How many years have you come? This is my 11th good they’ve been 11 great years. Thank you very much at this meeting uh four or five years ago. You commented that money managers in the aggregate have not done better than various market indices, and you attributed this in part to the frictional cost inherent in an actively managed portfolio. I wonder if today you would. You would update your thoughts on this, and do you think that this underperformance compared to index funds will continue and then a related question? If the two of you were giving advice to a classroom of equity, mutual fund managers, are there two or three things in particular that you would want to suggest to them? Yeah? Well, i would say there’s money managers in the last few years since i’ve made. That statement have not disappointed me in aggregate. They have underperformed index funds and it’s the nature of the game. They simply cannot overperform an aggregate there. There are too many of them managing too big a portion of the pool and for the same reason that the crowd could not come out here to examine in the past years and make money in aggregate, because there was a bite being taken out of every dollar. That was invested in the fair mutual machines that people that invest their dollars elsewhere through money managers in aggregate cannot do as well as they could do by themselves, creating their own index fund or be easier to have just to buy into an index fund it’s.

You know they say in this world, you can’t get something for nothing, but the truth is money. Managers in aggregate have gotten something for nothing. I mean they’ve gotten a lot for nothing and and people investors have paid and the corollary is. Investors have paid something for nothing and that doesn’t mean the people are evil. It doesn’t mean that they’re charlatans or anything it’s, just it’s the nature. If you’ve got a six or seven trillion, dollar or whatever it may be equity market, and you have a very significant percentage of it, managed by professionals and they charge you significant fees to invest with them and they have costs when they change around. They cannot do as well as unmanaged money in aggregate and it’s the only field in the world that i you know that i can think of and charlie will think of some others, but but where the amateur as long as he recognizes his amateur will do better Than the professional does for the people whose money he’s handling and and therefore, if i were in a teaching this class or speaking to that class, i would probably tell them that, for their own psychological well being they should probably leave the room charlie. Well, i pretty well said what i had to say on this subject. In that talk i gave at usc and anybody that wants to read that i can read it. I will say that one of the things i like about the annual meeting is, i get to interface with a whole lot of people that have even lower annual investment management expenses.

Then berkshire hathaway, the company. Does i mean if you stop to think about it. We’Ve got our cost almost to zero, and many of you have gotten it to zero. We charlie and i would be glad to take any money management organization in the world that manages a management organization in the world that manages oh just been had a note says. Unfortunately, we don’t have extra annual reports on site those shareholders desire. Oh just been had a note says. Unfortunately, we don’t have extra annual reports on site those shareholders desiring one should call us or right so, and anyone should call us or write and and we’re also on the internet. You can you can run it off there too, so i apologize for not having them on the uh here, but but they’re easy to get just just dial, 346, 1, 400 and there’s. An annual report line and you’ll have one one sent to you. We would be willing to take any money management organization in the world, managing 10 billion or, more and and in the case of brokerage houses who have their brokers in aggregate handling, 10 billion or more. And we would be willing to bet that their aggregate investment experience over the next five years or ten years for the group that they advise will be less uh, will will be poorer than that achieved by a no load. Very low cost index fund and we’d put up a lot of money to make that wage here with anybody that would care to step forward.

Gambling may be illegal, but now you can do it through something called derivatives. You see and we could. We could create an instrument that would allow that, even though it might be uh against the laws of the state of nebraska charlie, would you join me on that or well i. I certainly agree with you. I always say that the exactly one fifth have to be in the bottom: 20 percent and there’s certain fundamental forces at work here that, but it is a very peculiar profession where you have to be in a state of psychological denial to shave in the morning. If you, if you do the work, i don’t think that’s true for a handful of investment managers. I i think we know investment managers who who add value but it’s it’s, a comparatively rare and small percentage yeah we they’re we have identified in the past. Even i mean on a prospective basis, not retrospective managers, who have added value and there’s a couple of them in this room. Um well there’s, louis simpson of geico. Well i mean he’s one. I had in mind you know it, you can do it, you can’t, do it with unlimited amounts of money and a good record tends to attract money. Even a mediocre record, presented by a good salesperson, tends to attract money, but they um. There are people working with smaller amounts of money that, where the probabilities are that they will do better than that.

Excuse me where the probabilities are that they will do better than average, but they’re very rare. Incidentally, i apologize on this voice. I had to leave garage early last night and then there were a number of you. I was hoping to see, but i just it was gone entirely last night and then i i managed i like to tell you.

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