Buffett Annual Letter 2016 [Jack Bogle is a hero]

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matjen
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Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by matjen » Sat Feb 25, 2017 8:32 am

Warren Buffett pulls no punches this year regarding his bet with a hedge fund manager, Wall Street fees, and Jack Bogle!

http://www.berkshirehathaway.com/letters/2016ltr.pdf
Here are the results for the first nine years of the bet – figures leaving no doubt that Girls Inc. of Omaha,
the charitable beneficiary I designated to get any bet winnings I earned, will be the organization eagerly opening
the mail next January.

...Under my agreement with Protégé Partners, the names of these funds-of-funds have never
been publicly disclosed. I, however, see their annual audits.
The compounded annual increase to date for the index fund is 7.1%, which is a return that could easily
prove typical for the stock market over time. That’s an important fact: A particularly weak nine years for the
market over the lifetime of this bet would have probably helped the relative performance of the hedge funds,
because many hold large “short” positions. Conversely, nine years of exceptionally high returns from stocks
would have provided a tailwind for index funds.

Instead we operated in what I would call a “neutral” environment. In it, the five funds-of-funds
delivered, through 2016, an average of only 2.2%, compounded annually. That means $1 million invested in
those funds would have gained $220,000. The index fund would meanwhile have gained $854,000.
And regarding Jack:
If a statue is ever erected to honor the person who has done the most for American investors, the handsdown
choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds.
In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have
promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of
added value.

In his early years, Jack was frequently mocked by the investment-management industry. Today,
however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their
savings than they otherwise would have earned. He is a hero to them and to me.
A man is rich in proportion to the number of things he can afford to let alone.

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Re: Buffett Annual Letter 2016

Post by delrinson » Sat Feb 25, 2017 8:35 am

You beat me to it. An eloquent testimony to the power of passive investing in indices. Read pp. 21-25 of the letter.

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Re: Buffett Annual Letter 2016

Post by matjen » Sat Feb 25, 2017 9:03 am

delrinson wrote:You beat me to it. An eloquent testimony to the power of passive investing in indices. Read pp. 21-25 of the letter.
Indeed! Wish I could quote more but don't want to run afoul of the moderators. A must read IMO.
A man is rich in proportion to the number of things he can afford to let alone.

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Re: Buffett Annual Letter 2016

Post by dkturner » Sat Feb 25, 2017 9:57 am

By far the best critique of hedge funds I have ever read. :beer

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Warren Buffet says Jack Bogle is a hero.

Post by Petrocelli » Sat Feb 25, 2017 9:59 am

[Thread merged into here, see below. --admin LadyGeek]

http://finance.yahoo.com/news/warren-bu ... 54909.html

Great article on a great man.
Petrocelli (not the real Rico, but just a fan)

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Re: Warren Buffet says Jack Bogle is a hero.

Post by Toons » Sat Feb 25, 2017 10:10 am

Thanks,
Great Read :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Warren Buffet says Jack Bogle is a hero.

Post by rattlenap » Sat Feb 25, 2017 10:12 am


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Re: Warren Buffet says Jack Bogle is a hero.

Post by ruralavalon » Sat Feb 25, 2017 10:16 am

That's a nice article, thanks for the link.
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Re: Warren Buffet says Jack Bogle is a hero.

Post by Norris » Sat Feb 25, 2017 10:20 am

Jack Bogle epitomizes Honest to God goodness in a human being. He is a hero to myself and many thousands of others.

Norris
Life is really simple, but we insist on making it complicated. Confucius

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Re: Buffett Annual Letter 2016

Post by ruralavalon » Sat Feb 25, 2017 10:36 am

delrinson wrote:You beat me to it. An eloquent testimony to the power of passive investing in indices. Read pp. 21-25 of the letter.
I recommend that everyone read that.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Buffett Annual Letter 2016

Post by FreeAtLast » Sat Feb 25, 2017 10:50 am

And of course Protege Partners have all the technical excuses in the world as to why they will lose.....I say Buffett should extend the bet for another ten years to give them a chance to catch up. :twisted:
Illegitimi non carborundum.

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Re: Warren Buffet says Jack Bogle is a hero.

Post by TxAg » Sat Feb 25, 2017 10:58 am

Thanks for sharing

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Re: Buffett Annual Letter 2016

Post by BrandonBogle » Sat Feb 25, 2017 11:10 am

A great letter. I wish more people would check out Buffett's bet with open eyes!

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Re: Buffett Annual Letter 2016

Post by lgs88 » Sat Feb 25, 2017 11:25 am

Great letter, especially on the psychology of paying top dollar for investment management. Sometimes, you only get what you DON'T pay for.
merely an interested amateur

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Re: Warren Buffet says Jack Bogle is a hero.

Post by SGM » Sat Feb 25, 2017 11:26 am

A great quote from this article is:  “As Gordon Gekko might have put it: ‘Fees never sleep,'” quipped Warren Buffet.

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Re: Buffett Annual Letter 2016

Post by JPH » Sat Feb 25, 2017 11:31 am

Thanks for this. It was a fantastic read. I particularly liked this quote.
Bill Ruane – a truly wonderful human being and a man whom I identified 60 years ago as almost certain to deliver superior investment returns over the long haul – said it well: “In investment management, the progression is from the innovators to the imitators to the swarming incompetents.”
I suppose it could apply to early any profession; certainly to my previous career.
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Re: Warren Buffet says Jack Bogle is a hero.

Post by tom0153 » Sat Feb 25, 2017 11:32 am

Well deserved kudos from a valuable source.

I often reflect on this decision made by Bogle to organize his company for the benefit of the shareholder. I'd like to read in his words what thinking went into it. Does anyone know of a resource?

Thanks.
Best, Tom

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Re: Warren Buffet says Jack Bogle is a hero.

Post by bondsr4me » Sat Feb 25, 2017 11:39 am

Thanks for the link.
Great article about two of the all time greats of my time for sure.
They both are on my Mt Rushmore of Investing.
Total respect and admiration for both of these men.

Have great weekend everyone

Don

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Re: Buffett Annual Letter 2016

Post by PFInterest » Sat Feb 25, 2017 11:42 am

anybody else go to geico.com and start poking around......

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Re: Buffett Annual Letter 2016

Post by bondsr4me » Sat Feb 25, 2017 11:56 am

Both Warren and Jack, along with Charlie M and Ben G, should have their statues in the Investing Hall of Fame.

These guys are irreplaceable IMHO.

Don

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Re: Buffett Annual Letter 2016

Post by billyv » Sat Feb 25, 2017 11:57 am

Kudos to WB for giving JB such a nice shout-out! Also for providing a timely rejoinder to the recent spate of anti-indexing coverage in the media, much of which I suspect is bought and paid for by the investment advisory industry.

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Re: Warren Buffet says Jack Bogle is a hero.

Post by MichaelRpdx » Sat Feb 25, 2017 12:02 pm

I also noted a Business Insider story on it.

Let's go to the source: http://www.berkshirehathaway.com/2016ar ... ual16.html
Warren Buffet on page 26 wrote:If a statue is ever erected to honor the person who has done the most for American investors, the hands-
down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds.
In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have
promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of
added value.
In his early years, Jack was frequently mocked by the investment-management industry. Today,
however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their
savings than they otherwise would have earned. He is a hero to them and to me.
[Page 26 in the PDF rendering is labeled as page 24]

There is lots of other good reading in the report. For example an update of his wager of S&P 500 performance against a selection of hedge funds. This is best summed up by Mr. Buffett As Gordon Gekko might have put it: “Fees never sleep.”
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Re: Warren Buffet says Jack Bogle is a hero.

Post by Tycoon » Sat Feb 25, 2017 12:03 pm

I hold Mr. Bogle in much higher esteem than Mr. Buffet. In this case Mr. Buffet is absolutely correct.
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Re: Warren Buffet says Jack Bogle is a hero.

Post by bondsr4me » Sat Feb 25, 2017 12:04 pm

Norris wrote:Jack Bogle epitomizes Honest to God goodness in a human being. He is a hero to myself and many thousands of others.

Norris
+1

Totally agree.

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Re: Buffett Annual Letter 2016

Post by Startled Cat » Sat Feb 25, 2017 12:47 pm

To be honest, I was a bit underwhelmed by this letter. At times, I felt like I was reading one of the past annual letters, verbatim.

I hoped he would share his thoughts on how immigration restrictions and trade restrictions would impact the business environment. He was strangely silent on this topic.

I was also curious to hear him explain the big investments in airlines, given his famous distaste for the industry. There is some speculation that his next big acquisition will be an airline, but the letter didn't contain any hints on this.

I did learn that corporations pay lower taxes on dividends than capital gains. This interesting factoid made me realize why owning a business outright might be better than just holding some of its shares - it would avoid the double taxation of cash flows. For a long time, I had wondered why someone who so famously cared about buying at a good price was willing to pay premiums above the market price to buy companies. It seemed like it would be better to buy shares at the market price until your ownership began to distort the market, and then move on to the next target. If a company is undervalued, surely it's an even better deal at the market price than at some premium to it. But I assume that outright ownership means cash flows can be directly put to work instead of being paid out as dividends and taxed a second time, and this is probably quite valuable.

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Buffett praises index funds, says Bogle deserves a statue

Post by nisiprius » Sat Feb 25, 2017 1:31 pm

[Thread merged into here, see below. --admin LadyGeek]

Morningstar's news item about
Warren Buffett's annual letter to shareholders, in which he says:
Both large and small investors should stick with low-cost index funds.
************
If a statue is ever erected to honor the person who has done the most for American investors, the hands- down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value.

In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.
************
Over the years, I’ve often been asked for investment advice, and in the process of answering I’ve learned a good deal about human behavior. My regular recommendation has been a low-cost S&P 500 index fund. To their credit, my friends who possess only modest means have usually followed my suggestion.

I believe, however, that none of the mega-rich individuals, institutions or pension funds has followed that same advice when I’ve given it to them. Instead, these investors politely thank me for my thoughts and depart to listen to the siren song of a high-fee manager or, in the case of many institutions, to seek out another breed of hyper-helper called a consultant....

Human behavior won’t change. Wealthy individuals, pension funds, endowments and the like will continue to feel they deserve something “extra” in investment advice. Those advisors who cleverly play to this expectation will get very rich. This year the magic potion may be hedge funds, next year something else. The likely result from this parade of promises is predicted in an adage: “When a person with money meets a person with experience, the one with experience ends up with the money and the one with money leaves with experience.”
He also has a lot to say about his bet with Protégé Partners, and is willing to risk counting his chickens now although they will not actually hatch until the year-end 2017.

A small statue has, in fact, been erected to John C. Bogle. It's on the Vanguard campus, not easily viewed by the general public, I haven't seen it myself.

Image
Last edited by nisiprius on Sat Feb 25, 2017 1:43 pm, edited 2 times in total.
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Re: Buffett praises index funds, Bogle; unaware of Bogle's statue

Post by nisiprius » Sat Feb 25, 2017 1:38 pm

P.S. I've previously expressed annoyance at Buffett's too-short utterances that always leave unexplained questions. An obvious one, which continues to go unanswered, is that he has said, over and over again, very plainly, variations on this:
Both large and small investors should stick with low-cost index funds.... Over the years, I’ve often been asked for investment advice, and in the process of answering I’ve learned a good deal about human behavior. My regular recommendation has been a low-cost S&P 500 index fund.
Besides other obvious questions--is he advising against small-caps? is he advising against international stocks? the big question is: if both large and small investors should stick with low-cost index funds, then whom would he identify as the investors who ought to invest in Berkshire Hathaway? It's a very natural question, and as far as I know he's never answered it--but I'm not much of a Buffettologist.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Buffett praises index funds, Bogle; unaware of Bogle's statue

Post by student » Sat Feb 25, 2017 1:40 pm

I think this is probably different from what Buffett has in mind. I assume that the statue was erected based on his contributions as determined by Vanguard, not exactly non-biased for the purpose of honoring "the person who has done the most for American investors."

