Buffett way ahead

[boilermaker75]

on his bet with Ted Seides

 

http://news.yahoo.com/buffett-way-ahead-1-mn-wager-against-hedge-193649849.html

[OracleofCarolina]

Love how they blame the fed and then come up with excuses..the simple fact is the odds are you in favor with index funds

[Crip1]

Love how they blame the fed and then come up with excuses..the simple fact is the odds are you in favor with index funds

 

 

Well, they kinda have to, don't they. The alternative is to say "Yeah, this 'funds-of-funds' product I sell is not nearly as good for your financial health as a simple S&P Index Fund" but could anyone really expect this? Of course not...just find a scapegoat and talk about how this just happens to be the best time in the history of mankind to be in an Index Fund but those days are coming to an end so one better find a good Hedge Fund manager...

 

 

Loved this, though:

 

 

• "Admiral shares are up 63.5 percent since 2008, while after the management and performance fees are stripped out, the Seides hedge fund of funds return to investors was just 19.6 percent."
  
• "'Moreover', he argued, 'it was not the fees that accounted for the poorer performance of the hedge fund of funds, so Buffett's thesis has not been proven.'"
  

Narcissism run amok.

 

 

-Crip

 

[Mephistopheles]

"That, combined with investment managers' focus on the S&P 500, have tilted the gambling table in Buffett's favor, he said."

 

What does this even mean?

 

"Moreover, he argued, it was not the fees that accounted for the poorer performance of the hedge fund of funds, so Buffett's thesis has not been proven."

 

But Buffett's thesis was that the enormous fee structure of fund of funds isn't justified. This DOES prove that! Moreover, even before the fees the index outperformed, so this argument is meaningless!

 

"These seven lean years for hedge funds may go down in the annals of market history as a period driven singularly by central bank stimulus. Using that lens, it becomes less clear that the bet, if lost, proves that hedge funds are not worth an investment across a cycle."

 

As professional investors earning hefty fees, the job of the hedge fund manager is to outperform the market over a long time no matter what the world throws at them. That's their job.

 

This guy should have just stayed quiet. By trying to blame others, he is making himself look worse.

[Guest longinvestor]

Ha ha ha to the hedgie dude.

 

Wonder why WSJ hasn't or doesn't put this on their front pages, huh? After all, high networth read WSJ, no? It also turns out that that high NW folks are primary clientele of our hyperhelpers, ha. Seides's punch line to me is asking WEB to reup the wager for another 10 years. Not done cleaning out deep pockets!

 

As always, WEB was correct. So was Bogle. Remember the Gotrocks?

 

[Guest longinvestor]

Ha ha ha to the hedgie dude.

 

Wonder why WSJ hasn't or doesn't put this on their front pages, huh? After all, high networth read WSJ, no? It also turns out that that high NW folks are primary clientele of our hyperhelpers, ha. Seides's punch line to me is asking WEB to reup the wager for another 10 years. Not done cleaning out deep pockets!

 

As always, WEB was correct. So was Bogle. Remember the Gotrocks?

 

Wonder if this is trying to preempt WEB's 50th letter, which is rather likely to be seminal piece that's going to end up being widely read?

[Tim Eriksen]

Granted if a fund of funds adds an additional layer of fees they are significantly handicapping investors.  To me, the real problem in the bet is that Seides did a horrible job of selecting funds.   

[Mephistopheles]

I don't get why anyone would want to give their money to a fund of funds, with the added layer of fees. Are they that lazy that they can't pick a manager themselves, that they think is worth paying another layer of (probably expensive) fees for? Or do they really think they'll gain alpha by doing this?

[Liberty]

I don't get why anyone would want to give their money to a fund of funds, with the added layer of fees. Are they that lazy that they can't pick a manager themselves, that they think is worth paying another layer of (probably expensive) fees for? Or do they really think they'll gain alpha by doing this?

 

I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.”

[philly value]

It's hard to interpret the meaning of a fund made up of funds we don't know underperforming the market. I do think the idea of a fund of funds with multiple layers of fees is ridiculous.

 

While the guy is of course just talking his own book, I do think that looking purely at the 2009-present period in order to evaluate whether a fund can beat the market is a bit unfair. U.S. equities have just killed everything else over this period, and anyone who has not been 100% long U.S. equities has likely underperformed. As an example, it seems to me that it'd be a mistake to take a view that a fund like Baupost underperforming over this period means that they will underperform across a long period of differing market conditions.