March 24, 2012
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.