#072: Should You Be Investing In Individual Stocks?
Big Picture Retirement®
Devin Carroll
4.7 • 546 Ratings
🗓️ 14 May 2018
⏱️ 44 minutes
🧾️ Download transcript
Summary
Warren Buffett made a bet, that came to be known as Buffett's bet, that the S&P 500 would outperform any basket of hedge funds in the next 10 years. It started on the 1st day of January 2008, and was supposed to conclude at the end of 2017.
If you look the final results, the S&P annualized gain was 7.1%, which is impressive considering that this challenge started during a terrible time in the market. The group of hedge funds didn't even earn an average of 2.1% during that period of time.
It's weird that Buffett made this bet, because he has made his fortune by buying individual stocks. This bet was contrary to the way he invests personally.
Letter to shareholders In the event of his death, he directs the trustees to put 90% of the trust funds value in S&P 500 index funds.
It does raise the important question, in your own portfolios, should you just stay to with a packaged product?
For more information, visit the show notes at http://www.bigpictureretirement.net/072
Transcript
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| 0:00.0 | The Big Picture Retirement Show does not provide specific tax, legal, or financial advice. |
| 0:05.1 | Listeners are encouraged to seek out their own advisors in these areas. |
| 0:12.8 | Hello everyone and welcome to the Big Picture Retirement Show where we deliver insight |
| 0:17.5 | on what you need to know for a meaningful and successful retirement. If you are planning |
| 0:22.6 | for or living in retirement, this is the show for you. I'm Devin. And just like he is every week, |
| 0:30.3 | John Ross is sitting across the desk for me today. Howdy. So, John, it was back in 2007, and I remember this because the market was seemingly headed downhill |
| 0:43.8 | pretty quick. |
| 0:44.8 | Okay. |
| 0:45.3 | I mean, 2007, you know, we were having some horrible days in the market. |
| 0:49.6 | And, you know, we thought it was bad. |
| 0:51.1 | 2008 hadn't hit yet. |
| 0:52.6 | Right. |
| 0:53.2 | But at that time, Warren Buffett made a bet. |
| 0:57.0 | And it was called Buffett's Bet, is the way it came to be known. |
| 1:01.2 | And he just made this bet against this guy named Ted. |
| 1:04.6 | I think his name was Ted Sides. |
| 1:06.7 | He was a big-time hedge fund manager. |
| 1:09.2 | That was back in the heyday of these hedge funds. |
| 1:11.7 | So Warren Buffett said, hey, Ted, I think that the S&P 500 is going to outperform any basket of hedge funds that you can put together. |
| 1:22.2 | So pick five, pick five of your favorites, put them together, and I'll bet just my simple little S&P 500 fund is going to beat him over a 10-year period. |
| 1:31.8 | Okay. |
| 1:32.6 | Well, Ted Seiddy said, no, I don't think it will. |
... |
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