I love this part:
>"But the S&P 500 defied the odds and rewarded investors with a historically normal 7.1 percent nine-year annualized return."
He must know that 7% is something of a magic number, it's what Jeremy Siegel argued is the steady, annual inflation-adjusted gains for equites for the past 200 years in his seminal book "Stocks for the Long Run," which was written in 1994 and is the foundational argument for passive equity investing ("Irrational Exuberance" and others argue directly against it).
The fact that the S&P 500 did 7.1% over 9 years is only "lucky" if you ignore the precise argument that Buffet, Siegel and many others make.
Not quite. Seides' claim is that, at the start of the period, the S&P 500 was valued at the high end of its historical range. It is somewhat reasonable to expect that it would come down from that high instead of going higher.
... and the S&P 500 did go down from that high. Within a year after the bet was made, the S&P 500 crashed, dropping 50% of its value. But the S&P 500 still more than made up the returns to beat the hedge fund.
He must know that 7% is something of a magic number, it's what Jeremy Siegel argued is the steady, annual inflation-adjusted gains for equites for the past 200 years in his seminal book "Stocks for the Long Run," which was written in 1994 and is the foundational argument for passive equity investing ("Irrational Exuberance" and others argue directly against it).
The fact that the S&P 500 did 7.1% over 9 years is only "lucky" if you ignore the precise argument that Buffet, Siegel and many others make.