# Hedge Funds Are Terrible Investments. So Why Do Rich People Keep Using Them? - How Money Works | How Money Works

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Text version: https://stenobird.com/podcast/how-money-works-7289568/hedge-funds-are-terrible-investments-so-why-do-rich-people-keep-using-them-how-money-works-how-money-works.md
Podcast: [How Money Works](https://stenobird.com/podcast/how-money-works-7289568)
Published: 2026-07-25T03:33:00+00:00
Episode link: https://traffic.megaphone.fm/PODAGEN4459636832.mp3?updated=1778655875
Audio file: https://traffic.megaphone.fm/PODAGEN4459636832.mp3?updated=1778655875
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Duration seconds: 914

## Resource

Hedge Funds Are Terrible Investments. So Why Do Rich People Keep Using Them? - How Money Works Thanks to Trends for making it possible to keep on learning How Money Works. To start your 7-day trial today go to https://trends.co/howmoneyworks Sign up for my newsletter https://compoundeddaily.com 👈 In 2008 Warren Buffett made a bet for 1 million dollars that a hand selected group of hedge funds could not outperform the S&P 500 Index over a ten year period. In 2018, Buffett won the bet, and went home an extra million dollars richer (which I am sure was a very big deal for him) This exposed a big flaw in the investment industry which is that actively managed funds and in particular hedge funds struggle to outperform the general market. When fees are considered there is only a handful of funds that have returned money to their investors in excess of what they would have received had those investors just taken a more traditional investment approach. Link to Patrick Boyle's Channel - https://www.youtube.com/c/PatrickBoyleOnFinance #HedgeFunds #Investing #HowMoneyWorks Link To The Capitalists Discord where I hang out with other creators - https://discord.gg/8MeNJ7gfSR Music by Epidemic Sound Stock footage by Story Blocks Follow to learn How Money Works. Find How Money Works on YouTube: https://www.youtube.com/@HowMoneyWorks Disclaimer: This podcast is an independently produced audio adaptation of content originally created by How Money Works. It was developed by a fan who values the channel’s clear and engaging approach to financial education, with the goal of making that knowledge more accessible in a hands-free, audio format. This is not an official production of How Money Works, and it is not affiliated with or endorsed by the channel. All rights to the original video c…

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