Denver Nuggets: The Long Bet – Denver Stiffs
A dozen years ago, a 75-year old man made a bet. A bet that could have easily outlived him, given the terms he was seeking.
In May of 2006, Warren Buffett, the Oracle of Omaha, stepped in front of a crowd of over 20,000 investors to tell them that any of them betting on hedge funds over the long haul were being taken for a ride. According to Buffet, the high-risk, high-stakes world of hedge funds did make a ton of profits, but primarily for the hedge fund managers who oversaw the funds. Buffett famously told the crowd that sticking your money into a boring old S&P index fund would beat the hedge fund guys hands down. And he was willing to put a half a million dollars of his own money on the line for a decade to prove it.
With Buffett’s reputation, it was a while before anyone took him up on the bet, but 14 months later, a hedge fund management group took him up on the wager. To keep things legal, they donated the winner’s outcome to a charity of their choice. The bet kicked off in early 2008. Anything else memorable happen in 2008? Only one of the largest financial meltdowns in U.S. history.
And with that meltdown, Buffett’s bet came out of the gates poorly. By the end of the year, he was already behind the hedge fund by 13%. The Oracle kept on his game face and reminded everyone of Aesop’s tortoise and the hare. After all, he had nine-plus years to try and make back that ground.
Your Denver Nuggets just laid a similar set of chips on the table. A week ago, Tim Connelly and the Nuggets front office stepped away from what sounded like a plan to shed some salary