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<ul><li><keyword id="5027658" type="PERSON" weightage="60" keywordseo="ted-seides">Ted Seides</keyword> made a $1 million, decade-long bet with <keyword id="6358963" type="DEFINITION" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword> that he lost in 2017.</li><li>The investor wagered that <keyword id="116445" type="COMPANY" weightage="60" keywordseo="Hedge-funds">hedge funds</keyword> would outperform a <keyword id="123873" type="PERSON" weightage="60" keywordseo="SP-500">S&amp;P 500</keyword> index fund.</li><li>Seides probably wouldn't make the same bet today as the odds of winning are lower.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">See more stories on Insider's business page</a>.</li></ul>Ted Seides famously lost a <a href="https://www.businessinsider.in/Warren-Buffett-has-won-his-1-million-bet-against-the-hedge-fund-industry/articleshow/62342782.cms">$1 million bet with Warren Buffett</a> that a basket of hedge funds would outperform the S&amp;P 500 index over the course of a decade. The former hedge fund investor doubts he would place the same wager now."I probably wouldn't today for the next 10 years, not because I necessarily think it's a losing bet, as much as I don't think the odds are as tilted in favor of hedge funds as they were at the beginning of 2008," Seides said in a recent <a href="https://www.realvision.com/shows/the-interview/videos/thinking-like-a-capital-allocator">RealVision interview</a>."You make a bet like that in public with a guy like Warren, I think it's incumbent on you to think that your odds are awfully good to win," he continued. "My guess is it's probably a 50/50 bet today, so I wouldn't do it as a 50/50 bet."Seides, who hosts "The Capital Allocators Podcast," previously invested in hedge funds at <keyword id="4245048" type="PERSON" weightage="60" keywordseo="Protg-Partners">Protégé Partners</keyword>, a so-called fund of funds. For his bet with Buffett, he selected and tracked the performance of five funds invested in more than 100 hedge funds in total, while the <keyword id="6362665" type="ORGANIZATION" weightage="60" keywordseo="berkshire-hathaway">Berkshire Hathaway</keyword> chief backed the Vanguard S&amp;P 500 index fund. They agreed the winner would be whoever posted the higher return net of fees, costs, and expenses.Read more: <a href="https://www.businessinsider.com/warren-buffett-hoards-cash-sells-stocks-bash-bitcoin-thomas-russo-2021-5">Warren Buffett is hoarding $80 billion of cash, cleaning up his stock portfolio, and declining to bash bitcoin. Veteran investor Thomas Russo says why that strategy will ultimately pay off.</a>Buffett proposed the bet because he wanted to underscore the value of owning an index fund for passive investors, and highlight the hefty fees that hedge funds charge. He emerged the victor and donated his $2.2 million of winnings to charity.Seides told RealVision that his wager with Buffett compared apples to oranges, and it would have been fairer to adjust their returns for market exposure, geographical focus, tax rates, and other differences. However, he acknowledged that complicating the bet "takes all the fun out of it."The podcast host also bemoaned that his dad, a doctor and neophyte investor who he described as a "hoarder," missed out on buying a piece of Buffett's company over 60 years ago."He loves owning things and does not like selling them," Seides said, pointing to his dad purchasing IBM stock in 1959 and still holding it today. "It is a shame he didn't come across Berkshire Hathaway back then, because it would be worth a lot more."

