[byrneseyeview]

Your first assumption is incorrect. I never said they were chosen randomly, and specifically mentioned researching those 100 stocks. Since I did not say that the stocks were random, and also said that they were not random, I am not sure where you got that idea.

It seems fairly unlikely to me that there is no value to research. The average person's research may have low marginal value, but I cannot help but notice that some folks are able to research a company, articulate why it's a good company to invest in, and be right. It would be kind of funny if stocks were the only financial transaction in which doing less research was an advantage. Of course, for pecuniary reasons I won't discourage you from investing on that assumption.

The average hedge fund is not necessarily trying to outperform the market. Many of them are looking for higher risk-adjusted returns (i.e. being up when the market is up, and up less when the market is down). And to some extent the low future returns of hedge funds can be blamed on outside investors: a fund with a good record can scale up tenfold within a year once investors start chasing them -- that hurts returns, but their fees can convince managers to take on the extra money anyway.

Finally, the hedge fund comparison is silly because you (probably) don't pay a 2 and 20 on your own personally selected investments. If you do, I would suggest switching brokers. Since Buffett's bet is at least partially a bet that the high returns don't justify such high fees, you might pay attention to the gross returns rather than the net returns.

[anamax]

> The average hedge fund is not necessarily trying to outperform the market. Many of them are looking for higher risk-adjusted returns (i.e. being up when the market is up, and up less when the market is down).

What do you think that "outperform the market" means if not "higher risk-adjusted returns"?

[byrneseyeview]

"Higher returns."