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Re: Buffett praises index funds, Bogle; unaware of Bogle's statue

Post by nisiprius » Sat Feb 25, 2017 1:43 pm

student wrote:I think this is probably different from what Buffett has in mind. I assume that the statue was erected based on his contributions as determined by Vanguard, not exactly non-biased for the purpose of honoring "the person who has done the most for American investors."
Yeah, you're right. I agree that the statue is a trivial and unimportant detail and there's no reason for Buffett have heard about it. I also agree that my tone was unnecessarily acerbic so I'll go back and edit my post and the subject line. Of course, Buffett could have said "a big, public statue..."
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by LadyGeek » Sat Feb 25, 2017 1:43 pm

I merged Petrocelli's thread into here, which is a similar discussion. I also retitled the thread.
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Re: Buffett praises index funds, Bogle; unaware of Bogle's statue

Post by mickeyd » Sat Feb 25, 2017 1:45 pm

Besides other obvious questions--is he advising against small-caps?
I think he is just keeping it simple. Once one gets to a certain age, simplicity seems to be an overriding aspect to equity investments.

Keeping it simple for 72 + years.
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by LadyGeek » Sat Feb 25, 2017 1:49 pm

I merged nisiprius' thread into here.
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by livesoft » Sat Feb 25, 2017 1:49 pm

Maybe Buffett knows about the statue and is obliquely hinting that he wants his own statue as well? After all, I think there are bobbleheads for each them already.
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by xystici » Sat Feb 25, 2017 1:56 pm

To be honest, the educational content of Mr. Buffett's 2017 letter including its quotes is communicated in this community almost on a daily basis.
The real gem is all the contributors, moderators, and leaders of the Boglehead community including Mr. Bogle.
This community is something else.
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Re: Warren Buffet says Jack Bogle is a hero.

Post by David Jay » Sat Feb 25, 2017 2:35 pm

tom0153 wrote:Well deserved kudos from a valuable source.

I often reflect on this decision made by Bogle to organize his company for the benefit of the shareholder. I'd like to read in his words what thinking went into it. Does anyone know of a resource?

Thanks.
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The Oracle of Omaha's Hero

Post by Grt2bOutdoors » Sat Feb 25, 2017 2:43 pm

The Oracle of Omaha (Warren Buffet)'s hero: none other than John Bogle.
Page 24 of this year's Berkshire Hathaway annual letter to shareholders: http://www.berkshirehathaway.com/letters/2016ltr.pdf

[Merged Grt2bOutdoors' topic and its reply into this existing thread - moderator prudent]
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Re: The Oracle of Omaha's Hero

Post by vencat » Sat Feb 25, 2017 2:51 pm

If a statue is ever erected to honor the person who has done the most for American investors, the handsdown
choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds.
In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have
promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of
added value.
In his early years, Jack was frequently mocked by the investment-management industry. Today,
however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their
savings than they otherwise would have earned. He is a hero to them and to me

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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by stemikger » Sat Feb 25, 2017 3:02 pm

Well deserved!! Jack and Warren are both my heroes!!
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Re: Buffett praises index funds, Bogle; unaware of Bogle's statue

