CNBC's Jim Cramer attributed the “Oracle of Omaha” with a sea change he notices in investing today.
"People don't pick a lot of individual stocks. People have kind of listened to Warren Buffett more than they listened to anybody else," Cramer told CNBC.
Buffett at the Berkshire Hathaway annual shareholder meeting on Saturday offered his latest critique of fund managers, saying that "both large and small investors should stick with low-cost index funds."
"When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients," said Buffett, widely considered one of the world's best investors.
"Both large and small investors should stick with low-cost index funds," Buffett said, Reuters reported.
Buffett offered a negative view of actively managed funds, citing high fees and bad results for investors.
"And Warren Buffett says just keep contributing to your 401(k), just keep buying the index fund. I'm not saying that that is a complacent thing. I'm saying that's become kind of the way people save," Cramer said.
Meanwhile, Buffett also challenged how hedge fund managers are paid, Bloomberg reported.
"If you go to a dentist, if you hire a plumber, in all the professions, there is value added by the professionals as a group compared to doing it yourself or just randomly picking laymen," Buffett, 86, said.
"In the investment world it isn’t true. The active group, the people that are professionals in aggregate, are not, cannot, do better than the aggregate of the people who just sit tight."
Vice Chairman Charles Munger, 93, said "it’s even worse than that" because some hedge fund managers with a long career in the industry -- known for charging 2 percent management fees and taking 20 percent of profits -- do well, attract money and then lose it.
"The investing world is just a morass of wrong incentives, crazy reporting and, I’d say, a fair amount of delusion," Munger said.
(Newsmax wires services contributed to this report).
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