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Rekenthaler Report

Warren Buffett's Bet on the Huddled Masses

So far, it's working out.

Mentioned:

The Bus vs. the Private Jet
Yesterday, The Wall Street Journal’s Spencer Jakab reminded me of a wager that I had forgotten: the performance of the S&P 500 against that of five hedge funds of funds, or HFOFs. The bet occurred in late 2007, with hedge fund manager Protege Partners selecting five HFOFs to compete against Warren Buffett's selection of  Vanguard 500 Index (VFIAX) portfolio. On Dec. 31, 2018, the 10-year results will be tallied. The loser must pay $1 million to charity.

At the time, Buffett's decision appeared odd. Hedge funds were regarded as one of the ways that the rich became richer. Index funds, in contrast, were a sound way of investing in mutual funds--but they were only mutual funds. How good could they be if anybody could own them? 

John Rekenthaler does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.