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Who am I to question the Great One? He’s produced 21% CAGR for 40 years and I don’t even use my real name when I write blog postings. But I have to push back a little on Buffett’s entertaining, but somewhat misleading salt-of-the-earth populism. It certainly sells tickets at the Qwest centre, but it’s an unhelpful contribution to the important debate over investment management fees.
In fairness, Buffett is one of then world’s most successful producers of alpha - beating the S&P500 by an average of 10%p.a. over the past 4 decades. But he takes his usual swipe at the “2-and-20 crowd” in his recently released 2006 investment letter. We commend his implicit emphasis on alpha as the raison d’etre for fees, but he is too quick to assume hedge funds simply deliver beta......Read the entire article here.