Buffett would approve the Saul method…
Warren Buffett Just Officially Won His Million-Dollar Bet
Warren Buffett made a bet that a passive S&P 500 index fund would outperform a basket of hedge funds over a 10-year period, and it concluded at the end of 2017. Not only did Buffett’s pick outperform the hedge funds it was up against, but it did so handily. Here’s the final result of Buffett’s bet on passive investing, and why Buffett prefers index funds to actively managed investments.
First of all, Buffett is not suggesting that all investors should go sell their stock holdings and buy passive index funds. Buffett doesn’t necessarily have anything against stock picking if you have the time, knowledge, desire, and discipline to do it properly. However, the majority of people don’t, which is why Buffett has said that index funds are the best investment most Americans can make.
Buffett’s issue isn’t with individual stocks. Rather, it’s with actively managed funds, particularly those that charge high fees, like hedge funds. Buffett acknowledges that in any given year, some fund managers will certainly beat the market. On the other hand, some will lose to the market. And since all of these funds charge fees, investors are at an inherent disadvantage, especially over the long run.