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Warren Buffett Wins Million Dollar Long Bet

Posted on Friday, February 9th, 02018 by Ahmed Kabil
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SAN FRANCISCO, CA. February 9, 02018.* The Long Now Foundation today announced that it has arrived at a decision for Long Bets #362, popularly known as the “Million Dollar Buffett Bet,” between Warren Buffett and Protégé Partners LLC. Warren Buffett has won the bet, and by a significant margin.

In the bet, Warren Buffett predicted that “Over a ten-year period commencing on January 1, 02008, and ending on December 31, 02017, the S&P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.”

Warren Buffett invested in the Vanguard index fund. Protégé picked five hedge fund of funds (whose names have never been publicly disclosed—although Buffett does see their annual audits).

While Protégé’s position pulled ahead in the early years of the bet, which occurred during the global financial collapse, Buffett’s position more than made up for it, taking the lead for the first time in the bet’s fifth year. Over the decade-long bet, the index fund returned 7.1% compounded annually. Protégé funds returned an average of only 2.2% net of all fees. Buffett’s point, which was well-illustrated, is that when looking at returns, fees are often ignored or obscured. And when that money is not re-invested each year with the principal, it can almost never overtake an index fund if you take the long view.

“In my opinion, the disappointing results for hedge-fund investors that this bet exposed are almost certain to recur in the future,” Buffett said in last year’s Berkshire Hathaway annual report. “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.”

Buffett and Protégé initially wagered an investment that would become $1 million at the end of the bet, but the bond value appreciated faster than expected, resulting in shifting the investment strategy and growing the winnings to $2.2 million. The winnings will go to the charity of Buffett’s choosing, Girls Inc. of Omaha. Given that Girls Inc. currently has an operating budget of $2.8 million annually, the winnings will go a long way in furthering the charity’s mission to inspire girls to be “strong, smart and bold.”

“Long Bets is honored to have hosted this decade-long wager,” said Alexander Rose, Executive Director of The Long Now Foundation. “It is both gratifying to see long-term thinking winning the bet, and to have such a great outcome for the worthy charity receiving the winning stakes.”

About Long Bets

Long Bets is a public arena for enjoyably competitive predictions of interest to society, with philanthropic money at stake. The Long Now Foundation furnishes the continuity to see even the longest bets through to public resolution.

The Long Bets forum is intended as a tool to improve long-term thinking. We often make statements about the future, but there’s little that compels us to really think about what we say: even the craziest statements will never have to be revisited. We only remember the tiny fraction of statements that turn out to be correct, leading us to think all predictions generally come true.

Long Bets is changing all this by encouraging us to hold ourselves accountable for the predictions we make. We ask all predictors to put their name, a solid argument, and a financial pledge down in support of their statement about the future. And Long Now, in turn, provides a long-term record where any prediction can be revisited, reviewed, and discussed at any time.

How to make a Long Bet

A Long Bet always starts with a prediction. Anyone can visit the Long Bets website and click on “Make a prediction.” All predictions should come with an argument in support, a financial pledge, and an end-date. The minimum term for a prediction is two years; there is no maximum term.

A prediction becomes a bet when a challenger comes forward with a counterargument. The predictor may then choose to make a bet with the challenger. The predictor and challenger will agree on a wager, and each will choose a charitable cause to receive the winnings.

When the end-date for the bet passes, The Long Now Foundation will adjudicate the bet and donate the proceeds to the winner’s charity of choice.

The Long Bets site offers a public record of all predictions and bets. We highly encourage discussion about what we may learn, or what we have learned, from bets and their outcomes. This is what feeds improvement of long-term thinking—the real pay-off.

*The Long Now Foundation uses five-digit dates. The extra zero is to solve the deca-millennium bug which will come into effect in about 8,000 years.

Warren Buffett maintains his lead in his $1 million Long Bet

Posted on Friday, March 13th, 02015 by Andrew Warner
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In 02008, Warren Buffett placed a Long Bet that will take until 02017 to resolve. He predicted that for those ten years, “the S & P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.

Below is a summary of how things went in the seventh year of this Bet, as published by Fortune Magazine:

Warren Buffett adds to his lead in $1 million hedge-fund bet


By Carol Loomis

Seven years into a 10-year performance wager, the Berkshire Hathaway CEO is winning easily.

Results are in for the seventh year of what’s sometimes called The Million-Dollar Bet—Warren Buffett’s 10-year wager that the S&P 500 would outperform a sampling of hedge funds—and, for now at least, it’s looking like a rout for the CEO of Berkshire Hathaway.