The hedge fund investor who lost a $1 million bet with Warren Buffett doubts he would make the same wager today

<ul class="summary-list"><li>The pandemic bubble in asset prices may not have burst yet, Seth Klarman said.</li><li>The elite investor flagged the risk of further banking chaos as more troubled lenders are exposed.</li></ul>The pandemic bubble may not have popped — and <a href="https://www.businessinsider.com/silicon-valley-bank-failure-what-happened-bank-run-explained-2023-3">Silicon Valley Bank's collapse</a> might presage further disasters in the financial sector, Seth Klarman has warned."You had a bubble, it was really a credit bubble, that became an everything bubble," the billionaire investor and Baupost Group CEO said during the <a href="https://www.capitalallocators.com/podcast/timeless-value-investing/" target="_blank" rel="noopener">latest episode</a> of "Capital Allocators with Ted Seides.""Super-low interest rates, at times zero rates, made capital easily available and incredibly cheap," Klarman continued. "That led to startup manias and SPACs and meme stocks and crypto, all kinds of speculative activity. I'm not convinced that we've even begun to sort out that bubble."The hedge-fund boss noted the bubble did a "pretty good job of collapsing" last year, but emphasized that stocks have rebounded this year and entered a <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-bull-rally-cycle-slow-high-octane-type-2023-7">new bull market</a>.Indeed, the benchmark S&amp;P 500 index has rallied 17% this year, while the tech-heavy Nasdaq Composite has soared 35%. Investors are betting big on an artificial-intelligence revolution, the Federal Reserve cutting interest rates, and the US economy escaping a recession.Separately, Klarman issued a caution about the banking industry. Lenders had limited ways to make money for more than a decade, and may have joined SVB in placing risky bets or failing to hedge their wagers as a consequence, he suggested."I'm not convinced we know where all the bodies are buried," Klarman said. "I don't know anything, but I'd be nervous because markets cause behaviors, and when people have to put money to work ... they're going to do something with the money.""We haven't seen a lot of bodies float up," he continued. "I don't know what that means, but I'd be worried."Klarman also warned that many people assume the US government will bail them out of trouble, which might lead them to behave recklessly. He cautioned against complacency and ruling out disaster entirely."You had a lot of hiccups between '98 and ',01 and then the Great Financial Crisis was a really ugly 12 months or so," he said. "I'm just not sure why you couldn't have more trouble."Klarman, a value investor who specializes in sniffing out bargains, has been widely hailed as the next Warren Buffett, <a href="https://markets.businessinsider.com/news/stocks/seth-klarman-baupost-warren-buffett-bought-google-facebook-stock-2020-5-1029205652?utm_medium=ingest&amp;utm_source=markets">including by the Berkshire Hathaway CEO himself</a>.

Billionaire investor Seth Klarman warns the 'everything bubble' might still burst - and more banking disasters may be coming

<ul class="summary-list"><li>Investors at JetBlue Ventures, Mighty Capital, and other VC firms shared their favorite podcasts.</li><li>They include "All-In" with Chamath Palihapitiya and "The Future of Everything" by the WSJ.</li></ul>Global venture-capital funding in 2022 may have <a href="https://www.cbinsights.com/research-state-of-venture?utm_campaign=marketing_state-venture_2022-07&amp;campaignid=17130804447&amp;adgroupid=137057131835&amp;utm_term=venture%20capital%20slowdown&amp;utm_source=google&amp;utm_medium=cpc&amp;utm_content=adwords-reports-quarterly-annual-reports&amp;hsa_tgt=kwd-1684919686729&amp;hsa_grp=137057131835&amp;hsa_src=g&amp;hsa_net=adwords&amp;hsa_mt=e&amp;hsa_ver=3&amp;hsa_ad=610211246529&amp;hsa_acc=5728918340&amp;hsa_kw=venture%20capital%20slowdown&amp;hsa_cam=17130804447&amp;gclid=CjwKCAjw3qGYBhBSEiwAcnTRLkGjbBXo9pQ9StzEkoAmJNP6qyrlitI9FHW1DcBuaftyueWz6eCwMhoCMqkQAvD_BwE">dipped 35%</a> from 2021, according to a report by analytics company CB Insights, but <a href="https://www.businessinsider.com/vc-startup-investors-ramp-up-deals-after-summer-slowdown-2022-9">VCs are still eager to make deals</a>. It's a tough market right now, though, and investors need reliable insights, news, and information to spot opportunities and avoid making the wrong moves. Podcasts can help. Here are 11 great options, recommended by VCs, founders, CEOs, and other industry insiders.<h2>1. 