Post by Wakefield1 » Sat Feb 25, 2017 3:29 pm

nisiprius wrote:
student wrote:I think this is probably different from what Buffett has in mind. I assume that the statue was erected based on his contributions as determined by Vanguard, not exactly non-biased for the purpose of honoring "the person who has done the most for American investors."
Yeah, you're right. I agree that the statue is a trivial and unimportant detail and there's no reason for Buffett have heard about it. I also agree that my tone was unnecessarily acerbic so I'll go back and edit my post and the subject line. Of course, Buffett could have said "a big, public statue..."
err-that statue has been mentioned by one of Mr. Bogle's detractors-I mean competitors-I mean one of the -------- who wanted more of those rich fees in their expensive funds

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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by JoMoney » Sat Feb 25, 2017 4:04 pm

Great stuff. I hope his accolades for Mr.Bogle leads to more interviews of Mr.Bogle, giving him the opportunity further spread the gospel of simple low-cost investing.
Maybe when people stop looking at trading stocks and active management as some path to higher returns, they'll start looking behind the curtains more at what companies are doing with regard to accounting practices, executive compensation, and other concerns... which might actually add value to investors in aggregate, unlike trading.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by Yohanson » Sat Feb 25, 2017 5:31 pm

I like this quote on page 6:
During such scary periods, you should never forget two things: First, widespread fear is your friend as
an investor, because it serves up bargain purchases. Second, personal fear is your enemy. It will also be
unwarranted. Investors who avoid high and unnecessary costs and simply sit for an extended period with a
collection of large, conservatively-financed American businesses will almost certainly do well.

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Re: Buffett Annual Letter 2016

Post by wolf359 » Sat Feb 25, 2017 6:58 pm

FreeAtLast wrote:And of course Protege Partners have all the technical excuses in the world as to why they will lose.....I say Buffett should extend the bet for another ten years to give them a chance to catch up. :twisted:
In 2015, Ted Seides posted on his blog site about the bet. It was obvious at that date that he was going to lose. His reasoning is interesting -- Buffet's original proposal is that the hedge funds would lose by the margin of their expenses and fees. Since they were losing by a lot more than that, it was obvious something else more was intervening to account for the poor hedge fund performance.

He proposed the issue was the issue was that the S&P 500 was the wrong benchmark to compare hedge funds to, that the post-crash unprecedented intervention of the Fed skewed the market, the unusual outperformance of the US markets, and that the zero interest rate environment artificially increased the costs of shorting or hedging.

https://blogs.cfainstitute.org/investor ... ars-later/

Mr. Buffett's response seems to be black and white, that the hedge funds underperformed, and that fees took 60% of even the profits that were made.

Mr. Buffett does note that people of modest means seem to follow his index fund advice, while rich people tend to still send their money to the hedge funds.

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Re: Buffett Annual Letter 2016

Post by nisiprius » Sat Feb 25, 2017 7:33 pm

wolf359 wrote:...In 2015, Ted Seides posted on his blog site about the bet. It was obvious at that date that he was going to lose.... He proposed the issue was the issue was that the S&P 500 was the wrong benchmark to compare hedge funds to...
Well, he should have thought of that at the time he agreed to the bet.
...that the post-crash unprecedented intervention of the Fed skewed the market, the unusual outperformance of the US markets, and that the zero interest rate environment artificially increased the costs of shorting or hedging...
Again, he should have thought of that at the time he made the bet. The "Fed skewing the market" stuff leaves me completely cold. The Fed has been part of our system since 1913. Its job is to take actions, not passively record history. We live with the Fed. All of the may-I-call-it-"classic" CRSP data going back to 1926, on which factors 'n' stuff are based, includes ninety years of the statistical history of all the things the Fed has done... as well as the statistics of all the things the President and Congress and the SEC have done. But if he wanted a Fed-free bet, he should have worked something into the bet to account for that.

To say that hedge funds will outperform as long as everything is normal is just not an interesting proposition. If I only invest when everything is normal, I will never invest. The times are always unusual.

In any case, what's the point in saying the S&P 500 isn't a good benchmark? It's not as if it were something unattainable. I know an easy way to get the return of the S&P 500 to within a few basis points, and it has been totally reliable in every year since 1976. If he is saying that a clever selection of hedge funds can beat some lower-returning index, so what?

