Private Equity May Grab Your Future Wealth

After I recently lamented the strong performance of Exxon (XOM) stock despite the price of oil being in the $40 range and the necessity for the oil giant to take large write-downs, I speculated that the rise of indexing strategies in the stock market means that people will be sending through automatic buy orders without much regard for whether the fundamentals of the business deserve increased demand for the stock.

A reader forwarded me an on-point discussion of this topic between a young Bill Ackman and Charlie Munger that took place as part of “The Buffett Essays Symposium” in 1996.

Ackman offered the following question/observation to Berkshire Vice Chair Charlie Munger: “We’ve heard a lot of discussion about how institutions and individuals use index funds. But to the extent that more and more capital becomes indexed—and if you think about index fund managers as really being a computer, … Read the rest of this article!