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Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

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Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#221

Post by valuearb »

hyperpape wrote: post #33
dsr_ wrote: post #12

Has anyone done the analysis to see if the stock-picking by those managers was worth anything at all? Obviously it wasn't worth the fees they charged. But if all those fees had been flattened down to the same expense as the Vanguard fund, would their advice have been worth anything over the index? To a first approximation, it looks like the answer is no.

I can't vouch for this source, but here's a claim that alpha is real: https://blogs.cfainstitute.org/investor/2016/07/26/is-active... .

Buffett alone is proof enough that Alpha is real. The real problem is, how can you or I pick the next Buffett instead of the next Ted Seides? The answer, we can't.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#222

Post by crystalmeph »

It's interesting that while the S&P did beat these hedge funds, Buffet's own Berkshire Hathaway (BRK.B) seems to have beat the S&P handily[0], with an increase of ~130% from $77.93 in 2007 to $179.89 today.

I know Berkshire isn't actually a hedge fund, but is very analogous to a giant mutual fund, albeit one that takes a very active ownership role in the companies whose shares it owns.

0:http://quotes.morningstar.com/chart/stock/chart.action?t=BRK..., look at the 10-year chart.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#224

Post by diedyesterday »

Even though Efficient Market Hypothesis doesn't take into account some short-term subtleties and inconsistencies of human behavior, the insights it provides tend to dominate in the long term, which seems to be the case here with Mr Buffet's winning bet.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#225

Post by legohead »

mercutio2 wrote: post #29
matthewmcg wrote: post #14

Earlier quoted context omitted.

It's not just some people. It is actually the law in most states (albeit a seldom-enforced one). Don't cruise in the left lane.

I wish this were true of most states in the USA. It’s certainly true in many parts of Europe. I don’t have an especially authoritative source, and the first map I found was made seven years ago, but I don’t think things have changed much: http://jalopnik.com/5501615/left-lane-passing-laws-a-state-b... Only the green states would map to “don’t cruise in the left lane”; the laws in the majority only say you shouldn’t d…

I recently took a road trip from CA to NY and back. As soon as I got out of CA, people were obeying the "left lane is for passing" idea -- except Vegas.

I spent weeks in highway driving bliss with pretty much everyone obeying this rule. Then when I came back, and hit CA, I was immediately pissed off at traffic -- nobody was following this rule. But at the same time, the traffic is usually so bad it makes this rule meaningless, so I think we just forget about it after a while.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#226

Post by ringaroundthetx »

kspaans wrote: post #194
ringaroundthetx wrote: post #188

Earlier quoted context omitted.

sure, pretty much any options selling fund, pretty much any carry trade fund, pretty much any leveraged bond fund you can sell options on the S&P index to amplify returns of passive S&P500 investing if you blow up, you didn't manage risk right. rinse and repeat. the returns should be higher, especially over a decade.

Easier said than done: http://canadiancouchpotato.com/2010/01/26/the-trouble-with-l... You basically have to continuously time the bull-markets for the decade.

a decent rebuttal but everything I actually mentioned would have beat the S&P500 over the last decade.

the only fund of funds that took warren buffet's bet happened to lose.

ETFs are typically passive and have limits to the leverage. I didn't mention exchange traded funds.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#227

Post by osrec »

dredmorbius wrote: post #172
osrec wrote: post #135

Earlier quoted context omitted.

Yes, Renaissance is an exception. I would argue that their nature of their strategies almost puts them into a pseudo market maker category (I've personally never worked with/for them, but I hear much of their strategy is statistical arbitrage, made possible by favourable transaction fee set ups and fast, colocated execution infrastructure).

Any info on the colo'd infrastructure?

Unfortunately not, I'm afraid. I would guess they have much of their execution infrastructure in the same data centre as the exchanges they execute on.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#228

Post by jonahx »

munchbunny wrote: post #205
jonahx wrote: post #69

Earlier quoted context omitted.

Right. But it's still surprising that "experts" can't make a biased selection that is better than the exact average. On average, basketball teams in the NBA score X points per game. You now get to pick 5 teams and average just their scores. I'd imagine in that situation it's pretty easy to beat the league average. Again, it's a surprising and non-trivial fact that this isn't the case in the stock market, roughly spea…

That's not entirely the nuance of Warren Buffet's argument though. His argument is that the stock pickers have the deck stacked against them on total returns to the investor due to high fees. So maybe they do actually do better than average, but that it's likely not "2 and 20" better.

See my post above the one you replied to.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#229

Post by SirZimzim »

labster wrote: post #134
matthewmcg wrote: post #14

Earlier quoted context omitted.

It's not just some people. It is actually the law in most states (albeit a seldom-enforced one). Don't cruise in the left lane.

This doesn't apply at all in most of California. We need the left lane for capacity, not flow regulation. Also left lanes are frequently diamond lanes, so you're basically telling people not to carpool.

A lot of the capacity issues end up being just a lot of cars clustered in an area. If you are able to escape the bunch there tend to be nice stretches of open road. Flow regulation would help avoid clumping of cars by making sure the left lane is not used for cruising.

Re: Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

#230

Post by SirZimzim »

mulmen wrote: post #105
RandomInteger4 wrote: post #54

Earlier quoted context omitted.

I don't drive, but as a passenger, it is my understanding that the left lane is the fast lane and the right lane is to remain empty or mostly empty so cars can enter and exit the highway? Please correct me if I'm wrong. Regardless, if I ever get my license, I'm pretty much always going to avoid the highway as my anxiety cannot handle those speeds.

In my opinion the problems we have with traffic are a mismatch in expectations. If we are walking down the sidewalk and you stop in front of me I can simply say "excuse me" and walk around you or you may step to the side. It's a common human interaction and we all understand it. This is impossible in a car because we are isolated from each other. To handle this we make rules for each situation that if followed would…

Yeah, driving culture needs to be a part of driver training. Driving is simple enough that most situations we should expect predictable behavior.
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