How index funds work: why doing nothing beats most experts
Warren Buffett's $1 million bet: one index fund against the hedge fund experts
In 2007, Warren Buffett bet $1 million that a plain index fund would do better than a team of top experts over ten years. A Wall Street firm took the bet, sure it would win. Who was right?
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Rono tells the story he likes best. Warren Buffett is one of the most famous investors in the world, and he picks companies himself. Yet in December 2007, he made a bet against people who pick.
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First, a word you need: a hedge fund is a fund for rich investors, free to try almost anything, with high fees. A firm called Protégé Partners took the bet. It picked five funds that each put money into many hedge funds, more than 200 in all. Buffett picked a plain S&P 500 index fund.
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