Warren Buffett's most durable investment advice contradicts his own recent moves. In his 2013 shareholder letter, he instructed the trustees managing his wife's estate to allocate 90 percent to a low-cost S&P 500 index fund—specifically naming Vanguard. Yet in the fourth quarter of 2024, Berkshire Hathaway liquidated its entire 43,000-share position in the Vanguard S&P 500 ETF (VOO), according to 13F filings.
This divergence merits scrutiny. Buffett's core thesis for retail investors remains sound: own VOO and hold it through cycles. The fund's 0.03 percent expense ratio translates to just $3 annually per $10,000 invested, preserving capital that active managers and their fees would consume. Over decades, this compounding advantage is material.
VOO's diversification across technology, healthcare, financials, consumer goods, and industrials provides natural hedging. No single sector dominates performance across all economic regimes. The S&P 500 itself has proved resilient: it lost 49 percent in the dot-com crash (2000-2002) and 57 percent in the 2008 financial crisis, yet recovered each time to new highs. The index's composition refreshes dynamically—weak companies are replaced by stronger ones, allowing it to evolve with the U.S. economy.
Berkshire's exit may reflect Buffett's conviction that equities are fully valued or his preference for cash. It does not negate his recommendation for long-term investors. The man who built a $700 billion company through disciplined compounding still believes ordinary investors should own a diversified, low-cost S&P 500 fund and ignore short-term noise. That advice has aged well. For investors without a Buffett-grade investment operation, VOO remains a defensible core holding.
