The market is a fickle beast, but Warren Buffett has made a wager that will challenge the way many people look at the market. He has wagered $1 million to be donated to charity that he can maintain better returns on investments than a group of hedge fund managers, and his plan is simple. He will be investing in the S&P 500 passive index fund, and it looks as though Mr. Buffett will be collecting his winnings at the end of the year.What this bet will prove essentially is that passive index returns are not the only path to building a fund for your retirement. Index returns have an important place in the market, but they can prove to be unstable when the market goes awry. In fact, they often expose investors to 100 percent of the volatility in the market as it takes both wins and losses. Buffett has taken a new route that has provided a bit more stability, and has he is proving, his method works just as well, if not better, than the traditional way.
Tim Armour recently recapped the bet Buffett took and outlined why he backed the plan. He firmly agrees that while there is no crystal ball to predict the future of the market, there are experienced hedge fund managers that have learned how to read the market and with all their combined experience can make well informed decisions about investments.Armour is also watching the activity flooding the market after the election of the newest US President, Donald Trump. While some speculated his election would crash the market, the opposite seems to be true. Armour recently noted that what the market is doing is not simply a falsely inflated bubble, but is quite real and huge.
For the majority of Tim Armour’s career he’s seen declining interest rates, and he wagers that we’ve seen the bottom of the market and it’s all uphill from here.Armour’s opinion is nothing to scoff at, with his massive amount of market experience, he has the history to back his claims. He graduated from Middlebury College with a Bachelor’s degree before going on to work at numerous groups. He currently serves as the Chairman, Director, and Principal Executive Officer for Capital Research and Management Company. He has also been on the board for The Capital Group Companies, Inc., and AMCAP Fund.