Recently, Warren Buffet wagered $1 million for charity. The terms of this wager involve him personally being able to achieve a higher financial return on investments than an entire group of hedge fund managers. The twist is that he will only be investing in an S&P 500 passive index fund. According to records being released this year, Buffet will collect in this wager.
According to Buffett, there are a large number of mediocre and expensive stocks that cause investors to be short changed. His theory is that focusing on low costs investment options can save the investor that trust him a lot of money.’
By investing in low costs stocks. There is less of a chance for investors to lose large amounts of money in small investments, but the opportunity for a large return on investment, should the stock really take off. Even if the stock does not take off, any lost is considered minor in comparison to other high-risk stock availability.
After careful analysis, Tim Armour finds that the strategy being used by Buffett may be of great use, even in large hedge funds, which typically ignore the opportunity for low risk investment.
This insight is from Tim Armour, the CEO and from Capital Groups, a company that manages some of the largest investment portfolio’s in the world.
Before advancing to his position as a CEO, he worked as an equity investment analyst for a number of global telecommunications company, and a larger amount of U.S. Service companies.
Learn more about Timothy Armour on Bloomberg.