Weekend Reading: Million Dollar Bet Edition

It’s over. Mercy rule in effect. The losing side took their ball and went home. At the end of 2007, investing legend Warren Buffett famously made a million dollar bet with hedge fund manager Ted Seides of Protégé Partners. Buffett wagered that a low-cost S&P 500 index fund would perform better than a group of Protégé’s hedge funds over the next 10 years.

Buffett’s index investment bet is so far ahead that Seides conceded the match, even though it doesn’t officially end until the end of the year. The group of hedge funds so far has managed to gain 2.2 percent a year since 2008, while the S&P 500 index fund posted gains in excess of 7 percent a year.

Buffett wins $1 million bet

“In conceding defeat, Seides said the high investor fees charged by hedge funds was a critical factor. Hedge funds tend to be a good deal for the people who run the funds, who pass on big bills to the investors.”

The $1 million will go to a Buffett charity, Girls Inc. of Omaha.

This Week’s Recap:

On Monday I wrote about five financial traps seniors fall into and how to avoid them.

Many thanks to Rob Carrick for featuring that post in his Carrick on Money newsletter on Friday.

On Wednesday Marie listed 10 things she’d consider buying used (plus five things she’d never buy used).

Weekend Reading:

While the debate over banning embedded commissions on mutual funds rages on with no end in sight, Ontario Securities Commission CEO Maureen Jensen says the status quo is not an option. The core issue, she says, is the conflict of interest where advisors may be incented to recommend products that maximize their own compensation over the interests of their clients.

Is diversification overrated? Not a chance, says long-time investment writer Jason Zweig.

Another investing legend – Jack Bogle – has a great piece of advice when it comes to investing:

“My rule — and it’s good only about 99% of the time, so I have to be careful here — when these crises come along, the best rule you can possible follow is not ‘Don’t stand there, do something,’ but ‘Don’t do something, stand there!’”

From good advice to the downright shameful. A Dominion Lending agent from Langley, BC, bizarrely claims that a second mortgage might fix your marriage and your money. Still shaking my head.

A good piece by Kate Smalley on the rise of home equity lines of credit in U.S. homes in the 1980s after Ronald Reagan made mortgage interest tax deductible:

“The change eroded the social norm that home equity was sacrosanct.” 

No surprise here. CBC Marketplace exposes how some car dealerships sell unnecessary service and push maintenance much sooner than the manufacturer recommends.

John Heinzl helps you decide.whether to invest in individual stocks or ETFs. Like most of these types of questions, the answer is, ‘it depends’.

Here’s another one: Can you afford that luxury thing? Des Odjick breaks down the decision.

Rob Carrick with the latest retirement obstacle: Even thirtysomethings are still living at home.

“Parents, themselves, may also be part of the story. What they see as neediness on the part of their adult children may actually be an example of financial helicopter parenting. For example, the answer to expensive houses may just be for your adult kids to rent or live in a condo or townhouse, not get a down payment from mom and dad.”

Retirement expert Fred Vettese has another suggestion to improve tax fairness. Convert the Public Service Pension Plan from a defined-benefit pension to a target-benefit plan.

Jason Heath answers what happens to a RRSP / LIRA / RRIF when you die.

Patrick Sojka from Rewards Canada explains why, despite all the negative press surrounding the Aeroplan program, he’s still invested in collecting Aeroplan rewards.

Finally, Million Dollar Journey blogger Frugal Trader lists his favourite three electric vehicles for 2017.

Have a great weekend, everyone!

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