Warren Buffet Recommends Index Funds

Here's a piece from Bankrate detailing the Berkshire Hathaway annual meeting featuring financial thoughts from Warren Buffet. As usual, he dispensed his brand of folksy financial wisdom on a variety of subjects, but one part of the piece I wanted to highlight is what he said about index funds. His thoughts:

In response to a question about why Buffett recommends index funds to investors, he said that for "a know-nothing investor, a low-cost index fund will beat professionally managed money." He also said he had a standing offer to anyone who could name 10 hedge funds that will beat a low-cost index fund. No one has taken him up on his offer.

Asked later why he didn't take his own advice on index funds, he said he thought Berkshire could beat the S&P by a couple of percentage points, "just not a whole lot better."

Wait, did he just call me a know-nothing investor? ;-)

That's ok, I don't take offense since he's calling 8 out of 10 (or so) mutual fund managers know-nothing investors as well. That's roughly how many can't beat index funds over the long term. ;-)

For more on why I think index funds are a great investment, see Why I Like Index Funds.

Comments

[shadox]

You know, if it comes from Warren Buffet, we probably all deserve the title know nothing investor.