TN_Boy wrote: ↑Mon Feb 25, 2019 1:32 pm
knpstr wrote: ↑Mon Feb 25, 2019 12:31 pm
Grt2bOutdoors wrote: ↑Mon Feb 25, 2019 12:11 pm
TN_Boy wrote: ↑Mon Feb 25, 2019 11:57 am
Yes, I still don't understand why people think Berkshire Hathway's cash position, which is used for many things, including potentially buying large companies, tells us much about what individual investors should do -- even if you believe Buffett really is smarter than everybody else.
It's a long way from "Berkshire is holding lots of cash" to "I should reduce my stock allocation." Could someone point to where Mr Buffett implies such a connection in any way?
Buffett said long ago, he believes the perfect allocation is 90% S&P 500/10% Treasuries.
Yes, Buffett has suggested that the "average or passive" investor should always be fully invested and at 90/10 - S&P500 index/Short term treasuries. Set it and forget it. Don't dance in and out.
Could you point me to where he said the average
investor should always be fully invested
, 90/10 per the above. Or that he said 90/10 was "perfect
Because I do not think that is what he said. I looked at the 2013 letter where he stated his wife's trustee should allocate the money 90/10. He clearly advocates index investing, and seems to discourage market timing in the associated text.
But I do not see where he says the average investor should be 90/10. He said his spouse should be. His spouse will almost certainly not be an "average investor." I'm taking a wild guess that just the 10% she'll have in bonds will greatly exceed the total net worth of most investors.
He never said it is "perfect" (nothing is perfect) but he has mentioned and hinted that this portfolio would suite most people well.
In a CNBC Squawk Box Transcipt:
"To which Buffett responded: “Well, I didn’t lay out my whole will. . . . I did explain, because I laid out what I thought the average person who is not an expert on stocks should do
. And my widow will not be an expert on stocks. And I wanna be sure she gets a decent result. She isn’t gonna get a sensational result, you know? And since all my Berkshire shares are going to philanthropy
, the question becomes what does she do with the cash that’s left to her? Part of it goes outright, part of it goes to a trustee. But I’ve told the trustee to put 90% of it in an S&P 500 index fund and 10% in short-term governments. And the reason for the 10% in short-term governments is that if there’s a terrible period in the market and she’s withdrawing 3% or 4% a year you take it out of that instead of selling stocks at the wrong time
. She’ll do fine with that. And anybody will do fine with that
. It’s low-cost, it’s in a bunch of wonderful businesses, and it takes care of itself.”"
all emphasis mine
As far as being fully invested he has another quote which I couldn't find but here is one that is tangential in nature:
""Since the basic game is so favorable, Charlie and I believe it's a terrible mistake to try to dance in and out
of it based upon the turn of tarot cards, the predictions of "experts," or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it.""
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius