S&P 500

“In fact, I think from this starting Shiller PE valuation from nine and a half years ago, this was the best, if not one of the best tenure periods ever.”

“At the time, the S&P 500 was trading near its historical high on a Shiller P.E. Basis, P.E. Basis, whatever you want. Simple metrics, but the S&P was expensive.”

“I would make the bet again, over and over and over again, enough times so that the odds played out.”

“If you measured these fund-to-funds against the Morgan Stanley World Index, which is not the right index because it's a hundred percent invested, it's almost a tie. International stocks, so everything but the US, are actually down over this nine-year period.”

“In 2008, the market, the S&P was down 37%. The hedge funds after Lehman, it was a big difference before and after, but after Lehman had a tough time, but were down, I don't remember the number, maybe it was 24%. This was the group of fund-to-funds.”

“As long as money is flowing there into exactly that strategy and buying those names more than it's buying other names. It is next to impossible to outperform that index.”

“I thought Warren was the patsy at the poker table, because he threw out the S&P as the index. I thought that was the wrong index to be picking, and it was something that was going to be an easy hurdle to overcome.”

“Historically speaking, the average Shiller P.E. Is probably 1617, something like that. But there's definitely two regimes, and one is sort of pre-early 19 eighties, and one is post. And the average post, 19 eighties, is much higher.”

“And there's one closing point I'd make that's an undercurrent of the bet, which is we all talk about and focus about how great the S&P five hundred's been. But what we actually did with the money, the collateral of the bet, outperformed the S&P 500 by a mile. …”

“The two key differences are the level of market exposure, where the S&P 500, every dollar you put to work is a dollar exposed to the market. In this group of hedge funds, and most hedge funds, let's just say for simplicity, it's about half of the exposure to t…”

“For all intents and purposes, it is, because it'd be very difficult for, unless there's a market crash, for the hedge funds to come back”

“They've done an amazing job of convincing their investor base that they need to hold these strategies for the long term. Now, obviously, that works out well for DFA as a business, because they've got incredibly sticky money, but it has also worked out very wel…”

“I just think that we have a trend. That's happened now with passive investing, and particularly the S&P 500, that is setting people, those people up for disappointment in the same way that it did 10 years ago.”

“We've had a market, the S&P, which, you know, hadn't had a five percent pullback in 400 trading that, you know, call it two years, which is the longest streak in since the fifties.”

“So we're not really yet in a period where active management can really show its worth, but I think we're going to be getting there, and that's really going to get us more back to full circle, where active managers are going to come in. They can show that maybe…”

“If you work in finance in New York City, and you have zero equities, you're long equities, right? Right? If you're in the hedge fund industry, private equity industry, you have beta, DS&P.”

“It probably makes no sense at all to try to outperform the S&P 500 today. Similarly with our fixed income, we want to get it right one time and move on.”

“Listen, we really need to separate the fiduciary duty and the political policy as it relates to health and dangerous products like cigarettes, because I can't really hold a manager accountable for beating the S&P 500 and then tell him he can't own one of the f…”

“He found this glitch. He found a screw up on the part of Bob Mercer, who was a super duper programmer, but he had messed up. There's a number that wasn't updating. It was an S&P 500 number that was static. And it was really more their hedging and their offsett…”

“I think that the US market for index funds is actually quite different from most other markets around the world in that, say the S&P 500 is very diverse with a lot of global leading companies. If you were to look in, say, emerging markets, there are a lot of c…”

“I think that it's probably fifty-fifty if you had a good hedge fund portfolio versus the market for the next 10 years, but I would never make what I thought was a fifty-fifty bet in public with Warren Buffett.”

“So I came out of it saying, you know, I actually still don't think it was a bad bet at the time. There was one outcome. It ended up being a bad outcome.”

“When we started the bet, My partners and I had said we thought we had, I don't remember what the number was, an 80 or 85% chance of winning, and you said you had a 60% chance of winning.”

