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Comment by emodendroket | Hacker News Reader

Since you mentioned him: http://finance.yahoo.com/news/buffett-most-mportant-investme...

> Nearly a decade ago, Warren Buffett made a million-dollar bet: that by investing in a completely unmanaged, broad-market low-fee index fund, he could beat the gains earned by a high-powered hedge fund with a team of managers at the helm. His opponent was Protege Partners, LLC, a New York City hedge fund with $3.5 billion in assets under management.

[...]

> His simple Vanguard S&P 500 (VFINX) fund has delivered returns more than 40 points higher than those of the hedge fund. “I believe this is the most important investment lesson in the world,” he said.

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By the way, the bet is online at http://longbets.org/362/

Warren Buffet has so much money in his control that he cannot beat the market - his very investments change the value of the good companies he invests in - and not in his favor. He can make small bets of companies, but even if the bets all pay off (they will not - even great investors make mistakes) it isn't enough to be very significant.

His scale also works in his favor for some transactions like municipal bond insurance or paying cash to acquire Fortune 100 companies.

So he beat one particular hedge fund, that hardly proves that "essentially no traders beat the performance of index funds long-term."

http://www.cnbc.com/2015/06/26/index-funds-trounce-actively-...

> Pity the active fund manager.

> More dollars have flowed to index strategies that track a market benchmark, such as the S&P 500 index, partly because such funds typically have lower costs than active funds and more investors believe that stock-picking managers can't regularly beat the financial markets.

> Now a new Morningstar study, released this week at the Morningstar Investment Conference, finds that actively managed funds lagged their passive counterparts across nearly all asset classes, especially over a 10-year period from 2004 to 2014.

This evidence all suffers from the problem that you are trying to prove a very difficult claim. Information about averages won't help you here.

"Essentially nobody" is admittedly not well-defined, but I don't take it to mean that a handful of guys doing better would disprove it (and in any case have trouble finding any data points in favor of the opposite position).

I claim that the top 20% (as specified in the headline) could not be reasonably described as "essentially nobody". And the article you linked two posts ago found that more than 20% of funds beat the market.

That's over the course of a year, which is not what I would consider a long-term measure. Over the course of the year, sure, you could easily have people who beat the market.

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