Warren Buffett’s longstanding advice for ordinary investors is notably simple: use a low-cost S&P 500 index fund to own a broad slice of American business rather than trying to identify individual winners. He has argued that most nonprofessional investors do not need to forecast the earnings of specific companies to participate in the economy’s long-term growth.
In Berkshire Hathaway’s 2013 shareholder letter, Buffett wrote that investors should accumulate shares over a long period, keep expenses low and avoid selling simply because market news has turned negative. He warned that buying during periods of extreme optimism can lead to disappointment when paper losses arrive, while frequent trading creates costs without improving the underlying earnings of the businesses owned.
He suggested Vanguard for the index allocation and said he expected that mix to produce better long-term results than those achieved by many investors using high-fee professional managers. The recommendation was framed for investors who lack the time or expertise to evaluate individual businesses, not as a claim that every portfolio should contain only stocks.
The advice remains relevant as Berkshire moves beyond Buffett’s tenure as chief executive. At the company’s May 2025 annual meeting in Omaha, Buffett said he would recommend Greg Abel as his successor at the end of the year, and shareholders approved the transition shortly afterward. Berkshire’s reported performance under Buffett was exceptional, but his guidance for most households has consistently emphasized diversification and discipline rather than attempting to replicate Berkshire’s concentrated stock-picking. The practical implication is that investors following his approach accept market declines as part of ownership, limit fees and maintain a long time horizon instead of reacting to every market reversal.