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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

#291
post #258

Earlier quoted context omitted.

What is the Y100K problem. More importantly, who would they pay out at that point when both parties are dead

What if you want to bet they find a cure for death?

We would totally accept that bet. The closest bet we have right now is bet 11: “At least one human alive in the year 2000 will still be alive in 2150.”

http://longbets.org/11/

The tricky part is coming up with a clear agreement about what "cure" and "death" mean here. But there's a lot of good discussion around e.g., the extropians, so I think a solid bet could be created.

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

#292
post #249

Earlier quoted context omitted.

I'd like to see where that's written into a statute book; doesn't sound correct.

It's in the book you have to study when you get your license here in Texas :) you can exceed the limit by 5mph. Have a nice day!

Maybe on a state by state basis as I just googled it and you can't do it in California.

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

#293
post #292

Earlier quoted context omitted.

It's in the book you have to study when you get your license here in Texas :) you can exceed the limit by 5mph. Have a nice day!

Maybe on a state by state basis as I just googled it and you can't do it in California.

I specifically said "at least here."

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

#294

So, for the non financially savy, how can I set up my portfolio to bet on index funds?

Just buy shares of SPY. It tracks the S&P 500. Keep in mind, returns aren't everything. They have to be considered along with risk. The S&P 500 also has big downturns of 20% or more. A good measure of return to risk is the sharpe ratio. The S&P's isn't all that good. This is why people invest in hedge funds.

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

#295

Earlier quoted context omitted.

Buffett clearly disproves this theory. The reason is it's ignoring the overwhelming impact of bias and mal-incentives. Hundreds of thousands of investors have professional training in valuation techniques Buffett uses. But 99% don't make the same use of that skill as Buffett does, for reasons that include 1) they can't buy in to using valuation as their sole investment criteria. They want to be "smarter", thinking th…

Or perhaps Buffet has an information asymmetry. Don't you think when he is interested in buying a company that may not even be in the public market that the meetings, tours of facilities and financial due diligence represents a significant information asymmetry. This information is probably available to any who seek it but not practically to most.

That's the whole point of a mutual fund (of any kind). You're paying them to do things you couldn't possibly justify given the size of your portfolio. If all they're doing is sifting through quarterly reports they're not providing much value for your fees.

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

#296
post #106

Earlier quoted context omitted.

It applies before with the goal of not getting to the point that all the lanes are full of cars.

Roads have a carrying capacity, or bandwidth, which at after a certain speed say 80mph, doesn't increase. Traffic is unavoidable once enough cars come onto the road at the same time such that they exceed this limit, and so you get traffic where people are speeding up and slowing down and that cascades back. At the end of the day, there is no amount of rules that will bypass the fact that there is a hard limit to how…

That's true but the rules get us closer to that theoretical maximum.

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

#297

Index funds will almost always outperform actively managed funds. They are the best choice for the layman investor. An excellent book on this topic is The Little Book of Common Sense Investing by John Bogle. https://www.amazon.com/Little-Book-Common-Sense-Investing/dp...

Why do you think this is true? I agree that index funds are better for the average consumer at the moment, but I don't think that means they will always outperform actively managed funds. There are some theoretical benefits of an actively managed fund, as compared to an S&P 500 ETF (although these will largely be true of any index fund; also consider point 0: that the S&P 500 is "actively managed" by Standard & Poors…

1. Diversify into bonds to reduce stock risk and volatility (either a Total Bond or Treasuries fund)

2. Diversify globally to avoid single-country political, economic and geographical risks (add Total International to balance your domestic stock)

3. If you really want to, buy a commodities ETF to further diversify (generally not recommended at more than 10% of portfolio and not a big deal either way)

4. But we've already seen that after fees they come out behind, so their 'better information' isn't translating into higher returns

The idea that 'too many indexers will kill indexing' has been around for a while and debunked for an equally long time. Here's a source for that:

http://www.etf.com/sections/index-investor-corner/swedroe-ne...

At the end of the day, there's just no need to get crazy with things. Indexing works. It's reliable. You can sleep at night. I can't really imagine putting my money in the hands of a manager (or set of them). What if they get sick, or bored, or were just lucky early on? No need to add that layer of risk.

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

#298
post #30

This does not surprise me. My personal experience with hedge fund managers is that they are good salesmen that peddle their financial expertise to clients, convincing them of their financial rock-star status (usually gained through a lucky investment or two). Paulson is a classic example. Wealthy individuals buy into it, especially those that are less educated (e.g. those that have inherited money), and happily alloc…

See John C. Bogel (https://en.wikipedia.org/wiki/John_C._Bogle).

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

#299
post #137

Earlier quoted context omitted.

I understand a lot of the top performing hedge funds operate via insider information.

Is your understanding that they operate via illegal insider information, or access to information that is very difficult to achieve? To be clear: I have mined and sold data to hedge funds before, including well known ones, and from that work I derived two conclusions: 1. It is fundamentally possible to beat the market consistently and legally by exploiting information asymmetry, and 2. Most hedge funds, especially th…

I base my comments on stuff like this:

https://www.ft.com/content/efda2ca2-ec69-11e6-930f-061b01e23...

https://www.nytimes.com/2016/01/09/business/dealbook/sec-and...

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

#300

Earlier quoted context omitted.

I’ve had motorcycle tires in 49 of our 50 states, and lived in a variety of regions of the country. I agree with your general sentiment, because boy howdy there are some bad ones everywhere you go, but I say with confidence that I have found where the worst drivers in the country live.

Where did you feel most comfortable with motorcycling? I've been looking to leave CA because driving here is getting worse every year.

Most comfortable? Canada. Seems like they take driving a little more seriously there. In the U. S., California is fine. Lane splitting is legal, drivers mostly competent and attentive, cops are about the right mix between lenient and slapping a ticket on you when deserve it. Even in places like L. A. I felt comfortable, even lane splitting with bags on. CA has its problems, but I like riding there. That obviously doesn’t match your experience, but I sadly haven’t ridden down to CA in probably three or four years. I also tend to kind of stay away from the Bay Area on the bike.

A lot of southern states are good, like North Carolina or Tennessee. Good mountain roads, reasonable drivers. And believe it or not, I’ve like riding in New York City. Don’t let the bike out of your sight lest it be stolen (I am dead serious about that unless you have some serious locking equipment). Obnoxious drivers, sure, but competent and it’s almost as if everyone knows that if we don’t cooperate at least a little, nobody’s getting home tonight. All of this of course is one giant sweeping generalization, so no one need trot out their personal list of exceptions.

But Seattle? I fucking hate driving in Seattle. It’s as if every single driver is sixteen years old on their learner’s permit with two months behind the wheel. There’s a reason one of the topics of the very first Portlandia episodes dealt with driving in the PNW.

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