Warren Buffett's portfolio for his wife: Vanguard index fund

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huntertheory
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Warren Buffett's portfolio for his wife: Vanguard index fund

Post by huntertheory »

From an excerpt from Buffett's newest shareholder letter:
My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I've laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife's benefit. (I have to use cash for individual bequests, because all of my Berkshire Hathaway (BRKA) shares will be fully distributed to certain philanthropic organizations over the 10 years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (VFINX)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers.
Full article here: http://finance.fortune.cnn.com/2014/02/ ... re-letter/
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by bondsr4me »

I really respect people like Warren Buffett and Jack Bogle.
They DO put their money where their mouth is.
They eat their own cooking....can't find fault with these guys for sure.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by reisner »

90/10 is a far cry from 60/40. I would have appreciated the rationale for his AA.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by IPer »

yep
90/10, 86/14, 70/30, 60/40 all great ratios depending on term and goals, up to you!
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by bamajames »

Greetings,

I assume Buffet prefers s&p 500 to total stock market for retirees.

BJ
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by HomerJ »

reisner wrote:90/10 is a far cry from 60/40. I would have appreciated the rationale for his AA.
When you have $100 million (or whatever he's leaving her), it doesn't really matter if the market drops 50% now does it? That $10 million in bonds should get you through most crashes.

Well, unless she sells his old house in Omaha and buys a $50 million house in Miami Beach... then maybe it will matter... :)
Last edited by HomerJ on Mon Feb 24, 2014 8:01 am, edited 1 time in total.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by dbr »

Since he specifically mentions "long term results" the benefits cannot be only for his present wife. At least I assume she is near his age.

This is a quote that is missing some information about what Mr. Buffet really has in mind. I don't think you can glean helpful investing advice from this sort of "sound byte" approach.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by freddie »

That was my first though but isn't their a school of thought that 80/20 slightly outperforms 90/10 over most market time periods? It should be noted that Warren said cash not bonds so you sort of wonder if he is saying she has 10+ years of cash to pay living expenses and he thinks over those type of time periods (and the fact that is wife probably only has another 20 years left) means he can be as risky as he wants.
HomerJ wrote:
reisner wrote:90/10 is a far cry from 60/40. I would have appreciated the rationale for his AA.
When you have $100 million (or whatever he's leaving her), it doesn't really matter if the market drops 50% now does it?

Well, unless she sells his old house in Omaha and buys a $50 million house in Miami Beach... then maybe it will matter... :)
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by dbr »

freddie wrote:That was my first though but isn't their a school of thought that 80/20 slightly outperforms 90/10 over most market time periods? It should be noted that Warren said cash not bonds so you sort of wonder if he is saying she has 10+ years of cash to pay living expenses and he thinks over those type of time periods (and the fact that is wife probably only has another 20 years left) means he can be as risky as he wants.
Adding a small increment of bonds to an all stock allocation does not increase the return but it does reduce the risk. It could well be true that the risk adjusted return is improved. What do you mean by performance? Most people who use that word mean return, but it could be something else.

What he specifically said in the quote is that the long term results would be superior to those obtained by certain others. Generally one assumes that by long term results he means greater compound average growth rate of the investment, also known as return on average. We don't know what assessment he is making of risk in this evaluation because he doesn't say enough in the piece quoted to know what he thinks about that in this situation. It is fair to assume that with the assets in trust the trustees would not do something stupid such as selling out at the bottom of a market crash. That hazards is one of the big risks to the naive investor in holding high stock allocations.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Riprap »

The cash flow from the dividends alone is probably more than enough to sustain the desired lifestyle. Even Dr. Bernstein says that you can reasonably count on dividends to drop no more than 50% during financial storms. Assuming this is a taxable account, the SP500 is 100% qualified dividends with almost no turnover to create nuisance capital gain taxes.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Grt2bOutdoors »

The current yield on the S&P 500 is roughly 2%, assuming earnings continue to grow at 4-6% and dividends continue to yield 2% over the long haul - even if the heirs spent 2 or 3% of the portfolio value, the remainder would continue to accrue and compound over time. Interesting that he made no mention of investing in a Total International Stock Index fund - perhaps he is counting on the multinational status of those companies which make up the index to be where ever the "action" is on a global basis.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by FafnerMorell »