Under the terms of the wager, Buffett is betting (with his own money, not Berkshire’s) on the stock market performance of an S&P 500 index fund while Protégé Partners, a New York money manager, is banking on five funds of hedge funds (the names of which have never been publicly disclosed) that Protégé carefully picked at the outset. Through the seven years, Vanguard’s 500 index fund, as represented by its Admiral shares, is up 63.5%. That’s the portfolio carrying Buffett’s colors. Protégé’s five hedge funds of funds are, on the average—the marker the bet uses—up an estimated 19.6%. (The “estimated” takes into account that not all of the five funds have final figures for 2014).

A charity of the winner’s choice will receive $1 million—or more, which we’ll get to in a moment—at the bet’s end.

This was the sixth straight year that the contest has tilted in Buffett’s direction: The Admiral shares were up 13.6% in 2014 and the average gain for the funds of funds was 5.6%. Only in the first year of the bet—which began in 2008, a year that was a train wreck for both the economy and the stock market—did the funds of funds win, so to speak. They were down, on average, only 24%. The Admiral shares plummeted by 37% that year.

In Fortune (which exclusively wrote about the beginning of the bet in 2008 and has since annually made public how the bet stands), Buffett pictured himself after the 2008 tumult as a tortoise, up against a hare. Since then, Buffett has stuck to the plot of the Aesop fable and methodically moved ahead of his rival.

With only three years left in the bet, is there a scenario that would leave Protégé closing the yawning gap and winning? One scenario, maybe, and it is articulated by Ted Seides, the Protégé partner who in 2007 negotiated the bet with Buffett (after Buffett, in a speech, threw out a challenge to the hedge-fund world). Says Seides: “The odds now are that we’ll need to see a severe market contraction for our side of the ledger to stage an epic comeback.”

And he adds the deeper meaning of such a contraction. “One lesson from 2008 is that no one wins when that occurs,” says Seides.

To amend that statement only slightly, this contest will definitely have one certain winner: The charity that gets the proceeds of the bet. The odds say that will be Girls Inc. of Omaha, which Buffett designated to get the money if he emerged the victor.

The amount handed over, though, is not likely to be $1 million, because of changes that Buffett and Protégé made in the wager a couple of years ago. The original bet stipulated that each side in the bet would put up $320,000 to be invested in a zero-coupon bond that after 10 years would be worth $1 million. Thus the name of the bet.

But, when the recession hit, interest rates went down so insistently—which sent zero-coupon bonds up—that the valuation of the bond that Buffett and Protégé bought was by the fall of 2012 very close to the promised land of $1 million.

The two contenders then agreed that the bond would be immediately liquidated and the proceeds put into the B stock of the company that Buffett heads, Berkshire Hathaway. Buffett also issued a guarantee: He will pay the winning charity $1 million if the Berkshire stock bought isn’t worth that much at the bet’s end.

And what’s happened since those changes? Berkshire, like the S&P 500 overall, has done well, and the bet’s stock is now worth about $1,680,000.

That’s a tough figure for headline writers to handle. In its annual rundown, Fortune will probably stick to the “Million-Dollar Bet,” even as that description—for the minute, at least—understates the case.

Carol J. Loomis, who retired recently from Fortune as a senior editor-at-large, is a long-time friend of Warren Buffett’s, a Berkshire Hathaway shareholder, and editor of Buffett’s annual letter to shareholders.

How Hard Should the Turing Test Be?

Posted on Tuesday, July 29th, 02014 by Austin Brown
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It seems clear that computers are becoming more intelligent, but in the face of this fact, our definition of intelligence itself seems increasingly blurry. The University of Reading recently made an announcement exemplifying this trend:

The 65 year-old iconic Turing Test was passed for the very first time by computer program Eugene Goostman during Turing Test 2014 held at the renowned Royal Society in London.

At its face, this is huge and historic news. Alan Turing’s proposal of the eponymous test threw down the field of Artificial Intelligence’s original gauntlet. For a computer program to pass for human is no small feat and the creators have done something no one has achieved until now.

Within the world of Long Now’s Long Bets, as well, $20,000 is on the line – Mitch Kapor predicted in 02002 that “By 2029 no computer – or “machine intelligence” – will have passed the Turing Test.” He argued that when it comes to human knowledge and culture,

It is such a broad canvas, in my view, that it is impossible to foresee when, or even if, a machine intelligence will be able to paint a picture which can fool a human judge.

Ray Kurzweil, who helped popularize the Turing Test in his books The Age of Spiritual Machines and The Singularity is Near took him up on the bet, countering that sufficient reverse-engineering of the human brain will allow for computer programs that can think like a human and that trends within the relevant research are accelerating much like the power of computers themselves.

