From Benjamin Graham in 1972: “Any approach to moneymaking in the stock market which can be easily described and followed by a lot of people is by its terms too simple and too easy to last.”
In a 1976 interview, shortly before his death, Graham expressed the view that the situation for security analysis had “changed a great deal” since his textbook Graham and Dodd was first published. He noted that due to the enormous amount of research being done, he doubted most extensive efforts to find undervalued issues would generate sufficiently superior selections to justify their cost.
His final recommendation for the “defensive” investor (someone without the time, inclination, or expertise to perform in-depth analysis) was a simplified approach, which he essentially described as owning a broad cross-section of high-quality, established domestic stocks, akin to an index fund. In that interview, he stated:
“In effect that would mean that the stock market experts as a whole could beat themselves—a logical contradiction… I see no reason why they should be content with results inferior to those of an indexed fund or pay standard fees for such inferior results”.
Because indexing scales, it’s low cost, and if you dollar cost average over decades you ride the powerful math of accumulation and compounding.
Graham was describing why he had to revise the guidance he gave for security selection in each edition of Security Analysis, a book which had nothing to do with indexing.
Indexing only seems simple today because technology has made it effortless. Fifty years ago, building and maintaining a 500-stock portfolio, rebalancing it, tracking corporate actions, and doing it all at nearly zero cost would have been impossible for a retail investor.
It’s like comparing a 1970s Formula 1 car to a 2025 F1 machine. The driver isn’t necessarily faster—the technology is. The modern car does things that were simply not achievable with the tools of the past.
Indexing isn’t a hack. It’s a technology-enabled access point.
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
In a 1976 interview, shortly before his death, Graham expressed the view that the situation for security analysis had “changed a great deal” since his textbook Graham and Dodd was first published. He noted that due to the enormous amount of research being done, he doubted most extensive efforts to find undervalued issues would generate sufficiently superior selections to justify their cost.
His final recommendation for the “defensive” investor (someone without the time, inclination, or expertise to perform in-depth analysis) was a simplified approach, which he essentially described as owning a broad cross-section of high-quality, established domestic stocks, akin to an index fund. In that interview, he stated:
“In effect that would mean that the stock market experts as a whole could beat themselves—a logical contradiction… I see no reason why they should be content with results inferior to those of an indexed fund or pay standard fees for such inferior results”.
Because indexing scales, it’s low cost, and if you dollar cost average over decades you ride the powerful math of accumulation and compounding.
Graham was describing why he had to revise the guidance he gave for security selection in each edition of Security Analysis, a book which had nothing to do with indexing.
Here is a August 2025 research report from Vanguard about index investing. It talks about the benefits and the myths.
https://corporate.vanguard.com/content/dam/corp/research/pdf/setting_the_record_straight_the_truths_about_index_fund_investing.pdf
Indexing only seems simple today because technology has made it effortless. Fifty years ago, building and maintaining a 500-stock portfolio, rebalancing it, tracking corporate actions, and doing it all at nearly zero cost would have been impossible for a retail investor.
It’s like comparing a 1970s Formula 1 car to a 2025 F1 machine. The driver isn’t necessarily faster—the technology is. The modern car does things that were simply not achievable with the tools of the past.
Indexing isn’t a hack. It’s a technology-enabled access point.
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