It would be interesting to find out more on why he choose the S&P 500 index vs Total Stock (although really, there's not a lot of difference in historical performance between the two, so he might have just stuck with the tried & true).
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Warren Buffett - Shareholder Letter - Index Funds

Post by abuss368 »

Here is a small advance from the upcoming Shareholder letter from Warren Buffett where he again recommends a low cost index fund:

"I have good news for these nonprofessionals: The typical investor doesn't need this skill. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts). In the 20th century, the Dow Jones industrial index advanced from 66 to 11,497, paying a rising stream of dividends to boot. The 21st century will witness further gains, almost certain to be substantial. The goal of the nonprofessional should not be to pick winners -- neither he nor his "helpers" can do that -- but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal."

Here is a link to read the article:

http://finance.fortune.cnn.com/2014/02/ ... ahoo_quote
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by dickenjb »

dbr wrote:Since he specifically mentions "long term results" the benefits cannot be only for his present wife. At least I assume she is near his age.
You know what happens when you "assume".

His first wife died and this is for his trophy wife.

Astrid is 16 years his junior.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by abuss368 »

Another excellent note:

"My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I've laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife's benefit. (I have to use cash for individual bequests, because all of my Berkshire Hathaway (BRKA) shares will be fully distributed to certain philanthropic organizations over the 10 years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (VFINX)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by rkhusky »

dickenjb wrote:
dbr wrote:Since he specifically mentions "long term results" the benefits cannot be only for his present wife. At least I assume she is near his age.
You know what happens when you "assume".

His first wife died and this is for his trophy wife.

Astrid is 16 years his junior.
That's a bit harsh, don't you think? Once you're a senior, a delta of 16 isn't that much.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by abuss368 »

This was an excellent article. I did not see this thread and started another thread.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by Leeraar »

Duplicate thread?

http://www.bogleheads.org/forum/viewtop ... 0&t=133687

L.

[threads merged - admin alex]
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by abuss368 »

Yeah. I did not see the other thread when I posted the information.

Best.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by stemikger »

This is always great to see. Thanks for sharing this.

Warren Buffett has been promoting index funds a lot lately. He knows the average person cannot do what he does and this is a very responsible thing for him to do.

Due to the fact that I am such a big fan of Warren, he almost got me in trouble last year. It was the first time in 20 years I made such a big change in my portfolio because it came from his mouth. He was promoting the average know-nothing investor should just put everything in an index fund that buys America and in the same video he said do not own bonds because they are a dangerous investment. I saw several of these videos and I actually put my entire 401K in the Vanguard Institutional index fund. That month caused me sleepless nights and the next month went back to my 70/30 AA.

Warren really should take into account that most of us mere mortals can't stomach a big drop which an all stock portfolio can and will do from time to time.
Last edited by stemikger on Mon Feb 24, 2014 11:23 am, edited 1 time in total.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by abuss368 »

stemikger wrote:Warren Buffett has been promoting index funds a lot lately. He knows the average person cannot do what he does and this is a very responsible thing for him to do.

Due to the fact that I am such a big fan of Warren, he almost got me in trouble last year. It was the first time in 20 years I made such a big change in my portfolio because it came from his mouth. He was promoting the average know-nothing investor should just put everything in an index fund that buys America and in the same video he said do not own bonds because they are a dangerous investment. I saw several of these videos and I actually put my entire 401K in the Vanguard Institutional index fund. That month caused me sleepless nights and the next month went back to my 70/30 AA.

Warren really should take into account that most of us mere mortals can't stomach a big drop which an all stock portfolio can and will do from time to time.
I agree with you. The surprising part for me is if one reads the Berkshire Hathaway financial statements, there is a large allocation to bonds. I am guessing probably something to do with the insurance business and claims paying abilities.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by stemikger »

abuss368 wrote:
stemikger wrote:Warren Buffett has been promoting index funds a lot lately. He knows the average person cannot do what he does and this is a very responsible thing for him to do.

