While Buffett still recommends that everyone read Graham's "Intelligent Investor", he suggests ordinary people would be better off investing regularly over the long term in the S&P 500 index via a low cost mutual fund. I think he meant this was a better method than amateurs doing their own stock picking. (I wonder what his views are on indexing more broadly). I have never read him suggest people ought to buy Berkshire. I read between the lines, and started buying his class B shares over time soon after they became available. Many writers have zeroed in on the instructions in his will, advising his wife, should she survive him to invest 90% in the S&P 500 and 10% in treasury bills. This has been analyzed endlessly, yet most seem to have overlooked a couple points. First, his wife is elderly too. And, 10% of a vast sum placed in treasurys will likely outlive her. He never suggested anyone else should try this. Graham wrote that one's stock allocation ought to range between 25% and 75%, with the balance in bonds depending on whether prices are high or low, implying 50% if prices are "normal". He never qualified this advice depending on the investor's age or whether he was still working or retired. I'm curious what Buffett thinks Graham would say today about his allocation advice, and if we substituted a mutual fund based on the Total US Index or even better, Total World Index (such as Vanguard's VT) for stocks, and used short-term treasurys(individual or a fund) for bonds. Would he still only consider valuations, without regard to age of the investor or where the investor is in his life cycle? And more interestingly, what Buffett himself would advise.
Interesting analysis. Still, for the minority of us who can afford to delay and are in reasonably good health, it serves as a form of longevity insurance with a COLA.
I love the message conveyed by "...passing around a thermos of coffee that tasted far better than it probably was, warming our hands on the cups and laughing..." This applies to all of us, of all ages whether retired or still working! Keep the articles coming Mark.
When I see how much has been written, so far, about AI my eyes start to glaze over. I'm waiting for the development of AW, or "Artificial Wisdom". Now that would be something to learn more about!
I agree Jonathan would have said "nonsense, you belong here too" or something like that. And as one of the thousands who regularly follow this blog, I consider you to be one of our representatives at the service. Jonathan was not only knowledgable and a gifted writer; he was humble. So the name he chose for this site was fitting. When I read the articles and comments, I often wonder "what would Jonathan think of this?"
We often hear claims in the financial media suggesting we should not settle for "mediocre" results, like earning market averages via index fund investing. Those promotional claims omit the fact that earning market averages is better than what the majority of investors using active management will earn, over long periods. I think most of us non-experts can point to many prior investment decisions we have made which were not ideal. And yet, if we keep plugging away, minimize costs, avoid making rash decisions and allow compounding to occur, we turn out just fine. The goals we set can influence our behavior. For some, whether they admit it or even realize it themselves, the goal is to make as much money as possible. You were wise to pursue the goal of becoming financially independent. The beauty of knowing how much is enough, and achieving it makes it easier to tune out the headlines and avoid falling victim to the fear of missing out (FOMO). Missing out on what, exactly? You have already won the game. Your story supports my belief. Congratulations Cecelia!
Buffett has recommended everyone should read Ben Graham. Graham suggested a stock allocation spectrum, ranging from 25% when stocks are overvalued to 75% if undervalued, with the balance invested in bonds. Interestingly, this advice did not take into account the age or time horizon of the investor. As for your comment about rebalancing too early, I hear you. In retrospect, my portfolio today would be larger, had I not rebalanced when I did. By the way, Jonathan had mentioned this momentum effect, hinting one could allow the stock portion to rise a bit higher before rebalancing. This continued increase in the stock valuations after rebalancing means the safety we hope to get from rebalancing comes at a price. I think the regret we may feel about this will be offset on those occasions when the market falls after rebalancing. On the one hand, articles about the continuing bull market stir feelings of FOMO and regret for my not holding more stocks. But simultaneously appearing articles about the market being overpriced counterbalance those feelings. So, after using some "very high level math", I came up with a solution to the dilemma: 50% Stocks/50% Cash plus Short-term Treasurys/TIPS. Somewhat protected from a bear market, somewhat positioned to cash in on the continuing (so far) rise in equity prices. Finally, my planning, unlike Graham's advice, does take into account where I am in my life cycle. I'm 72 and have been retired for over 7 years. A younger person with a much longer horizon might choose a more aggressive allocation.
For those fortunate enough to succeed in amassing "enough", anything beyond that amount can be thought of as surplus. The question is whether and what to do with the surplus. One could leave it untouched, providing a "margin of safety". Or, do something different with the surplus. To paraphrase Bill Bernstein: Once you have accumulated "enough" and put it all in secure investments (such as TIPS and normal treasurys) any remaining amount can be considered as your "risk portfolio" and invest it in any manner you wish. Of course, the reader should read his actual words in his revised edition of "The Four Pillars of Investing". Incidentally, I found the most interesting part of this book to be his comments on how his thinking has evolved since the publication of the first edition.
Comments
While Buffett still recommends that everyone read Graham's "Intelligent Investor", he suggests ordinary people would be better off investing regularly over the long term in the S&P 500 index via a low cost mutual fund. I think he meant this was a better method than amateurs doing their own stock picking. (I wonder what his views are on indexing more broadly). I have never read him suggest people ought to buy Berkshire. I read between the lines, and started buying his class B shares over time soon after they became available. Many writers have zeroed in on the instructions in his will, advising his wife, should she survive him to invest 90% in the S&P 500 and 10% in treasury bills. This has been analyzed endlessly, yet most seem to have overlooked a couple points. First, his wife is elderly too. And, 10% of a vast sum placed in treasurys will likely outlive her. He never suggested anyone else should try this. Graham wrote that one's stock allocation ought to range between 25% and 75%, with the balance in bonds depending on whether prices are high or low, implying 50% if prices are "normal". He never qualified this advice depending on the investor's age or whether he was still working or retired. I'm curious what Buffett thinks Graham would say today about his allocation advice, and if we substituted a mutual fund based on the Total US Index or even better, Total World Index (such as Vanguard's VT) for stocks, and used short-term treasurys(individual or a fund) for bonds. Would he still only consider valuations, without regard to age of the investor or where the investor is in his life cycle? And more interestingly, what Buffett himself would advise.
Post: Why would index investing be different?
Link to comment from November 16, 2025
Do you know why a QCD to a donor advised fund is not allowed? Or, whether there is any plan to change this rule?
Post: IRS 2026 Updates
Link to comment from November 15, 2025
Interesting analysis. Still, for the minority of us who can afford to delay and are in reasonably good health, it serves as a form of longevity insurance with a COLA.
Post: THE REAL RETURN ON DELAYING SOCIAL SECURITY
Link to comment from November 13, 2025
I love the message conveyed by "...passing around a thermos of coffee that tasted far better than it probably was, warming our hands on the cups and laughing..." This applies to all of us, of all ages whether retired or still working! Keep the articles coming Mark.
Post: Purple Handcuffs and the Gift of Time
Link to comment from November 13, 2025
When I see how much has been written, so far, about AI my eyes start to glaze over. I'm waiting for the development of AW, or "Artificial Wisdom". Now that would be something to learn more about!
Post: Shopping carts. Please don’t consider this a rant. It is a lamentation.
Link to comment from November 11, 2025
I agree Jonathan would have said "nonsense, you belong here too" or something like that. And as one of the thousands who regularly follow this blog, I consider you to be one of our representatives at the service. Jonathan was not only knowledgable and a gifted writer; he was humble. So the name he chose for this site was fitting. When I read the articles and comments, I often wonder "what would Jonathan think of this?"
Post: A Day In Philly
Link to comment from November 11, 2025
We often hear claims in the financial media suggesting we should not settle for "mediocre" results, like earning market averages via index fund investing. Those promotional claims omit the fact that earning market averages is better than what the majority of investors using active management will earn, over long periods. I think most of us non-experts can point to many prior investment decisions we have made which were not ideal. And yet, if we keep plugging away, minimize costs, avoid making rash decisions and allow compounding to occur, we turn out just fine. The goals we set can influence our behavior. For some, whether they admit it or even realize it themselves, the goal is to make as much money as possible. You were wise to pursue the goal of becoming financially independent. The beauty of knowing how much is enough, and achieving it makes it easier to tune out the headlines and avoid falling victim to the fear of missing out (FOMO). Missing out on what, exactly? You have already won the game. Your story supports my belief. Congratulations Cecelia!
Post: Feeling Secure
Link to comment from November 10, 2025
Good list!
Post: Wealth: A Short List on How to Recognize It
Link to comment from November 10, 2025
Buffett has recommended everyone should read Ben Graham. Graham suggested a stock allocation spectrum, ranging from 25% when stocks are overvalued to 75% if undervalued, with the balance invested in bonds. Interestingly, this advice did not take into account the age or time horizon of the investor. As for your comment about rebalancing too early, I hear you. In retrospect, my portfolio today would be larger, had I not rebalanced when I did. By the way, Jonathan had mentioned this momentum effect, hinting one could allow the stock portion to rise a bit higher before rebalancing. This continued increase in the stock valuations after rebalancing means the safety we hope to get from rebalancing comes at a price. I think the regret we may feel about this will be offset on those occasions when the market falls after rebalancing. On the one hand, articles about the continuing bull market stir feelings of FOMO and regret for my not holding more stocks. But simultaneously appearing articles about the market being overpriced counterbalance those feelings. So, after using some "very high level math", I came up with a solution to the dilemma: 50% Stocks/50% Cash plus Short-term Treasurys/TIPS. Somewhat protected from a bear market, somewhat positioned to cash in on the continuing (so far) rise in equity prices. Finally, my planning, unlike Graham's advice, does take into account where I am in my life cycle. I'm 72 and have been retired for over 7 years. A younger person with a much longer horizon might choose a more aggressive allocation.
Post: The Conversation: Contrarian Meets Momentum
Link to comment from November 8, 2025
For those fortunate enough to succeed in amassing "enough", anything beyond that amount can be thought of as surplus. The question is whether and what to do with the surplus. One could leave it untouched, providing a "margin of safety". Or, do something different with the surplus. To paraphrase Bill Bernstein: Once you have accumulated "enough" and put it all in secure investments (such as TIPS and normal treasurys) any remaining amount can be considered as your "risk portfolio" and invest it in any manner you wish. Of course, the reader should read his actual words in his revised edition of "The Four Pillars of Investing". Incidentally, I found the most interesting part of this book to be his comments on how his thinking has evolved since the publication of the first edition.
Post: The Conversation: Contrarian Meets Momentum
Link to comment from November 8, 2025