If a miracle happens and Seides ends up winning his bet, it will be interesting to see if he stills says "it was just a fluke resulting from very unusual market conditions."
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by Northern Flicker » Sat Feb 25, 2017 7:46 pm

Agreed, but the bet isn't over. If the fund of funds is fully hedged and the S&P500 drops 50% this year, Mr. Buffett could still lose the bet. Of course, I wouldn't bet on that happening.
Last edited by Northern Flicker on Sun Feb 26, 2017 5:44 pm, edited 1 time in total.
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Re: Buffett Annual Letter 2016

Post by baw703916 » Sat Feb 25, 2017 7:59 pm

nisiprius wrote:To say that hedge funds will outperform as long as everything is normal...
I think that more precisely, hedge funds will outperform as long a distributions are normal. :happy
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Re: Buffett Annual Letter 2016

Post by nisiprius » Sat Feb 25, 2017 8:12 pm

baw703916 wrote:
nisiprius wrote:To say that hedge funds will outperform as long as everything is normal...
I think that more precisely, hedge funds will outperform as long a distributions are normal. :happy
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by arcticpineapplecorp. » Sat Feb 25, 2017 8:22 pm

on page 24 of the letter Buffett writes:
So that was my argument – and now let me put it into a simple equation. If Group A (active investors) and Group B (do-nothing investors) comprise the total investing universe, and B is destined to achieve average results before costs, so, too, must A. Whichever group has the lower costs will win. (The academic in me requires me to mention that there is a very minor point – not worth detailing – that slightly modifies this formulation.)
And if Group A has exorbitant costs, its shortfall will be substantial
That sounds straight out of Bill Sharpe's "The Arithmetic of Active Management":

https://web.stanford.edu/~wfsharpe/art/ ... active.htm

I liked this one too:
My calculation, admittedly very rough, is that the search by the elite for superior investment advice has caused it, in aggregate, to waste more than $100 billion over the past decade. Figure it out: Even a 1% fee on a few trillion dollars adds up. Of course, not every investor who put money in hedge funds ten years ago lagged S&P returns. But I believe my calculation of the aggregate shortfall is conservative.
Costs matter.
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by frugalecon » Sat Feb 25, 2017 8:23 pm

Yohanson wrote:I like this quote on page 6:
During such scary periods, you should never forget two things: First, widespread fear is your friend as
an investor, because it serves up bargain purchases. Second, personal fear is your enemy. It will also be
unwarranted. Investors who avoid high and unnecessary costs and simply sit for an extended period with a
collection of large, conservatively-financed American businesses will almost certainly do well.
I agree, this is a good quote. Buffett seems to view his investments as claims on the streams of profits that the underlying companies generate, rather than something they might want to sell, and hence an S&P 500 index fund represents claims on the profits of that set of companies. Over time, those profits are likely to rise, as they have in the past. It helped my level of calm to try to view my investments only from the perspective of the fluctuating flows of profits that I was continually acquiring.

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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by JoMoney » Sat Feb 25, 2017 8:26 pm

I think Buffett's bet seems like almost a cinch when considering the extreme costs and expenses the hedge funds have to overcome, let alone the difficulty of finding genuine 'skill' in allocating money...

I find Paul Merriman's attempt at a bet, a more challenging proposition. Primarily, because I think his idea is likely to be a matter of luck no better than a coin flip. Merriman wanted to bet Bogle that "Value" stocks will outperform "Growth" stocks, I think Merriman is mis-characterizing Bogle's proposition. Bogle doesn't think people should be tilting to value or growth, he believes that: "once you depart from the market portfolio, you're taking on extra risk". That's not to say I think there is a risk premium associated with value stocks, I just think people betting on either growth or value are making a bet on a coin-flip that is effectively "uncompensated risk" they just don't need to take.
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Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Post by abuss368 » Sun Feb 26, 2017 12:03 am

Thank you!
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