Why Warren Buffett Said A Man You've Probably Never Heard Of 'Has Done Probably More For The American Investor Than Any Man In The Country'
Buffett's convictions were so strong that he famously "put his money where his mouth was" in 2008. He made a $1 million challenge to any hedge fund manager who could beat the returns he generated by investing in passive index funds over a decade. Tom Sedies, who was managing Protegee Funds at the time, took Buffett up on his bet, and the race was on.
Buffett chose Vanguard's S&P 500 index fund, while Sedies relied on a combination of five hedge funds. By the time it was over, the Financial Times reported that the Vanguard fund Buffett chose had returned 126%, while Sedies' hedge funds only generated 36% returns during the same period. Buffett planned to make the results public at his Berkshire-Hathaway (NYSE: BRK.A, BRK.B) shareholders' meeting, but he also invited Bogle.
Buffett proclaimed Bogle "has probably done more for the American investor than any man in the country,” during his keynote speech. “I estimate that Jack, at a minimum, has saved and left tens and tens and tens of billions into their pockets, and those numbers are going to be hundreds and hundreds of billions over time," Buffett continued. It was high praise considering the source.
Buffett's endorsement put index funds on the map in a way that they hadn't been before. It helped pave the way for Vanguard to become a household name and gave millions of investors an alternative to expensive hedge funds. Buffett had long crusaded against high management fees, and Bogle helped him show investors there was an equally effective way to diversify their holdings.
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This article Why Warren Buffett Said A Man You've Probably Never Heard Of 'Has Done Probably More For The American Investor Than Any Man In The Country' originally appeared on Benzinga.com
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