Eugene Goostman would appear to have beat Kapor’s deadline by 15 years!

As with any wager, though, the devil is in the details, and here is where we come back to fuzzy definitions of intelligence. Eugene Goostman the computer program poses as a 13 year-old who is communicating in a language that isn’t his first. Interrogators had only had 5 minutes with which to get to know “him.” And in the end, a “passing” grade for this test was 30% – the program managed to convince 33% of judges it was human.

In a way, we have to talk about Turing tests. The Turing test passed by Eugene Goostman in not the same Turing test proposed by Kapor and Kurzweil. Indeed, Kurzweil found Eugene Goostman to be rather lacking, posting a transcript of a conversation he had with the program and pointing out some of its clearly non-human characteristics:

I chatted with the chatbot Eugene Goostman, and was not impressed. Eugene does not keep track of the conversation, repeats himself word for word, and often responds with typical chatbot non sequiturs.

His bet with Mitch Kapor stipulates that interviews will last 2 hours, which would allow for significantly more in-depth conversation and, one assumes, a much easier time in determining computer or human. Kurzweil has not conceded the bet and even explains that he expects a long period of dubious and debated claims that computers have passed Turing’s test.

Turing’s test was explicitly meant to ignore the mechanisms of thought and to focus on the experience of it, but in tweaking the rules of the test we implicitly set a bar and work towards a definition for human intelligence. The bar cleared by Eugene Goostman may not be high enough to indicate human-level intelligence to Kurzweil or many others, but there can be little doubt that higher bars will yet be cleared and each one’s demonstration of intelligence debated.

Paul Sabin on the Gamble over Earth’s Future

Posted on Wednesday, October 9th, 02013 by Charlotte Hajer
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In 1980, a bet was made between a Malthusian ecologist and a Cornucopian economist – between optimism and pessimism – about the fate of humanity and planet Earth. The wager concerned fluctuations in the market prices for several crude metals. If prices rose over the next decade, civilization must be facing scarcity and thus inevitable doom; falling prices, on the other hand, would signal abundance, ingenuity, and human prosperity. In 1990, optimism won. (A longer-term bet, however, would have turned out differently.)

Last month, Yale historian Paul Sabin published a book in which he revisits this iconic bet. Delving into the philosophical disagreements between doomsday-saying environmentalists and optimistic believers in the adaptive powers of human innovation, the book ultimately asks: how should we measure global prosperity, and what will spur us to act on a changing environment?

While the (rising) price of essential commodities can be a powerful motivator for action, Sabin writes, some important indices of civilizational well-being may not be reflected in the behavior of the free markets (think, for example, of the impact of carbon dioxide emissions, which currently carry no financial burden). Nevertheless, doomsday-warnings about the impact of environmental destruction do not seem to be much better at prompting productive responses to our evolving world. Advocating a middle ground between these two entrenched perspectives, Sabin ultimately argues that the future of our planet is best served by actions and decisions that are driven by social values – and a long-term perspective:

“I think that environmentalists would find a more solid foundation to advocate action if they made their case based on social values, rather than apocalyptic fear. What kind of world do we want to live in? Humans might survive, and even prosper economically, in a warmer and more populated world. But are the risks associated with climate change worth taking? (The answer, I think, is clearly “no.”) Do we want to live on a more biologically impoverished, albeit economically productive, planet? These are profound social questions that, I might point out (as a historian), cannot be answered by economics or biology alone but rather depend on the humanities and can only be resolved through politics.”

The Bet: Paul Ehrlich, Julian Simon, and Our Gamble Over Earth’s Future has been published by Yale University Press. You can read more about and by Paul Sabin here.

Long Bets Table at WorldFuture2013

Posted on Friday, August 2nd, 02013 by Andrew Warner
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From July 19th- 21st in Chicago, the World Future Society hosted their annual conference, WorldFuture 2013. The conference had over 60 sessions, workshops, and special events over the course of two and a half days, including a keynote from former SALT speaker Nicholas Negroponte. Topics ranged from Artificial Intelligence and the future of education to gaming and politics.

This year, Long Now hosted a table on Long Bets. For the weekend, we waved the $50 prediction fee and gave conference guests the chance to make predictions for free. The table generated much interest and led to predictions on topics as diverse as urban farming and the future of libraries.

One of the keynote speakers and Long Now member, Ramez Naam, paid the table a visit and made two predictions, both of them concerning our environmental future:

“By 2020, across at least 25% of the continental US, the cost of new solar or wind will be lower than the cost of either new coal or new natural gas”

“The first ice-free Artic day (as defined by NSIDC) will occur by the end of 2020.”

