A passive index position providing broad market exposure — Guy Spier follows Buffett's advice that most investors are best served by a low-cost S&P 500 index fund
Guy Spier
Aquamarine Capital Management
“Warren Buffett has said repeatedly that a low-cost S&P 500 index fund is the best investment for most people. I take that advice seriously, even as a professional stock picker.”
The Business
- The iShares Core S&P 500 ETF (IVV) tracks the S&P 500 index, providing exposure to 500 of the largest US-listed companies
- Top holdings include Apple, Microsoft, NVIDIA, Amazon, and Alphabet — the dominant companies in the US economy
- The fund has an expense ratio of 0.03% and over $500B in assets under management, making it one of the largest ETFs in the world
- It provides instant diversification across all major sectors of the US economy with daily liquidity
Why They Own It
“Warren Buffett has said repeatedly that a low-cost S&P 500 index fund is the best investment for most people. I take that advice seriously, even as a professional stock picker.”
- Spier follows Buffett's advice that a low-cost S&P 500 index fund is the best investment for most people — and uses it for a portion of his own portfolio
- The iShares position provides diversified equity exposure that complements his concentrated individual stock picks
- Near-zero expense ratio (0.03%) means virtually all market returns flow through to the investor
- The S&P 500 has compounded at ~10% annually over the long term, providing reliable wealth accumulation
- This position reflects intellectual honesty — even the best stock pickers benefit from passive diversification
What the investor sees
An S&P 500 ETF does not have a traditional 'thesis price.' Spier's allocation reflects a belief that owning the broad US equity market at any given time is a reasonable investment, particularly as a complement to concentrated individual stock positions. The S&P 500's long-term compounding rate of ~10% annually provides a reliable base return.
Financial Snapshot
0.03%
expense ratio
S&P 500
index tracked
$500B+
aum
~500 stocks
holdings
Technology (~30%)
top sector
~10% CAGR (long-term)
historical return
The Moat
- S&P 500 companies represent the most profitable businesses in the US economy with strong competitive positions
- Index rebalancing naturally removes weak companies and adds strong ones, creating a self-improving portfolio
- Extreme diversification eliminates single-stock risk while capturing broad economic growth
What Could Go Wrong
Market-wide drawdowns — the S&P 500 can decline 30-50% during bear markets and recessions
Concentration in mega-cap tech — the top 10 holdings represent ~35% of the index, creating sector concentration
Passive investment bubble concerns — massive flows into index funds may distort price discovery
Currency and geopolitical risks affecting the entire US equity market
Catalysts
- Long-term compounding — the US economy continues to be the most innovative and productive in the world
- Corporate earnings growth driven by AI, technology, and productivity improvements
- Share buybacks — S&P 500 companies collectively buy back hundreds of billions in stock annually
In Their Own Words
“Part of being a good investor is intellectual honesty. Not every dollar needs to be in a concentrated position. Some portion of the portfolio can simply ride the broad market.”