Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

aei.org

Post reply on HN
Print view View original

281–290 of 323 posts

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

#281

Post by knodi123 »

Ntrails wrote: post #241
osrec wrote: 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…

> This does not surprise me. It shouldn't. That anyone would take a basket of hedge funds and think it would win vs the market is madness. Active investment is negative sum due to fees - it's essentially implausible for hedge funds on average to generate alpha. There are plenty which do. There are lots which actually simply provide alternative Betas, or smart betas, or whatever. Some of them have genuinely reasonable…

> it's essentially implausible for hedge funds on average to generate alpha.

Only if they're playing fair. But, wink wink, you should really wink wink invest in my uncle's fund, he knows a wink good strategy, but if you enjoy plausible deniability you'll just fork over the dough without asking too many questions.

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

#282

Post by wpietri »

igravious wrote: post #116
wpietri wrote: post #67

And I'm just going to self-promote a bit and say that the bet was registered via a project I worked on, the Long Now Foundation's project Long Bets: http://longbets.org/ We've been going since 2002: https://www.wired.com/2002/05/longbets/ We are happy to host bets of long-term significance, and the minimum bet is only $200/side. I am glad to personally help shepherd people who are serious about bets to make sure you…

Cool. Put your money where your mouth is.

I'm not sure why this is getting downvoted; that's exactly the point. We get people to stake money and reputation, which makes them very careful about making clear, specific claims. There is a whole lot of mouth around the future, but very few testable predictions. We could have tried creating an apparatus for rigorous predictions, but everybody understands a bet.

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

#283

Post by ghostbrainalpha »

So obviously the Hedgefund didn't beat the market enough to have a better return for the investors....

But is there anyway to compare the (Returns + Extracted Money Through Fees) vs S&P500 to see the potential return of the Hedgefund before the fees were extracted?

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

#284

Post by wpietri »

the_cat_kittles wrote: post #121
wpietri wrote: post #67

And I'm just going to self-promote a bit and say that the bet was registered via a project I worked on, the Long Now Foundation's project Long Bets: http://longbets.org/ We've been going since 2002: https://www.wired.com/2002/05/longbets/ We are happy to host bets of long-term significance, and the minimum bet is only $200/side. I am glad to personally help shepherd people who are serious about bets to make sure you…

this utterly rules. like, i want to fly to your current location to give you a fist bump. in my utopian dream world, every political pundit has to put their thoughts on here.

Next you're in SF, definitely look me up. A couple years back the Long Now opened a cafe and bar, so we even have a good place to meet for the fist bump:

https://theinterval.org/

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

#285

Post by [deleted] »

dsacco wrote: post #265
valuearb wrote: post #221

Earlier quoted context omitted.

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.

And even if you luckily (or maybe skillfully) could, you'd most likely have a relatively small window of access before they no longer needed your capital unless you were a very large investor (on the order of a few years).

[deleted]

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

#286

Post by soundwave106 »

quuquuquu wrote: post #147
e12e wrote: post #82

Earlier quoted context omitted.

Ie speeding?

Some states are 70mph, and most cops won't pull people over unless they're doing 10-15mph over. Unless you are just really unlucky XD

Not sure why the downvotes. (Some states are 80mph actually!)

Speeding enforcement in the United States is fairly loose, with usually roughly a 10mph buffer. (The exception being various "speed traps", atypically mostly rural towns that rely on ticket revenue for an outsized portion of their town budget.)

I think this adds to the problem with left lane issues; even if the "true" speed limit is 80mph, if the "posted" speed limit is 70mph, some people will do no more than 70mph no matter where they are.

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

#287

Post by rvern »

wpietri wrote: post #67

And I'm just going to self-promote a bit and say that the bet was registered via a project I worked on, the Long Now Foundation's project Long Bets: http://longbets.org/ We've been going since 2002: https://www.wired.com/2002/05/longbets/ We are happy to host bets of long-term significance, and the minimum bet is only $200/side. I am glad to personally help shepherd people who are serious about bets to make sure you…

Long Bets is a good site to make a public statement but PredictionBook[1] or Metaculus[2] may be better to track predictions about things we argue about. Both sites calculate your Brier score, which is how you can know how well calibrated you are.[3]

Since prediction tracking and aggregation sites use reputation instead of money, they scale to a higher number of predictions. As proof, there have been only 747 predictions and bets on Long Bets, while gwern alone has made[4] 2275 on PredictionBook. Furthermore, the Metaculus community prediction provides valuable forecast information,[5] much like prediction markets, while predictions on Long Bets don't count as Bayesian evidence of their own.

[1]: https://predictionbook.com/

[2]: https://www.metaculus.com/

[3]: https://en.wikipedia.org/wiki/Brier_score

[4]: https://www.gwern.net/Prediction-markets

[5]: https://www.metaculus.com/questions/track-record/

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

#288

Post by wpietri »

knodi123 wrote: post #280
timb07 wrote: post #213

Earlier quoted context omitted.

If longbets.org was really serious about long-term bets, it wouldn't be restricting years to only 5 digits. Haven't they heard of the Y100K problem?

If they had only used 4 digits, then in eight thousand years or so, longbets.org would have felt really stupid about having to hire a historical programming re-enactor to show us how our ancestors used to adjust the width of a database column. But luckily they used 5 digits. 5 digits should be enough for anyone.

The 5-digit display year is definitely in keeping with our mission, which is to get people to think longer term. But under the hood, I represented all dates as 64-bit longs of ms since epoch. So I believe the farthest date the current code can represent is 17 Aug 292,278,994 AD. By that point the earth's day will be an hour longer [1], so whatever sucker has inherited this project will have bigger problems than just the size of the field.

[1] https://en.wikipedia.org/wiki/Timeline_of_the_far_future

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

#289

Post by mcguire »

valuearb wrote: post #221
hyperpape wrote: post #33

Earlier quoted context omitted.

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.

The Superinvestors of Graham-and-Doddsville

https://www8.gsb.columbia.edu/articles/columbia-business/sup...

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

#290

Post by Waterluvian »

alexasmyths wrote: post #26
mojoe wrote: post #6

I feel like there's some cognitive dissonance surrounding hedge funds in popular culture -- on the one hand you have people saying that any outsized short-term gains seen by hedge funds are the result of some selection/survivorship bias, and on the other hand you have people saying that any outsized returns are the result of illegal privileged information (see the TV show 'Billions'). I realize that there are enough…

It doesn't have to be illegal. Hedge Funds have access to CEO's, they'll go in and interview them. Ostensibly, the CEO cannot say anything that is not 'public information' - but if you think about it, then why would the Fund even talk to the CEO if 'all info is public'? Because a lot of nuance can be gained from in person interviews. Little tidbits of information gleaned can make a difference. I'm not hugely knowledg…

I think the rationale that you can gain nuance from in-person interviews about public information is where science and mathematics turns into wizardry and human bias nonsense.

If the evidence suggests access to CEOs like this works, there's probably something else going on. Maybe a bit more winking and "I didn't say this but..."

Post reply on HN