Buffett on Asset Allocation

Question: What do you think of setting an asset allocation?

Warren Buffett: We don’t hold any committee meetings. The business of saying you should have 50% in stocks, 30% in bonds…it’s nonsense.

The idea of recommending that assets should be split 60/40 [between stocks and bonds], and then have a big announcement that you’re moving to 65/35 is pure nonsense. It just doesn’t make any sense.

Source: BRK Annual Meeting 2004 Tilson Notes


[Charlie Munger: Berkshire doesn’t do much conventional asset allocation. We just search for good opportunities and don’t want to put up artificial barriers. In this sense, we’re totally out of step with modern portfolio management, but we think they’re wrong.]

Warren Buffett: Well over 80% of our assets are in the U.S.

[Charlie Munger: When have you ever done a big asset allocation?]

Never. But if junk bonds had stayed low for longer, we could have invested $30 billion instead of $7 billion.

Source: BRK Annual Meeting 2005 Tilson Notes