Wendell Wallach, a bioethicist at Yale and presenter at the conference, made a controversial prediction concerning the timeline of fully autonomous cars:

“Neither the Google car nor any other fully autonomous car will be marketed to the general public by 2025”

To see the predictions from the conference and other recent predictions, visit the Long Bets site. If you find yourself in disagreement with any of the predictions, join the conversation by creating an account and challenging the prediction.

The Long Now Foundation on Tumblr

Posted on Friday, July 19th, 02013 by Mikl Em
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Photo closeup of a prototype Geneva wheel by Raphael Varieras
Geneva wheel prototype photo by Raphael Varieras

We recently launched a Long Now Tumblr blog where you will find even more about Long Now and related topics. If you’re unfamiliar with Tumblr, you don’t need to join the service to read the blog, just follow the link. But if you are on Tumblr, please follow and share the posts you enjoy.

Our Tumblr will complement what we publish on this blog. We’ll share a lot of Long Now images, information about our projects, fundamentals of what we do and why, and a look back at some highlights from our past.

Every Friday on Tumblr we will share audio from a past Seminar About Long-term Thinking. Our decade-old speaking series is building a compelling body of ideas about long-term thinking. It is curated and hosted by Stewart Brand, Long Now’s co-founder and Board President.

Philip Tetlock, January 02007
Philip Tetlock (screen shot from high-res Seminar video available to Long Now members)

This week we’ve chosen Philip Tetlock’s January 02007 talk from the archives. The research he shares in Why Foxes Are Better Forecasters Than Hedgehogs explores the confidence of forecasters, and it’s timely to revisit as we approach Daniel Kahneman‘s Seminar, just a few weeks away. We’ll tell you more about the relation between Tetlock and Kahneman’s work in our Seminar primer post next week.

The Tetlock Seminar begins with a mention of Long Bets, Long Now’s forum for competitive and meaningful long-term predictions. A good chance to remind you that Long Now will have a Long Bets table at the WorldFuture 2013 conference this weekend in Chicago. If you are there, look for us. Come by the table and make a Long Bet prediction for free.

Long Bets table at WorldFuture 2013

Posted on Thursday, July 11th, 02013 by Andrew Warner
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From July 19th- 21st in Chicago, the World Future Society will be hosting their annual conference, WorldFuture 2013. The conference has over 60 sessions, workshops, and special events over the course of two and a half days, including a keynote from former SALT speaker Nicholas Negroponte.

Topics range from Artificial Intelligence and the future of education to gaming and politics. The World Future Society was founded in 1966 as an organization dedicated  to thinking about the future, and has been publishing the forecasting magazine The Futurist since 1967.

This year, Long Now will be hosting a Long Bets table at the conference. For this weekend only, we will be waiving the $50 prediction fee and giving conference guests the chance to make predictions for free. We’re hoping that the thought-provoking panels and discussions at the conference will lead to some new exciting predictions and bets.

In the long-term, Long Bets aims to track the specific elements common to predictions that succeed, thus providing a better framework for everyone to think about the future. To attend the conference and visit our table, please visit the WorldFuture 2013 site.

image credit:

The Imagined Future of 02013

Posted on Monday, May 6th, 02013 by Charlotte Hajer
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Long Now’s Long Bets project is founded on the premise that we can improve our long-term thinking by holding ourselves accountable for the predictions we make about the future. By revisiting our forecasts as time goes by, we reveal the subtle mechanics of society’s evolution, and teach ourselves something about what kinds of visions might turn into reality.

Jerry Lockenour, a professor of engineering at the University of Southern California, has turned this premise into a lesson plan. Students in his Technology Development and Applications class are going back to the future: they are studying a 01988 issue of the Los Angeles Times’ Magazine, which offered a vision of the futuristic LA of 02013.

“In class we study emerging science and technology that can change the future,” he said. The magazine helps students see the relevance of the developments they are reading about in textbooks and professional journals, he said.

The 01988 feature offers a detailed description of a day in the life of a fictional family. Written in consultation with more than 30 futurists and experts, the article offers prospects for the technological innovations, environmental challenges, economic issues, and demographic shifts we might expect to deal with in 02013.

The LA Times itself recently interviewed Lockenour’s students to evaluate the quality of its 01988 predictions. “To their surprise, the students – some of whom weren’t even born when [the magazine’s] look into the future was published – found that many predictions have become reality.” Though robots have not quite become a staple in our households, we do indeed drive our cars with the aid of “electronic navigation systems,” schools have embraced the interactive learning potential of computers, and the population has indeed exploded.

To read the complete feature – and compare its vision of the unimaginable future to today’s present moment for yourself – please visit the LA Times’ website here.