Due to the fact that I am such a big fan of Warren, he almost got me in trouble last year. It was the first time in 20 years I made such a big change in my portfolio because it came from his mouth. He was promoting the average know-nothing investor should just put everything in an index fund that buys America and in the same video he said do not own bonds because they are a dangerous investment. I saw several of these videos and I actually put my entire 401K in the Vanguard Institutional index fund. That month caused me sleepless nights and the next month went back to my 70/30 AA.

Warren really should take into account that most of us mere mortals can't stomach a big drop which an all stock portfolio can and will do from time to time.
I agree with you. The surprising part for me is if one reads the Berkshire Hathaway financial statements, there is a large allocation to bonds. I am guessing probably something to do with the insurance business and claims paying abilities.
He actually answered why he owns bonds on one of those videos. I can't explain it, but it did have something to do with insurance. If I find it I will post it. In the same video he was asked what a 55 year old guy with a million dollars should put his retirement money. His answer was he should hold enough cash to feel secure and put the rest in the S&P index fund. He also said that he tells all his family and friends who by and large do not have a lot of money to do the same and lately even John Bogle has been saying that we should count social secuity as a bond holding. If that is the case I also should be 100% in equities. Having said all that, it would be hard for me to sleep at night.
Last edited by stemikger on Mon Feb 24, 2014 11:30 am, edited 1 time in total.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by abuss368 »

stemikger wrote:
abuss368 wrote:
stemikger wrote:Warren Buffett has been promoting index funds a lot lately. He knows the average person cannot do what he does and this is a very responsible thing for him to do.

Due to the fact that I am such a big fan of Warren, he almost got me in trouble last year. It was the first time in 20 years I made such a big change in my portfolio because it came from his mouth. He was promoting the average know-nothing investor should just put everything in an index fund that buys America and in the same video he said do not own bonds because they are a dangerous investment. I saw several of these videos and I actually put my entire 401K in the Vanguard Institutional index fund. That month caused me sleepless nights and the next month went back to my 70/30 AA.

Warren really should take into account that most of us mere mortals can't stomach a big drop which an all stock portfolio can and will do from time to time.
I agree with you. The surprising part for me is if one reads the Berkshire Hathaway financial statements, there is a large allocation to bonds. I am guessing probably something to do with the insurance business and claims paying abilities.
He actually answered why he owns bonds on one of those videos. I can't explain it, but it did have something to do with insurance. If I find it I will post it. In the same video he was asked what a 55 year old guy with a million dollars should put his retirement money. His answer was he should hold enough cash to feel secure and put the rest in the S&P index fund. He also said that he tells all his family and friends who by and large do not have a lot of money to do the same.
100% equity portfolio? That would keep me up at night. This is why as much as I like Warren Buffett, at the end of the day, I enjoy Jack Bogle's advice the most. Age in bonds (ignoring the social security argument here)!
Last edited by abuss368 on Sat Sep 20, 2014 7:21 pm, edited 1 time in total.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by nisiprius »

abuss368 wrote:Another excellent note:

"My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I've laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife's benefit. (I have to use cash for individual bequests, because all of my Berkshire Hathaway (BRKA) shares will be fully distributed to certain philanthropic organizations over the 10 years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (VFINX)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."
Amazing that his estate can't meet the $10,000 minimum for Admiral shares.
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by abuss368 »

nisiprius wrote:
abuss368 wrote:Another excellent note:

"My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I've laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife's benefit. (I have to use cash for individual bequests, because all of my Berkshire Hathaway (BRKA) shares will be fully distributed to certain philanthropic organizations over the 10 years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's. (VFINX)) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."
Amazing that his estate can't meet the $10,000 minimum for Admiral shares.
Priceless!
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Re: Warren Buffett - Shareholder Letter - Index Funds

Post by placeholder »

Probably qualify for Institutional Plus at a mere 200 million initial investment.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Twins Fan »

bamajames wrote:Greetings,

I assume Buffet prefers s&p 500 to total stock market for retirees.

BJ
He seems to recommend the S&P 500 in any article and for any age group. I believe it's Buffett's own style of investing in high quality and proven companies where this comes from. Does that mean a proven company can't fail? No, but it's less likely to fail than the small caps and such. So, for the average investor, or anyone that is not him :D , I think Buffett is saying it's best to throw it all in the S&P 500.

