Home Warren Buffett Wager Two Fund Strategy eFinancial Videos
THE WARREN BUFFETT WAGER
10 YEAR RESULTS
By Trevor Jennewine – Mar 18, 2023 at 5:10AM.
BILLIONAIRE'S ADVICE FOR RETIREMENT INVESTING
Simple Strategy
LOW COST INDEX FUNDS
Billionaire's Advice For FREE!
PAST PERFORMANCE IS NO AN INDICATION OF FUTURE PERFORMANCE
Warren Buffett believes the average investor can outperform most professional money managers with this strategy.
Economic growth slowed last year as high inflation and climbing interest rates weighed on consumer spending. Those headwinds
cut into corporate profits and stoked recession fears that brought about a sweeping decline in the stock market.
The S&P 500 had its worst year since the Great Recession. The broad-based index dropped into bear market territory on the first trading day of 2022, and it is still 19% off its high.
That drawdown has put a dent in many portfolios, but investors need to keep a level head. Past bear markets have always ended
in bull markets that propelled the S&P 500 to new highs, and there is no reason to expect a different outcome this time. That's why investors should treat the drawdown as a buying opportunity.
Warren Buffett has frequently recommended an S&P 500 Low Cost Index Fund.
It is no accident that Buffett is regarded as one of the most successful investors in history.
Buffett has often said an S&P 500 Index Fund is the best way for most investors to gain exposure to the stock market.
In fact, he believes the average investor can actually outperform most professional money managers by regularly buying an
S&P 500 Index Fund.
The key word is regularly.
Investors should add to their position through thick and thin to avoid the pitfalls of market timing.
In 2007 Warren Buffett wagered $500,000 that no professional investor could outperform an unmanaged S&P 500 Index Fund
over a 10-year period.
Protége Partners accepted the challenge, and the firm selected five hedge funds managed by five finance experts, who employed several hundred other finance experts. Suffice it to say Protége tried very hard to beat Buffett and FAILED, BADLY.
The bet began in December 2007, shortly before market crash of 2008. The index ultimately lost 56% of its value, marking its sharpest decline since the Great Depression.
But Warren Buffett still won the bet.
The S&P 500 eventually recouped its losses, and produced a return of 126% by the end the 10-year period.
Meanwhile, the best and worst Protége hedge funds produced returns of 88% and 3%, respectively.
Buffett made his point. He beat hundreds of highly trained finance experts without doing any work. He simply bought a Vanguard
S&P 500 index fund and held it. It doesn't get much easier than that.
REVIEW THE RESULTS: