Return to Blog

Hedge Funds, Index Funds, and Buffet's $1,000,000 Bet

Warren Buffet has bet  with one million dollars going to charity that the S&P 500 will beat the top five hedge funds (picked by Protege, a hedge fund to fund) net of fees over a ten year period.  We are currently in year two.  Read full article here

Hedge funds are known for their daring bets, secretive (proprietary) strategies, and the 2 and 20 fee (2% of assets and 20% of profits).  It has come to many people's attention that hedge funds have not been hedging market risk for their clients since several have shut down this year during the bear market.  Hedge funds are not required to report earnings, investments they hold, or strategy.  During booming markets many hedge funds publish their unbelievable returns and attract many high net worth clients looking for above ordinary returns.

It was reported today in the WSJ that some of these hedge funds are being forced out of business because in some cases 50% of their entire portfolios consisted of one company.  The idea is to take big bets proving their excelent forecasting skills, but one unforeseen mistake have cost many managers their funds and businesses.  Also other hedge funds have been unable to find ways around the temporary ban on short selling stocks. Here's a quote from this morning's WSJ article, "Big Bets Come Back to Bite Fund Managers"

To wit, a basket of stocks most popular among hedge funds tumbled 19% in September, more than the 9% drop for the Standard and Poor's 500, according to Goldman Sachs.

Who would have thought that an S&P 500 ETF would have beaten hedge funds who have always attracted the best analyst and have the ability to side step companies who are plummeting?  Warren Buffet does.    Investment strategies must be able to weather all economic conditions because all economic conditions happen.  Again, diversification wins and the lower the cost, the more money you keep.

Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Happy Independence Day!

#independenceday #julyfourth #fourthofjuly

Happy Birthday to Kylie, our Marketing Assistant! Kylie works hard behind the scenes on our website, podcast, social media, and so much more.

Meet Daphne, our Financial Planning Intern. She is studying Finance at The University of Georgia. We are excited she's joined us for the summer!

Your Medicare premium is affected based on which tax bracket you fall within after age 63. IRMAA is your income-related monthly adjustment amount. Watch today's video to learn more about how IRMAA works. #irmaa #medicare

The big question is, will we have a recession in 2022? Watch this video to find out! #recession2022 #recession



Client Access

Firm Information

Schedule a Meeting
678-905-4450[email protected]
Google Rating
Based on 71 reviews