My take on it anyway.

Also, he tends to say hold enough in cash to make one comfortable and invest the rest. So, the 90/10 AA he wants for the wife would fit that. Since, as mentioned, the 10% is likely millions of dollars in this case. That could vary situation to situation of course.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by connor »

The goal of the nonprofessional should not be to pick winners -- neither he nor his "helpers" can do that -- but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.

That's the "what" of investing for the nonprofessional. The "when" is also important. The main danger is that the timid or beginning investor will enter the market at a time of extreme exuberance and then become disillusioned when paper losses occur. (Remember the late Barton Biggs's observation: "A bull market is like sex. It feels best just before it ends.") The antidote to that kind of mistiming is for an investor to accumulate shares over a long period and never sell when the news is bad and stocks are well off their highs.
That biggs's quote is a keeper.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by abuss368 »

Daniel O wrote:
The goal of the nonprofessional should not be to pick winners -- neither he nor his "helpers" can do that -- but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.

That's the "what" of investing for the nonprofessional. The "when" is also important. The main danger is that the timid or beginning investor will enter the market at a time of extreme exuberance and then become disillusioned when paper losses occur. (Remember the late Barton Biggs's observation: "A bull market is like sex. It feels best just before it ends.") The antidote to that kind of mistiming is for an investor to accumulate shares over a long period and never sell when the news is bad and stocks are well off their highs.
That biggs's quote is a keeper.
Maybe that can be added to the Bogleheads favorite quotes.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Tortoise Banker »

I second that... absolutely love it!
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by SDBoggled »

Hi,

I am guessing that the lower bond % for his wife, just aligns with his dislike of current bond return vs S&P return (sorry I can't give exact reference, I think he compares current return of bonds to companies he selects, somewhere in 10 part lecture series to college students on YouTube).

He is not against bonds per se, just not into them at current prices. As others have noted - so what if the portfolio dips by 50% for a decade.
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Re: Warren Buffet pushing indexing on the Huffpo

Post by abuss368 »

There are a couple of other threads on this today. I was one who started a new duplicated thread as I did not see the earlier thread!

In any event, it is a good interview.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by connor »

For me, the thing that distinguishes the Buffett approach is his emphasis on thinking like a business person, investing in real businesses, and the earnings potential and productivity of those businesses. In the case of the indexer, we invest in business in aggregate.

"...ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm."

I think that is a refreshing alternative to the more abstract conversations about alpha, and beta, and standard deviation, and which finely sliced & diced combination of "asset classes" provide the optimal curve on the efficient frontier....etc. I've never heard Buffett talk about that.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by abuss368 »

Daniel O wrote:For me, the thing that distinguishes the Buffett approach is his emphasis on thinking like a business person, investing in real businesses, and the earnings potential and productivity of those businesses. In the case of the indexer, we invest in business in aggregate.

"...ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm."

I think that is a refreshing alternative to the more abstract conversations about alpha, and beta, and standard deviation, and which finely sliced & diced combination of "asset classes" provide the optimal curve on the efficient frontier....etc. I've never heard Buffett talk about that.
Very well said indeed.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by freebeer »

but... but... what happened to "age in bonds" ????
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Dale_G »

freebeer wrote:but... but... what happened to "age in bonds" ????
This time is different - I am age - 48 in bonds. Gotta love the volatility on the upside - not so much fun on the downside. :D

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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Twins Fan »

freebeer wrote:but... but... what happened to "age in bonds" ????
Buffett has never said that, as far as I know.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by TimesAWastin »

abuss368 wrote:
Daniel O wrote:For me, the thing that distinguishes the Buffett approach is his emphasis on thinking like a business person, investing in real businesses, and the earnings potential and productivity of those businesses. In the case of the indexer, we invest in business in aggregate.

"...ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm."

