Financial Monkeys Throwing Darts

Billionaire Warren Buffett gave his "annual meeting" earlier this week, which has become legendary in personal finance circles for spawning talking points that podcasters will use for years as the basis for their content.

This year, Buffett, who is now 91 and worth more than $125 billion, explained that he would rather give his money to “monkeys throwing darts” to pick stocks and investments than financial advisers. Buffett’s point, which he’s been making for many years, is that it’s very difficult to pick winning stocks, and financial advisers take fees from clients that often eat a sizable portion of any investment gains.

“It’s a good thing to own American business,” Buffett said, suggesting people should simply put money into the American economy and forget about it. "We haven't ever timed anything," he added, which means that when he buys stocks, he holds them rather than trying to buy low and sell high.

“It’s amazing how hard people make what a simple game this is,” Buffett said. “It’s too much to expect of human nature for people to explain that they aren’t really adding any value to what you can do by yourself. I hate to use the example, but you can have monkeys throwing darts at the page and, you know, take away the management fees and everything, I’ll bet on the monkeys.”

This is notable mostly because Buffett is right but also because Buffett is seen as a kind of deity among a huge swath of the financial media, especially personal finance podcasters, who use much of what he says as the basis for the advice that they then give to millions of people.

Buffett famously bet $1 million that the S&P 500 index fund of the top 500 companies in the United States would outperform a hedge fund’s active trading strategy over the course of 10 years. Active stock trading is when people actively buy and trade single stocks or groups of stocks, and try to "time" the market, meaning buy low and sell high. It is famously difficult to do, as many Redditors are currently learning on WallStreetBets.

Buffett won his bet with the hedge fund, which has been used by financial podcasters to popularize passive index fund investing—in which people buy large collections of stocks and sit on them for years—as the preferred investing strategy of the Financial Independence Retire Early (FIRE) movement that’s popular online. Buy-and-hold is also the preferred strategy of Bitcoin maximalists, though they are putting all their eggs in a single basket.