'The Full Ratchet' with Nick Moran</h2>Steve Taub, the managing director of investments at <a href="https://affiliate.insider.com?postID=63c19fa7232821203b57cc2b&amp;site=bi&amp;u=https%3A%2F%2Fwww.linkedin.com%2Fcompany%2Fjetblue-ventures%2F">JetBlue Ventures</a>, JetBlue Airways' VC firm that's invested in startups like <a href="https://www.jobyaviation.com/">Joby</a> and <a href="https://flyrlabs.com/">Flyr Labs</a>, said he likes "<a href="https://fullratchet.net/">The Full Ratchet</a>" because it "demystifies" the VC world. The podcast's host, Nick Moran — the founder and general partner of <a href="http://newstack.vc/">New Stack Ventures</a> — has interviewed VCs and startup founders like <a href="https://podcasts.apple.com/gb/podcast/118-economic-theory-in-venture-capital-part-1-mark-suster/id888084300?i=1000378448924">Mark Suster</a>, <a href="https://fullratchet.net/135-dispelling-conventional-wisdom-in-vc-part-1-eric-paley/">Eric Paley</a>, and <a href="https://fullratchet.net/ep30-the-dark-side-of-vc-predatory-investor-practices-joanne-wilson/">Joanne Wilson</a> on how they build great companies."Moran often has interesting guest interviews, and I like the short 'investor stories' about lessons learned and unusual situations," Taub said. "I like that they're brief so I can listen to them when I don't have time for a full interview." <h2>2. 'Catalyst' with Shayle Kann </h2>Taub is also a fan of "<a href="https://www.canarymedia.com/podcasts/catalyst-with-shayle-kann">Catalyst</a>," which interviews investors, researchers, and executives knowledgeable about the world of climate tech. While this isn't a strictly VC-focused podcast, the host, Shayle Kann, is a partner at <a href="https://www.energyimpactpartners.com/">Energy Impact Partners</a> and leads EIP's investments at the frontier of climate tech, so the show covers timely topics in the climate-tech space.Taub told Insider he listens to "Catalyst" because the threat of climate change — and humanity's response to it — is among the defining issues of the 21st century. "It will shape almost every aspect of our society and economy, so it's creating enormous opportunities for innovation and entrepreneurs," Taub said. "I think Kann does a great job of finding people with interesting ideas in the space, and he teases out the real challenges they need to overcome to be successful, so it's not just cheerleading."<h2>3. 'The Twenty Minute VC' with Harry Stebbings</h2><a href="https://affiliate.insider.com?postID=63c19fa7232821203b57cc2b&amp;site=bi&amp;u=https%3A%2F%2Fwww.linkedin.com%2Fin%2Fandrewger%2F">Andrew Gershfeld</a>, a partner at the Boston-based investment fund <a href="https://flintcap.com/">Flint Capital</a> — whose investments include the unicorns <a href="https://www.crunchbase.com/organization/socure">Socure</a> (valued at $4.5 billion) and <a href="https://www.crunchbase.com/organization/walkme">WalkMe</a> (valued at $2.5 billion at IPO) — is a fan of "<a href="https://www.thetwentyminutevc.com/">The Twenty Minute VC</a>" podcast. "Permanent lack of time in an investor's life makes you very picky when it comes to podcasts," he told Insider. "I find the '20VC' podcast very useful and insightful. Listening to how other VCs speak about themselves and how entrepreneurs describe the VCs they work with helped me understand how to differentiate our firm from the crowd." Gershfeld said the host, Harry Stebbings, asks high fliers from successful VC firms — including <a href="https://twitter.com/wquist">Will Quist,</a> a partner at <a href="https://slow-prod.herokuapp.com/">Slow Ventures</a>, and <a href="https://contrary.com/blog/welcoming-kyle-harrison">Kyle Harrison</a>, a general partner at <a href="https://contrary.com/">Contrary</a> — how they forged investment scenarios to achieve big goals and what's impacted their leadership approach. "The main thing about the VC world is building relationships, and Harry is an example of a great networker," Gershfeld said. "He's a self-made VC professional who turned from a VC fan in his teens into a full-fledged investor who manages over <a href="https://www.businessinsider.com/vc-lerer-hippeau-hosting-summit-for-gen-z-tech-startup-2021-7">$140 million</a>."<h2>4. 'All-In' with Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg </h2>Gershfeld loves the podcast "<a href="https://www.allinpodcast.co/">All-In</a>" because so few podcasts cover "all major things of the week" — from economics and technology to politics and social agendas. He said the four hosts possess "unmatched experience" and knowledge about technology and the VC market. "Chamath Palihapitiya appears to be one of the few investors who has gone from VC into hedge-fund management," Gershfeld said. "Jason Calacanis has more than two decades in tech. David Sacks has over 20 unicorns in his portfolio, including Airbnb, Facebook, SpaceX, Twitter, and Uber. And David Friedberg of Climate Corporation, one of the first 1,000 employees at Google, helped run Google's AdWords and worked with Larry Page, Google's cofounder."Gershfeld favorite segments include "<a href="https://podcasts.apple.com/us/podcast/e100-reflecting-on-the-first-100-shows-fan-questions/id1502871393?i=1000582630529">Reflecting on the first 100 shows</a>," and "<a href="https://podcasts.apple.com/us/podcast/e91-softbanks-%2421b-vision-fund-loss-signals-of/id1502871393?i=1000575944980">Softbank's $21B+ Vision Fund loss</a>."<h2>5. 