This coming weekend is the annual Berkshire Hathaway shareholder meeting in Omaha. That means this week is the perfect opportunity to discuss a topic which will likely figure prominently at Berkshire this weekend: Ted Seides’s famous bet with Buffett. Ted and I discuss the origins of the bet, the nuances beneath the headlines, and whether he’d make the bet again for the next ten years. Along the way, we cover many hot topics like hedge funds, alternatives, fees, and indexing. Please enjoy!
Books Referenced
Unconventional Success (David Swenson)
Cable Cowboy: John Malone and the Rise of the Modern Cable Business
Links Referenced
Carol Loomis article on the bet (2008)
Berkshire Hathaway Shareholder Letter with Bet
Ted’s most recent piece on the bet/fees (2015)
Hard Times Come Hedge Funds (Carol Loomis, 1971)
Show Notes
2:08 – (first question) – Ted describes his first trip to a Berkshire Hathaway meeting
3:20 – What is Ted most excited for when it comes to this year’s trip
4:44 – How this now famous bet first came about
5:48 – Had rocks, got rocks, fees in financial services
7:16 – structure and funding of the bet
9:48 – How was PR handled from both sides of the bet
11:07 – Carol Loomis article on the bet (2008)
12:55 – Berkshire Hathaway Shareholder Letter with Bet
13:10 – Why was Ted willing to make this bet
14:22 – Ted’s most recent piece on the bet/fees
16:19 – Looking at the difference of exposures between the S&P 500 vs Fund of Funds
19:08 – Exploring pricing of the S&P 500 over a long period of time
22:04 – What should people take away from the bet
23:32 – Unconventional Success (David Swenson)
27:12 – Can the more expensive, more exclusive investing strategies be replicated in a public market cheap alternative.
27:18 – Warren Buffett’s Alpha
32:10 – At what level does it make sense to start looking at alternative level investment ideas
35:03 – Are hedge funds an asset class or contractual arrangement, and what metric would Ted use if the bet were to be repeated.
40:13 – Knowing what he knows now, what are some of the changes Ted would make to this bet
45:18 – The S&P is touted as a representation of the global economy but it only covers a fraction of it
49:17 – Would Ted use fund of funds in a new bet
52:52 – What was the most and least enjoyable part of this bet
53:52 – Hard Times Come Hedge Funds (Carol Loomis, 1971)
54:10 – What is another field of investing opportunities that Ted might not know as well that he is excited to explore.
56:54 – A closer look at deploying capital to buy smaller businesses
1:00:42 – Resources for folks interested in deplying private capital
1:01:24 – Cable Cowboy: John Malone and the Rise of the Modern Cable Business
1:03:02 – Bonus question about the S&P 500’s time weighted return vs how volatility effects people’s holding in the index
1:06:10 – How paper returns vs real returns in markets effect this equation of the bet.
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
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