Buffett pulls ahead in wager against hedge funds

Posted on Wednesday, February 13th, 02013 by Austin Brown
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In 02008, Warren Buffet placed a Long Bet that will take until 02017 to resolve. He predicted that for those ten years, “the S & P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.

Below is a summary of how things went in the fifth year of this Bet, as published by Fortune Magazine:

Five years into a ten-year bet that an S&P index fund can beat hedge fund funds-of-funds, Warren Buffett is in the lead for the first time.


By Carol Loomis

FORTUNE — It’s halfway time in the 10-year stock market wager sometimes called The Million-Dollar Bet—that’s Warren Buffett backing the performance of an S&P index fund vs. a New York money manager backing five funds of hedge funds—and there’s double-barreled news.

Item One: For the first time since the bet started five years ago, Buffett has moved ahead—by an okay margin to boot. Item Two: For the first time ever as well, both sides have crawled out of the ditch (though the funds of funds barely made it) and are showing positive results.

About that history of bad results, of course, you need to keep in mind that this bet started in the gut-wrenching year of 2008, which left both contenders deep in the red. Buffett, though, was definitely a deeper shade of red: Vanguard’s Admiral shares—the S&P index fund he’d backed—lost 37% in 2008 vs. a 24% drop, on the average, for Protégé’s five funds of funds.

Reporting on that first year of the bet, Fortune quoted Buffett as just hoping he could be like the fabled tortoise that ultimately passes the hare.

So now the tortoise, after crawling four more years, indeed leads. At the five-year mark, the Vanguard index fund backed by Buffett is up by 8.69%. The five funds of funds picked by Protégé Partners to carry its flag in the race are up, on the average, only—”gulp,” says Protégé partner Ted Seides—0.13%.

By the terms of the bet, the identity of those five funds has never been made public. It has always been assumed, however, that one of them is a fund of funds run by Protégé itself.

The strength of 2012’s stock market is naturally what carried the contestants into the black. The market’s vigor is displayed in the performance of the index fund, which rose by 15.96% last year. In contrast, the five funds of funds managed a 2012 gain, on the average, of only 6.46%.

From his trailing position, and probably having heard enough about the tortoise, Protégé’s Seides imagines an alternative future for the bet by recalling the movie, City Slickers. In it, says Seides, “Billy Crystal’s character asks Jack Palance’s character, Curly, if he has killed anyone today—and Curly answers, ‘Day ain’t over yet.'”

We’ll let that suspense hang and report still one more piece of news about this bet. This bulletin concerns the 10-year zero-coupon bond that the two bettors, Buffett and Protégé, bought with the collateral they put up as the bet began. Each contributed about $320,000, so a total of roughly $640,000 went into the bond. Its value was set to rise gradually to $1 million—thus the nickname for the bet—by its conclusion on December 31, 2017.

But as reported last year (Buffett gains ground in hedge fund bet), the zero-coupon bond proceeded to perform so splendidly in the prevailing environment of falling interest rates that by 2012 it was already worth almost $1 million.

That remarkable result suggested to Buffett and Protégé that they could revise the terms of the bet and quite possibly get more than $1 million to the charity ultimately benefitting from the bet. That will be Girls Inc. of Omaha if Buffett wins and Absolute Returns for Kids if the victor is Protégé.

So the zero-coupon bond was sold for nearly $1 million toward the close of 2012, and by agreement between Buffett and Protégé, the proceeds were put into the B stock of Buffett’s company, Berkshire Hathaway (BRKA). Berkshire’s shares have risen since, and the current value of the investment is well over $1 million.

And couldn’t the stock fall? It certainly could, but that won’t make a whit of difference to the winning charity—because Buffett has guaranteed that it will get at least $1 million at the end of the bet. On the upside, meanwhile, there’s no ceiling on what the charity can walk away with. That depends simply on what happens to Berkshire’s stock between now and the bet’s conclusion.

Fortune senior editor-at-large Carol Loomis, who wrote this article, is a longtime friend of Warren Buffett’s, a Berkshire Hathaway shareholder, and editor of his annual letter to shareholders.

Long Bets – 02013 Update

Posted on Friday, February 8th, 02013 by Austin Brown
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Predicting the future is hard.

Long Bets is a project by The Long Now Foundation that is testing how hard it really is, and maybe making us just a little bit better at it. The site allows users to post Predictions of at least two years’ duration. Should someone disagree with the likelihood of a prediction, they are welcome to Challenge it and produce a Bet. Real money is put on the line and eventually goes to a charity nominated by the winner.

We’ve recently made judgments on several Bets and wanted to review the outcomes:

We’re also starting a Facebook Page for making and discussing predictions about the future.