'The Future of Everything' by The Wall Street Journal</h2>The WSJ's "<a href="https://www.wsj.com/podcasts/wsj-the-future-of-everything">The Future of Everything</a>" podcast is the top pick of Ryan Nelson, a partner at the early-stage venture studio and VC fund <a href="https://www.wearejobi.com/">Jobi</a> and the cofounder of Jobi Brands, which has helped build celebrity brands like Courteney Cox's home-care brand <a href="https://affiliate.insider.com?postID=63c19fa7232821203b57cc2b&amp;site=bi&amp;u=https%3A%2F%2Fhomecourt.co%2F">Homecourt</a> and Kate Hudson's wellness brand <a href="https://www.tobeinbloom.com/">Inbloom</a>. "I love this podcast for being very far-forward-looking and covering potential changes in technology that could dramatically alter our world," Nelson said. "Personally, I'm interested in how our lives and societal trends will evolve and be shaped by new inventions — or new applications of older technologies. "I think it's worthwhile to understand what types of opportunities to be on the lookout for in the near to medium term that are in line with these longer-term movements. By the time things are very obvious and in the mainstream, it can be too late to capitalize fully on the opportunity provided." <h2>6. 'Venture Unlocked' with Samir Kaji</h2>Jenny He — the founder and general partner of <a href="https://streaklinks.com/BNja_QseHqTfmoTefw6BSMbj/https%3A%2F%2Fwww.positionventures.com%2F">Position Ventures</a>, an early-stage venture fund backed by Bain Capital Ventures and Tiger Global that's invested in <a href="https://fractal.ai/">Fractal</a>, <a href="https://www.anrok.com/">Anrok</a>, and <a href="https://www.workwhilejobs.com/">WorkWhile</a> — said the <a href="https://www.allocate.co/">Allocate</a> CEO and founder Samir Kaji's "<a href="https://streaklinks.com/BNja_QouLnvoaZO00QsqsQtJ/https%3A%2F%2Fpodcasts.apple.com%2Fus%2Fpodcast%2Fventure-unlocked-the-playbook-for-venture-capital%2Fid1535501313">Venture Unlocked</a>" podcast is "a must-listen for any emerging manager or anyone looking to get into venture capital."The podcast interviews fund managers from all walks of life to reveal their approach to venture, trends they're seeing in the market, and how they got started with their first fund, featuring interviews with established VCs as well as emerging managers on their first fund. One of He's favorite episodes is "<a href="https://podcasts.apple.com/us/podcast/776s-alexis-ohanian-on-the-new-era-of-vc/id1535501313?i=1000557512012">Alex Ohanian on the new era of VC</a>.""'Venture Unlocked' gives listeners unique access into the world of starting and scaling a venture-capital firm — as well as a rare glimpse into the LP perspective, which few people know the ins and outs of," He said. "As a first-time fund manager, it was valuable to hear from other fund managers on how they got started, as starting a fund is also a founder journey." <h2>7. 'Capital Allocators' with Ted Seides</h2>Ted Seides, an allocator and asset-management expert, hosts "<a href="https://podcasts.apple.com/us/podcast/capital-allocators-inside-the-institutional/id1223764016">Capital Allocators — Inside the Institutional Investment Industry</a>," which <a href="http://www.scmoatti.com/">SC Moatti</a>, the founding managing partner of the San Francisco-based VC firm <a href="https://mighty.capital/">Mighty Capital</a>, a backer of Airbnb and Amplitude, said has "the most quality, in-depth discussions on how institutional investors select the VCs they invest in." "My favorite series of the show is their manager interviews, where an endowment will invite one of the venture funds they invested in — great nuggets on what makes VCs get excited about deals," Moatti added.<h2>8. 'Masters of Scale' with Reid Hoffman</h2>Chenxi Wang, the founder and general partner of the Silicon Valley-based venture fund <a href="http://www.raincapital.vc/">Rain Capital</a> and a former executive at Intel and Forrester, is a fan of the "<a href="https://podcasts.apple.com/ro/podcast/masters-of-scale/id1227971746">Masters of Scale</a>" podcast, where the LinkedIn cofounder Reid Hoffman proves unconventional theories about how businesses scale and interviews top CEOs."As a general partner of a venture fund, I don't have a lot of time, but I can always learn something valuable from Reid's conversations with leaders who have scaled a massively successful business," Wang said. "In my opinion, building a successful startup is 30% about the idea and 70% about the ability to scale up the operation. Scaling a business is about building repeatable motions, establishing meaningful business metrics, and responding to evolving market conditions. The 'Masters of Scale' podcast hits on those aspects really well, and I recommend all founders listen to this podcast and make it a regular resource."<h2>9. 'What Is Money?' with Robert Breedlove</h2>Nathan Montone, the cofounder and CEO of <a href="https://www.m31.capital/">M31 Capital Management</a>, a global investment firm focused exclusively on crypto assets and blockchain technology, and an early backer and advisor to Helium, lists "<a href="https://podcasts.apple.com/us/podcast/the-what-is-money-show/id1541404400">What Is Money?