How Warren Buffett Won His Multi-Million Dollar Long Bet
Buffett’s wager is a lesson in taking the Long View
From the preacher warning that the day of reckoning is nigh, to the sports analyst prognosticating about the outcome of next week’s big game, to the fortune teller calling for hard times in Mercury retrograde, predictions are pervasive, but accountability is rare. That the vast majority of predictions fail to come true is hardly a deterrent; we tend to remember the few that do.
This is a story about a prediction that was made ten years ago, on the eve of the worst financial crisis since the Great Depression, by Warren Buffett, one of the three richest people in the world. Unlike most predictions, Buffett’s came to pass. And unlike most predictors, Buffett was willing to put his money where his mouth was.
I. The Oracle of Omaha
In May 02006, some 20,000 investors convened, as they did every year, at the Berkshire Hathaway annual meeting to hear the Oracle of Omaha hold forth. After issuing prophecies on matters such as whether to invest in newspapers (don’t), and a looming housing bubble (there would be), Berkshire Hathaway CEO and legendary investor Warren Buffett took aim at hedge fund managers and the exorbitant fees they charged investors for their supposed expertise in…
