Ever heard of the Million Dollar Bet? A client recently reminded me of a bet that was placed five years ago between Warren Buffet and a New York City hedge fund manager. Buffet said the S&P Index fund he backed would beat the hedge managers fund of funds at the end of a ten year period that began in early 2008. The winner would win one million dollars and the money would be donated to the charity of his choice. Pretty cool idea.
The index fund Buffet backed is up 8.69% vs only .13% for the hedge fund manager. And, Buffet took a bigger hit when the financial crisis hit late in 2008/early 2009.
We’ll see what happens in the next five years, but, I can’t help but wonder how much money the hedge fund manager has made in fees over the past five years only to end up with less return for their clients?
Razzle Dazzle or Indexing, you decide!