This video is part of our "Motley Fool Conversations" series, in which senior analyst Anand Chokkavelu, CFA, discusses topics around the investing world.
Back in 2008, Warren Buffett made a $1 million, 10-year-long bet that an S&P 500 index fund (in this case, the lower-cost admiral shares of the Vanguard 500 Index Fund) could beat a fund of hedge funds. Although initially down on the bet, Buffett's pulled ahead recently (a 2.2% return versus. an estimated -4.5% return). Anand explains why the simple Buffett side of the bet is superior to the fancy Wall Street side.
Buffett's bet teaches a good lesson that indexing is a simple, viable option for most investors. Anand indexes a good portion of his own portfolio. But if you also like to pick your own individual stocks, check out our free report: "The Stocks Only the Smartest Investors Are Buying." The report details a company that Buffett would probably be interested in if he could still invest in small companies. Just click here.