nbc news

Buffet vs the “Experts”

This post is largely taken from an article from NBC news, but I thought it would be worth commenting on it.  The article can be found at:


About six years ago, the famed Warren Buffet made a wager with a group of hedge fund managers.  Hedge fund managers are touted as the most sophisticated, nimble, and adept money managers on the planet.  They are not burden by the regulatory issues facing mutual funds, and they can employ a vast array of financial maneuvers.  Warren’s ten year wager was that he could outperform a group of hedge fund managers using a simple low cost index fund; meaning that for all their flash and sizzle, the masters of the financial universe would be unable to beat the market due to the market’s efficiency.

With four years remaining, Warren’s simple index fund has a commanding lead, earning 43.8% vs 12.5% for the hedge funds (as of the time of the article).  What is more telling is that Warren chose an index fund to compete against them, not his own company’s stock.