One of the students had asked Buffett about a wager he had offered a year earlier, that an index fund that simply tracked the US stock market would beat any group of high-flying hedge fund managers. Berkshire’s chair noted that no one had dared to take him up on the bet, “so I guess I’m right,” he told the students. The scorn annoyed [Ted] Seides, a then thirty-six-year-old Wall Streeter with a passing resemblance to a clean-shaven Judd Apatow. After all, hedge funds were his bread and butter.

By the mid-2000s, most young Wall Streeters dreamt of running a hedge fund, not toiling away in investment banking or — perish the thought — doing unglamorous work such as lending money to companies.

The boom frustrated Buffett, who had long felt that the investment industry overflowed with mediocrities who in practice did little more than line their own pockets with the ample fees they charged clients.

Many in the industry scoffed at the ludicrous idea that someone should or would lazily settle for whatever the entire stock market did.

• "The Vanguard 500 Index Fund ... had returned 126 per cent over the decade."
• "The quintet of funds-of-hedge-funds chosen by Protégé had an average return of only 36 per cent. In fact, not one of the five managed to beat the index fund."

In the end, the proceeds that actually went to Girls Inc. amounted to $2.2mn, thanks to a timely switch of the bet’s collateral from US Treasury bonds into Berkshire stock — highlighting how human discretion can still play a valuable role.