</a>" with Robert Breedlove, a former hedge-fund manager and philosopher in the bitcoin space, as one of his favorite podcasts and the best starting point for anyone looking for a "first principles understanding" of monetary technologies."'What Is Money?' takes deep philosophical dives into the importance of bitcoin through historical, political, technical, and spiritual lenses," Montone said. "BTC is the single-most important asset in the world, and that podcast gets to the heart of why that is."<h2>10. 'Origins' by Notation</h2>Jenny Rooke, the managing director of <a href="http://www.genoavc.com/">Genoa Ventures</a>, a VC investing in early-stage companies like <a href="https://www.crunchbase.com/organization/intabio">Intabio</a> and <a href="https://intervenn.com/">InterVenn</a> in the biology and tech sectors, said "<a href="https://podcasts.apple.com/us/podcast/origins-a-podcast-about-limited-partners-created-by/id1111792048">Origin,</a>" a podcast created by Alex Lines and Nick Chirls, partners at the VC firm <a href="https://notation.vc/">Notation Capital</a>, is "excellent" for providing the LP perspective. "The Notation Capital hosts ask LPs the questions that are on general partners' minds, such as how LPs think about allocating to new and emerging managers, tips and guidance for communicating well with LPs, and the LP view on markets and trends that need to be reflected in a manager's evolving strategy in order to stay current and succeed," Rooke said.<h2>11. 'Built to Sell Radio' with John Warrillow</h2>"<a href="https://podcasts.apple.com/us/podcast/built-to-sell-radio/id1018988393">Built to Sell Radio</a>" airs weekly and features an entrepreneur who's recently sold their business to share why they sold it, focusing on their mistakes and victories along the way."Host John Warrillow is a thought leader in his own right, focused on creating and maximizing business value on the customer side and on the exit side," SC Moatti said. "A great show to hear stories about entrepreneurs who made it all the way, with stories of entrepreneurs selling their businesses," Moatti added. "So many lessons that can be applied to early-stage startups, because at the end of the day, it doesn't matter how much money you raise, it's all about the exit and being able to land that plane."

11 podcasts that busy venture capitalists and founders say they trust right now

<ul><li><keyword id="219358" type="PERSON" weightage="60" keywordseo="Mark-Cuban">Mark Cuban</keyword> is betting $1 million that <keyword id="128682" type="COMPANY" weightage="60" keywordseo="Netflix">Netflix</keyword> and <keyword id="18635" type="CITY" weightage="60" keywordseo="Amazon">Amazon</keyword> will outperform the S&amp;P 500.</li><li>He's also wagering $1 million that <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">bitcoin</keyword> or ether will beat the index over 10 years.</li><li>Warren Buffett bet on the benchmark to beat hedge funds over a decade and won.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">See more stories on Insider's business page</a>.</li></ul>The billionaire Mark Cuban is so confident that his two favorite <keyword id="6354298" type="DEFINITION" weightage="60" keywordseo="Stocks">stocks</keyword> and the top <keyword id="2420795" type="PERSON" weightage="60" keywordseo="cryptocurrencies">cryptocurrencies</keyword> will outperform the S&amp;P 500 index over the next decade that he's willing to bet $2 million on that outcome.The "<keyword id="1417364" type="COMPANY" weightage="60" keywordseo="Shark-Tank">Shark Tank</keyword>" investor and Dallas Mavericks owner <a href="https://twitter.com/mcuban/status/1387867086580498436">agreed to a pair of wagers</a> with Peter Mallouk, the CEO of Creative Planning, a wealth-management firm.Cuban tweeted on Thursday that he would <a href="https://twitter.com/mcuban/status/1387863203196153861">stake $1 million</a> on a 50-50 split of Netflix and Amazon stock beating the benchmark over the next 10 years. He said he'd bet another $1 million on Mallouk's choice of either bitcoin or ether <a href="https://twitter.com/mcuban/status/1387861184976760834">doing the same</a>. Mallouk would bet on the S&amp;P 500 in both cases.The men agreed to make the two bets after butting heads over the value of a diversified portfolio and the long-term viability of cryptocurrencies. The argument was sparked by Mallouk <a href="https://twitter.com/PeterMallouk/status/1387391603006922755">criticizing</a> Cuban's <a href="https://markets.businessinsider.com/currencies/news/mark-cuban-praises-dogecoin-defi-nfts-bitcoin-not-inflation-hedge-2021-3-1030172586">promotion of Dogecoin</a>, <a href="https://twitter.com/PeterMallouk/status/1387451974245920768">predicting</a> that 99% of cryptocurrencies would end up worthless, and touting stocks as superior to crypto."If you buy a hundred stocks, odds are most go up," Mallouk <a href="https://twitter.com/PeterMallouk/status/1387456203228319750">tweeted</a> on Wednesday. "If you buy a hundred cryptocurrencies, most will go to zero. Big difference.""Only a fool would buy 100 stocks or 100 crypto assets," Cuban <a href="https://twitter.com/mcuban/status/1387458297213571073">replied</a>.To settle their dispute, Cuban and Mallouk agreed to convert $4 million into crypto, set up <a href="https://www.businessinsider.com/how-smart-contracts-can-work-2018-10">smart contracts</a> that would automatically pay the victors in 10 years, and donate the proceeds to charity.Their bet echoes a famous wager between the billionaire investor Warren Buffett and the hedge-fund manager Ted Seides in 2007. Buffett staked $1 million on the S&amp;P 500 besting a basket of hedge funds over a decade <a href="https://www.businessinsider.com/warren-buffett-wins-million-dollar-bet-against-hedge-funds-2018-1">and won</a>.Read more: <a href="https://www.businessinsider.com/stocks-exposed-nft-boom-opportunity-after-price-slump-jefferies-2021-4" target="_blank" rel="noopener">Jefferies unveils 14 stocks with exposure to the booming NFT opportunity as digital collectibles continue to become more mainstream despite the recent price slump</a>

Mark Cuban is betting $1 million that Amazon and Netflix will best the S&P 500 over 10 years - and another $1 million on crypto to do the same

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Jo Yong-Hak/ReutersWarren Buffett</div></div></div><ul><li>In 2007, Warren Buffett entered a million-dollar bet with fund manager Protégé Partners that the S&amp;P 500 would beat a basket of hedge funds over the next decade. </li><li>His S&amp;P 500 index fund compounded a 7.1% annual gain over 10 years, beating an average increase of 2.2% by the basket of funds selected by Protégé Partners.</li><li>The prize money will go to Girls Inc. of Omaha. </li><li>Buffett took issue with hedge funds' high fees and their promise of outperforming the market. </li></ul> With 2017 over, Warren Buffett has sealed his victory over hedge funds in a bet he made a decade ago. The <a href="http://markets.businessinsider.com/stock/BRK-B-Quote">Berkshire Hathaway</a> chairman in 2007 bet $1 million of his money that the S&amp;P 500 would outperform a selection of hedge funds over the following 10 years. As of last week Friday, his S&amp;P 500 index fund compounded a 7.1% annual gain over that period. The basket of funds selected by Protégé Partners - the managers with whom he made the bet - gained 2.1%, according to<a href="https://blogs.wsj.com/moneybeat/2017/12/30/biggest-winner-of-famed-buffett-bet-girls-inc-of-omaha/?mg=prod/accounts-wsj"> The Wall Street Journal</a>.Buffett agreed to give the prize money charity. <a href="https://girlsincomaha.org/">Girls Inc. of Omaha</a>, a non-profit that Buffett has supported a number of times before, is the beneficiary.Each side first put $320,000 into a zero-coupon Treasury bond that they estimated would be <a href="http://www.businessinsider.com/buffett-still-beats-on-million-dollar-bet-2015-2">worth $1 million</a> by 2018. But it was moved into <a href="http://markets.businessinsider.com/stock/BRK-B-Quote">Berkshire Hathaway's class B shares</a> when the bond's value rose faster than they were expecting. The 11,200 shares they bought in 2012 were worth $2.22 million on Friday, the Journal noted. Buffett has long taken <a href="http://www.businessinsider.com/buffett-hedge-fund-managers-fees-performance-2017-2">issue with hedge funds</a>' promise of outperforming the market, and their high fees that take away from the returns their clients earn. He's turned out right on both fronts. Actively managed funds have seen outflows while passive funds gained since the financial crisis. At the same time, an abundance of exchange-traded funds has made it cheaper and easier for investors to buy into just about any group of stocks. "My guess is that doubling down on a bet with Warren Buffett for the next 10 years would hold greater-than-even odds of victory," wrote Ted Seides, a founder of Protégé Partners, in an early concession piece in <a href="https://www.bloomberg.com/view/articles/2017-05-03/why-i-lost-my-bet-with-warren-buffett">Bloomberg View</a>."The S&amp;P 500 looks overpriced and has a reasonable chance of disappointing passive investors," Seides said in May. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/bitcoin-price-checks-all-boxes-of-bubble-2017-12">Why bitcoin checks all the boxes of a bubble</a></h3> <div> </div> </div>

Warren Buffett has won his $1 million bet against the hedge fund industry

<table class="image-container float_right" width="200"><tr><td><div class="image"></div><a href="http://www.cbsnews.com/8301-505383_162-57373393/person-to-person-warren-buffett/">www.cbsnews.com</a></td></tr></table>In 2008, "Oracle of Omaha" <keyword id="6358963" type="PERSON" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword> and some hedge fund guys made a wager that's been dubbed the "Million-Dollar Bet." 
