Market Extra: Warren Buffett says don’t make this ‘terrible mistake’ when it comes to bonds

Billionaire investor Warren Buffett took a victory lap Saturday after easily winning a famous 10-year, $1 million bet that a passively managed index fund could beat the returns on a selection of hedge funds.

Buffett used the opportunity in his annual letter to shareholders of Berkshire Hathaway Inc. BRK.A, +0.87%BRK.B, +1.01% to again excoriate Wall Street and the hedge fund industry in particular for high fees. But he also highlighted an important lesson about risk.

Read Warren Buffett’s annual letter to shareholders

Buffett recounted that he and his counterpart in the bet, Protege Partners, funded the prize by each purchasing in 2007 $500,000 worth of zero-coupon bonds maturing in 10 years.

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