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Warren Buffett’s Way To Invest For Retirement: 90/10 Allocation

FYI: The Sage of Omaha’s proposed 90/10 asset allocation could provide superior upside potential and downside protection, a study has found.
Regards,
Ted
http://www.ai-cio.com/channel/ASSET-ALLOCATION/Warren-Buffett-s-Way-to-Invest-for-Retirement/

Comments

  • beebee
    edited November 2015
    If the last thirty years are any indicator of future trends in Healthcare, maybe a 90/10 portfolio of VGHCX / VFISX vs Warren's VFINX / VFISX: (click on each image for better clarity)

    image
    image
  • Thanks Ted
  • edited November 2015
    @bee - brilliant! Not sure what site you used. Could you please oblige using other major sectors, i.e. technology, financial and materials.
  • Glad to share. Try it you'll like it.

    Thanks to @MJG, @Davidmoran, @catch22 and maybe others who have referenced this site. Very rich in historical data.

    Play around with it an teach us a thing or three.

    https://portfoliovisualizer.com/backtest-portfolio
  • edited November 2015
    Oh yes! I recall now. TYVM.
  • Of course, Buffett's family can think outside the box with their very different time horizon for a lot of these things.
  • With the amount of money to invest, Buffet's family can live off of interest without drawing down on equity positions. I was thinking about Buffett's method when I bought an entry position in VFIAX on 9/10/15. It is now almost 8% higher.
  • edited November 2015
    Yeah, once I get my 1st $ 1 BILLION I will consider a 90/10 allocation...!

    I have in my possession an old (~1960s era) edition of "The Intelligent Investor", written by Buffett's one-time mentor, Ben Graham. In it, he discusses the topic of asset allocation. He wisely admitted that there is no optimum allocation advice for all investors, but as a general guideline that a 2-asset (equities, US Treasurys) portfolio should generally contain no more equities than 75% and no less than 25% for most investors. Graham described that investors younger and more risk-tolerant might have as much (but no more) than 75% equities; older and less risk-tolerant investors should still have at least 25% equities. Basically any extreme allocation outside the 75/25 to 25/75 was not recommended.

    Graham's counsel always seemed to me to be simple -- and thus easy for an individual to implement-- and wise.

    (Several years ago, I paged through a modern edition of Graham's book in a Barnes & Noble, looking for that passage, but it seems to have been posthumously excised, perhaps replaced by "newer, enlightened" thinking during the great 1990's bull market).

    An aside: I doubt Graham would have much positive to say regarding the current excitement with "alternative strategies" -- especially given the expense ratios in vehicles available to retail investors.
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