In sum, Buffett's wager against the hedge funders is that over a period of ten years hedge fund fund-of-funds could not beat the S&amp;P index. 
For the bet, five fund-of-funds (which haven't been named publicly) picked by Protégé are competing against Vanguard's Admiral shares, the S&amp;P index fund Buffett is backing.
It's been five years since that bet was made and we're currently at the half-way mark. According to <a href="http://finance.fortune.cnn.com/2013/01/24/buffett-hedge-fund-bet/">Fortune's Carol Loomis</a> Buffett is winning. 
<a href="http://finance.fortune.cnn.com/2013/01/24/buffett-hedge-fund-bet/">From Fortune:</a> 
So now the tortoise, after crawling four more years, indeed leads. At the five-year mark, the Vanguard index fund backed by Buffett is up by 8.69%. The five funds of funds picked by Protégé Partners to carry its flag in the race are up, on the average, only—"gulp," says Protégé partner Ted Seides—0.13%.
Of course, we still have five more years to see how this all plays out.
What's more is whoever wins the bet will have a $1 million, or possibly more, donated to the charity of their choice.

Warren Buffett Is Crushing Some Hedge Funders In A 'Million Dollar' Bet He Made Back In 2008

<div class="image-container float_right" style="width:400px"><div class="image"></div>REUTERS/Alessandro Garofalo</div>Breaking into the hedge-fund world is harder than before
IF SETTING up a hedge fund were easy, more people would do it: bar inheritance or winning the lottery, there are few swifter paths to immense riches. Sadly for aspiring plutocrats, it is getting ever harder to launch a fund. Swaggering financiers once joked that launching with less than $1 billion of outside money to invest was hardly worth their time. Debuts that splashy are now notable only for their scarcity. A new fund typically opens with $50m-100m in assets under management. Even so, and despite buoyant stockmarkets, the number of launches is declining (see chart).
Punier funds make for a less attractive business model. A $50m pile might once have been enough to sustain a small firm. Creaming off 2% of assets and 20% of profits--the standard hedge-fund fee formula--could generate around $2m a year given decent performance. No longer. Declining fees and low industry-wide returns have halved that amount.
Expenses have risen, too. Thanks to the Bernie Madoff swindle, investors want to see sturdier back-offices staffed by compliance types. Gone are the days when two traders with a Bloomberg terminal and some banking contacts could brand themselves as a hedge fund and attract outside money, says Kent Clark of Goldman Sachs Asset Management, the bank’s investment arm. Paying for all this box-ticking requires more like $100m in assets.
The industry’s investor base has also changed, which makes it hard for those firms that do get off the ground to soar. Hedge funds used to get most of their money from rich people; nowadays, institutions such as pension funds are the dominant investors. They are often more risk-averse, preferring to invest bigger sums in fewer, large managers with a longer record. Although over half of hedge funds manage less than $100m, they represent only 1.4% of the industry’s $2 trillion or so in assets, according to Hedge Fund Research, a data provider.
The ranks of potential hedge-fund managers have also thinned. Post-crisis rules banning banks from wagering their own money prompted many of their star traders to leave and set up their own funds. That exodus is pretty much over; many of these new funds have already shut up shop after delivering underwhelming performance. The most favoured potential managers of new hedge funds these days are the key lieutenants at existing large funds, says Dominic Freemantle of Morgan Stanley.
