager itself:

https://www.cnbc.com/2017/09/18/warren- ... s-ago.html

It appears that Buffett and a hedgie both put $500K into the pot.