“Now I think private markets are much more expensive than public markets, and you can see this with the venture-backed stuff like WeWork. Private markets say it's worth seventy-five billion. Public markets say it's worthless. You can see it in the deal multiple…”

“After a drawdown of 20% in the S&P 500, you wait three months. So now from the beginning of March through early June, and then you get involved. And then they looked at small cap and large cap value, small cap and large cap growth. And what they found essentia…”

“The challenge in these things are things like venture capital is a good example where there just aren't really reliable data. You and I can look at the S&P. 500 returns or the Russell 3000 returns. We can agree pretty much that the numbers are right. Venture c…”

“85% of the value of the S&P 500 is now driven by intangible assets, according to some studies, up from about 20, 25% of a few decades ago.”

“I think we can easily be at 7000 SPX by 2024.”

“Well, it was more than 30%.”

“In fact, I think it's challenging to do even higher than mid-single digits this next decade.”

“When we look at our data, and we ask the question of, what is the gap? We said a lot of things are about relativity. So we said, for each company, let's calculate the gap between how men feel and how women feel. Like, you know, do you feel appreciated? What's …”

“Yeah, so it does much worse. Systematically, repeatedly, by big gap.”

“If you were to strip out the 40 most successful US stocks out of the S&P 500 and compare that to the, so the remaining S&P 460, I guess. The S&P 400 sixty's performance is actually bang in line with emerging markets. Bang in line with European markets. There's…”

“The passive boom, when you look at the S&P, it's Right now, 18% technology without the F-A-A-M-G, but when you add Facebook, Apple, Amazon, Microsoft, Google as a separate group, that's about 23% of the S&P. 18% is technology, X those names, so you got about 4…”

“It has a correlation to traditional asset classes in the U.S. Of between -.2 and positive .3. And over the last 20 years has generated Compounded returns of 12 to 14% per year, which is about a 500 basis point premia to the S&P 500.”

“Venture strategies, private equity, real estate, they're all equity strategies, and so if you look at your portfolio, you're going to be long S&P, basically. So macro provides a diversifier, and if it's not working, great, the rest of your portfolio is working…”

“96% of CLOs had a positive return to the equity class from before the financial crisis with a median of 15 IRR, outperforming private equity, outperforming the S&P 500 even.”

“And maybe you put up on your wall when you say a hundred percent or 95% of the S&P 500 year to date performance is from the magnificent seven. That's not normal. That's not a healthy sign.”

“Big part of the reason why I was comfortable making the bet was because the market was trading in historical high valuations. When that happens, you don't expect the next 10 years will be good.”

“United Waste Systems outperformed the S&P 500 by 5.6 X. You would have made 5.6 times more money buying United Waste than you would have bought buying the S&P. We had a 55% CAGR on the profit and not coincidentally a approximately 55% CAGR on the stock price.”

“As much as I'm dismissive of private credit, these longer duration, niche-y credit opportunities continue to grow as part of our portfolio, because from our perspective, even if a lot of it is ordinary income, earning mid to high double-digit returns, because …”

“Energy stocks, six of the top 10 market cap companies in the world in the seventies were energy stocks, and they were 24% of the S&P 500 versus four percent today.”

“We have not had a direct exposure to the U.S. S&P. 500 or any U.S. Index since 1997, ok?”

“If you take the top decile relative to the remainder public securities in the U.S., it's at three X. It's the highest ratio Market cap in a hundred years.”

“I wrote in this piece that I think the chances of private equity average, so the median private equity outperforming S&P's 40%.”

“At the end of the day, there wasn't anyone to take the public equity side of the bet. I reached out to some friends at Vanguard, but Vanguard isn't just a public equity index fund manager.”

“Middle market's been better than large. Small has been better than middle market. Median has outperformed the S&P. Bottom quartile, definitely not. Top quartile by a lot.”

“Something like a 500 index fund, we're gonna see tracking error be no more than a couple basis points. Typically, less than one.”

“The S&P 500 should not be your benchmark nor your portfolio.”