Warren Buffett Would Sooner Entrust His Wealth To A 53-Year-Old Corpse Than Any Hedge Fund Manager

The Oracle of Omaha gives a whole new meaning to "passive investing."
Author:
Updated:
Original:
Getty Images

Getty Images

Warren Buffett has used the occasion of his latest triumph not only to make sexually retrograde jokes, but also to throw some shade at hedge fund managers in advance of his all-but-certain victory over the industry in his famed 10-year, $1 million bet about whether it’s better to invest an a hedge fund or an S&P500 index fund.

Buffett called these results “dismal –really dismal. And alas, the huge fixed fees charged by all of the funds and fund-of-funds involved – fees that were totally unwarranted by performance – were such that their managers were showered with compensation over the nine years that have passed.” He went on to estimate that 60% of the gains on those five fund-of-funds went to their managers over that period, calling that a “misbegotten reward.”

To the question of who he’d most readily pick to manage his fortune over a hedge fund, one might expect Buffett to say, “anyone.” Or perhaps “Jack Bogle,” given his plan to erect a statue in honor of the Vanguard Group founder. But no: Warren would rather give his money to a Brooklyn math professor than any hedge fund out there. A Brooklyn math professor who died in 1964, and whose name Buffett's biographer couldn't even be bothered to spell correctly.

Warren Buffett told CNBC on Monday that if he’d had to pick one person to manage his money, it would have been a “fella you never heard of: Herb Wolfe….”

“Herb Wolf was one of the smartest guys I ever met. He could tell the effect on American Water Works’ earnings if somebody took a bath in Hackensack, New Jersey. He was unbelievable. One day Herb said to me, ‘Warren, if you’re looking for a gold needle in a haystack of gold, it’s not better to find the gold needle.’ I had this thing that the more obscure something was, the better I liked it. I thought it was a treasure hunt. Herb got me out of that way of thinking. I loved that guy.”

Warren Buffett: This Is Who I Would Have Picked to Manage My Money [WSJ]
Buffett Salutes Jack Bogle And Blasts Hedge Funds [Barron’s]

Related

Getty Images

Warren Buffett Having Second Thoughts About Immortality

The Oracle of Omaha may be in his final decade of Oracle-ing.

Warren Buffett in the Oval Office, July 14, 2010. Pete Souza [Public domain], via Wikimedia Commons

Surge In Warren Buffett Steak-Lunch Index Goes Unnoticed By President Trump

The Oracle of Omaha’s Obama connections means even Trump won’t take public credit for this sign of economic robustness.

Getty Images

Warren Buffett Hates Hedge Fund Activism More Than He Loves GE

He won’t have anything to do with a company that listens to the likes of Nelson Peltz.

Getty Images

Hedge Funds Didn’t Lose That Bet To Warren Buffett Because Passive Indices Will Always Beat Active Managers Over The Long Term But Because They Just Picked The Wrong Decade To Bet On

That’s the real reason Buffett’s declining a sequel and not because actuarial science says he’ll be dead by the time it ends.

Getty Images

Warren Buffett Defends Non-Existent Gun Investments

Don’t be ridiculous about Berkshire divesting from companies it doesn’t own but might if they get cheap enough.