I'm most definitely a Warren Buffett fan. I love it that arguably the most successful active investor alive recommends index funds, long holding periods and minimizing fees. And I love that Buffett walks his talk about being greedy when others are fearful.
During the real estate/financial collapse, for instance, he was buying more stocks while the vast majority of Wall Street was dumping them faster than rotten food. Still, even a fan like me might have a point or two with which I take issue.
Warren Buffett often extols the many merits of the S&P 500 Index fund. In the most recent Berkshire Hathaway Annual Report, Buffett reveals the data on his 10-year bet that the S&P 500 Index total return would best hedge funds. With nine of the 10 years now history, let's just say the hedge fund managers are losing in a rout.
Buffett often recommends the S&P 500 Index fund, but why? It's flawed in a couple of respects. First, it misses out on the thousands of U.S. companies not in the S&P 500. I'm a dumb-beta investor, as factors such as size and value are no free lunch—the excess expected return is compensation for taking on more risk. This is not to say I want to ignore small and midsize companies.