I think that is a refreshing alternative to the more abstract conversations about alpha, and beta, and standard deviation, and which finely sliced & diced combination of "asset classes" provide the optimal curve on the efficient frontier....etc. I've never heard Buffett talk about that.
Very well said indeed.
Definitely. Buffett doesn't bother with that stuff because that's not how he's made his money. He's made it by investing in quality business with strong fundamentals and lead by honest managers. Businesses which are simple and which he understands and, after thorough research, has determined are temporarily undervalued by enough of a margin of safety to justify the investment. Not undervalued in the sense of having a low P/E, but in the sense that you can't find on morningstar.com. He knows a good business manager when he meets one because that's who he is and that's his job. He invests in that and he sees no difference between buying stock and buying a business. Reminds me of Deniro's character in Casino: "He'd find out the kind of inside stuff nobody else knew.. and that's what he'd put his money on. He'd know if the quarterback was on coke, if his girlfriend was knocked up." Or, in Buffett's case, he'd know if the new management were good enough to turn the company around and if the company had the fundamentals to make it possible, and he'd understand the business well enough to know those things. You can't find that stuff in a chart, or a P/E stat. But it takes knowledge, hard work, resources, and the cajones to throw down $300,000,000 on a struggling business.
Stock goes up, stock goes down. Stock goes up, stock goes down. -- Homer J. Simpson (paraphrased)
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Chin00k
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Chin00k »

freebeer wrote:but... but... what happened to "age in bonds" ????
Haven't you heard, 60 is the new 40.
Calm Man
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by Calm Man »

I have no problem with these instructions to a trustee as I doubt that his wife will need Medicaid. However, are we supposed to accept that this guy, the world's greatest investor who teaches the masses to invest so simply, cannot teach this to his wife and she take care of her own portfolio? Can she not invest 10% in a Vanguard short term government bond fund and 90% in the Vanguard total stock market fund?
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by cfs »

Good conversation.

Second-guess the Sage at your own risk.

Thanks for reading.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by claver »

dickenjb wrote:
dbr wrote:Since he specifically mentions "long term results" the benefits cannot be only for his present wife. At least I assume she is near his age.
You know what happens when you "assume".

His first wife died and this is for his trophy wife.

Astrid is 16 years his junior.
Actually, Astrid is not his trophy wife. Buffett has had a fascinating personal life. He has been with Astrid for many, many years while his first wife lived separately from him in California. They were all three cordial friends and his first wife introduced him to Astrid, a good friend of hers as I recall, many years ago. When his first wife died, he married Astrid. Buffett is a very interesting man.
Last edited by claver on Mon Feb 24, 2014 10:02 pm, edited 1 time in total.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by claver »

reisner wrote:90/10 is a far cry from 60/40. I would have appreciated the rationale for his AA.
Buffett is not a fan of bonds, which he holds in Berkshire only for purposes of necessary liquidity (see his comments on bonds in his 2012 investor letter). He was recently quoted as saying, "Right now bonds should come with a warning label." He is a great advocate of owning productive assets, stocks and businesses and otherwise. See his current investor letter (or the news reports about it) for his explanation of why he bought a farm--it's all based on owning productive assets.

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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by jwa »

As a holding company, Berkshire Hathaway has large investments in the insurance business with both primary insurance and reinsurance. Statutory requirements are that insurors hold a certain percentage of policyholder surplus in bonds. Regardless if Mr Buffet likes or dislikes bonds at any given time he will have no choice but to have them.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by denovo »

I think 90/10 is probably ok for someone who has a really HNW. The lack of international funds is troubling, however.
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by abuss368 »

Buffett recommended regular plain old fashion treasuries with the S&P 500.

No TIPS or inflation bonds?

Keep investing simple and stay the course!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by abuss368 »

Considering the money involved here it is probably safe to assume it is a taxable account correct?

Did anyone note that tax exempt bonds were not recommended?
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by rogers-SNK »

is VFINX good for a taxable account or should one stick with total stock market?
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CyberBob
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Re: Warren Buffett's portfolio for his wife: Vanguard index

Post by CyberBob »

rogers-SNK wrote:is VFINX good for a taxable account or should one stick with total stock market?
According to Morningstar, the Total Stock Market is a smidgen more tax efficient, having 5 and 10 year tax-cost ratios of 0.38 and 0.34 compared to the 500 index ratios of 0.40 and 0.36.

Total stock also had slightly higher after-tax returns for the 5 and 10 year periods of 19.71 and 7.16 compared to the 500 index at 18.72 and 6.43.

I believe the Morningstar numbers assume the highest tax-bracket.

Bob
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