Enough new funds are still launching to raise a question: why would any investor prefer managers at an established firm to set up their own shop? Data are patchy but suggest that start-ups do deliver better results. This may be down to newcomers being smaller and nimbler, or hungrier for the returns that will earn them mega-bucks. And many of the most sought-after funds are closed to new money, points out Ted Seides of Protégé Partners, a hedge-fund investor. Backing their most promising offshoots is the next best thing.
Indeed, a handful of specialist investors are looking to back new hedge funds in the same way that venture capitalists back start-ups. Blackstone, Goldman Sachs and others have pots of money dedicated to "seeding" new managers, entrusting them with $20m-100m of funds to invest in return for a share of revenue, typically 20%. Such seed funds had $5 billion to invest last year, estimates Acceleration Capital Group, an advisory firm. But even they have struggled to deploy money profitably. Many suggest that bright traders make lousy entrepreneurs. "Often they have a long track record but haven’t run their own business before," says Lisa Fridman of Paamco, a fund investor.
Running a successful hedge fund is still fabulously lucrative, however. The top 25 managers globally last year took home a combined $14 billion in pay and profits, according to Institutional Investor’s Alpha --and that was the worst year since 2008. Nine made over $500m. Even if the going is tougher, aspiring managers will keep trying their luck.
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Good Luck Trying To Start A Hedge Fund Right Now

If setting up a hedge fund were easy, more people would do it: bar inheritance or winning the lottery, there are few swifter paths to immense riches.
Sadly for aspiring plutocrats, it is getting ever harder to launch a fund. Swaggering financiers once joked that launching with less than $1 billion of outside money to invest was hardly worth their time. Debuts that splashy are now notable only for their scarcity.
A new fund typically opens with $50m-100m in assets under management.
Even so, and despite buoyant stockmarkets, the number of launches is declining (see chart).
Punier funds make for a less attractive business model. A $50m pile might once have been enough to sustain a small firm. Creaming off 2% of assets and 20% of profits—the standard hedge-fund fee formula—could generate around $2m a year given decent performance. No longer. Declining fees and low industry-wide returns have halved that amount.
<table class="image-container float_right" width="200"><tr><td><div class="image"></div>The Economist</td></tr></table>Expenses have risen, too. Thanks to the Bernie Madoff swindle, investors want to see sturdier back-offices staffed by compliance types. Gone are the days when two traders with a Bloomberg terminal and some banking contacts could brand themselves as a hedge fund and attract outside money, says Kent Clark of Goldman Sachs Asset Management, the bank’s investment arm. Paying for all this box-ticking requires more like $100m in assets.
The industry’s investor base has also changed, which makes it hard for those firms that do get off the ground to soar. Hedge funds used to get most of their money from rich people; nowadays, institutions such as pension funds are the dominant investors. They are often more risk-averse, preferring to invest bigger sums in fewer, large managers with a longer record. Although over half of hedge funds manage less than $100m, they represent only 1.4% of the industry’s $2 trillion or so in assets, according to Hedge Fund Research, a data provider.
The ranks of potential hedge-fund managers have also thinned. Post-crisis rules banning banks from wagering their own money prompted many of their star traders to leave and set up their own funds. That exodus is pretty much over; many of these new funds have already shut up shop after delivering underwhelming performance. The most favoured potential managers of new hedge funds these days are the key lieutenants at existing large funds, says Dominic Freemantle of Morgan Stanley.
Enough new funds are still launching to raise a question: why would any investor prefer managers at an established firm to set up their own shop? Data are patchy but suggest that start-ups do deliver better results. This may be down to newcomers being smaller and nimbler, or hungrier for the returns that will earn them mega-bucks. And many of the most sought-after funds are closed to new money, points out Ted Seides of Protégé Partners, a hedge-fund investor. Backing their most promising offshoots is the next best thing.
Indeed, a handful of specialist investors are looking to back new hedge funds in the same way that venture capitalists back start-ups. Blackstone, Goldman Sachs and others have pots of money dedicated to “seeding” new managers, entrusting them with $20m-100m of funds to invest in return for a share of revenue, typically 20%. Such seed funds had $5 billion to invest last year, estimates Acceleration Capital Group, an advisory firm. But even they have struggled to deploy money profitably. Many suggest that bright traders make lousy entrepreneurs. “Often they have a long track record but haven’t run their own business before,” says Lisa Fridman of Paamco, a fund investor.
Running a successful hedge fund is still fabulously lucrative, however. The top 25 managers globally last year took home a combined $14 billion in pay and profits, according to Institutional Investor’s Alpha —and that was the worst year since 2008. Nine made over $500m. Even if the going is tougher, aspiring managers will keep trying their luck.

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