Long Bet: Warren Buffet’s 10 Year Long, Multi-Million Dollar Wager Comes to a Close

Back in 2013, I wrote about Long Bets, a project by The Long Now Foundation that serves “as public arena for competitive predictions of interest to society.” The site allows two people to wager money against a prediction, one who believes it will come to pass and the other who believes it will not.

The rules regarding a bet are interesting, with a minimum of $200 from each participant… and a minimum timeframe of two years, before the bet is resolved. While a lot of bets and predictions have been made, Buffet’s was one of the more famous one for the amount wagered (and for his name recognition).

The bet between Warren Buffet and Ted Seides (of Protégé Partners), revolved around what would perform better over a 10 year period: a low-cost index fund or a portfolio of hedge funds of funds. Here’s the actual wording of the bet:

Over a ten-year period commencing on January 1, 2008, and ending on December 31, 2017, the S&P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.

The bet itself is viewable online, along with each participant’s argument.

I was reminded about this bet today, and got to read about how Buffet ultimately won the bet. It’s interesting to note that the original wager was to be for $1 million, and had both participants put up $320,000 each (which was expected to become $1 million in 10 years’ time). And also interesting to note that the bond value of the wager appreciated faster than expected, and the total amount ended up to be $2.2 million.

While Buffet’s name is the attention-grabber, I want to note that were it not for Seides, this bet would never have taken place. I like that both sides put their money up for their beliefs/ideas, and allowed things to play out over the course of a decade. And I love that The Long Now enabled the process to happen in the public sphere. And to top it all off, all the money went to a charitable cause.

Once more, The Long Now has me thinking beyond what my day holds, what errnads I must run after work, what my weekend will be like. What will the next year hold, the next decade? The next century?

The further out we imagine, the less we seem to focus on the self. I am not in the habit of viewing the world (or myself) in this long-term manner, and enjoy the reminders to do so.

[Photo: Fortune]

Long Bets: An Arena for Competitive, Accountable Predictions
Clock of the Long Now: Installation Begins
The Clock in the Mountains

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