Posted July 25, 2025 

MEET BOB, THE WORLD’S WORST MARKET TIMER

Do you ever feel “the curse” of investing at exactly the wrong point? Like your investing is too late, at the wrong time, or maybe that you’re just unlucky?

Well meet Bob – the World’s Worst Market Timer. Bob began his working career in 1970 at age 22 and was a diligent saver and planner.

His plan was to save $2,000 a year during the 1970’s, then increase his savings by $2,000 each decade. In other words $2,000/year in the 70’s, $4,000/yr in the 80’s, $6,000/year in the 90’s… you get the picture.

Bob started in 1970 with $2,000, added $2,000 in ’71 and ’72, then decided to take the plunge and invest in the S&P 500 at the end of 1972. (Time out: there were no index funds in 1972, but come along with me for illustration purposes).

Now in 1973 – 74, the S&P dropped by nearly 50%. Bob had invested his life savings at the peak, just before it fell in half ! Bob was bummed, but Bob had a plan and he was sticking to it. You see Bob never sold his shares. He didn’t want to be wrong twice by investing at the peak and then selling when prices were low. Smart move Bob !

So Bob kept saving $2k/year in the 70’s and then $4k/yr in the 80’s. But he was feeling the sting of his last investment and did not feel comfortable adding to his fund until he had seen the markets rise a fair amount. In August of 1987 Bob decided to put 15 years of his savings to work. Seriously Bob?

This time the market fell more than 30% right after Bob invested. Bob, amazed at his investing prowess, did not sell.

After the 1987 crash, Bob was really planning to wait it out. In the late 1990s everything was on fire. The internet was unbelievable new technology and stocks were flying high. By 1999 Bob had accumulated $68,000 from saving each year. A firm believer that the Y2K bug was boloney, Bob invested his cash in December 1999 just before a 50% decline that lasted until 2002.

The next buy decision in October 2007 would be one more big investment before he would retire. He had saved up $64,000 since 2000, deciding to invest this right before the financial crisis that saw Bob experience another 50% decline. Monkey’s throwing darts were probably better at investing than Bob.

Distraught and disheartened, Bob continued to save each year and accumulated another $40k. He kept his investments in the market until he retired at the end of 2013.

So let’s recap: Bob is definitely has “bad timing”, only investing at market peaks just before severe market declines. Here are the purchase dates, subsequent declines and the amounts Bob invested:

Fortunately Bob was a good saver, and actually a good investor. You see once he made his investment he considered it to be a long-term commitment and never sold his shares. Even the Bear Market of the 70’s, Black Monday in 1987, the Tech Bubble or the Financial Crisis did not cause him to sell or “get out” of the market.

He never sold a single share. So how did he do?

Bob almost fell out of his chair when his advisor told him he was a millionaire! Even though Bob made every single investment at the peak, he still ended up with $1.1M! How you might ask? Bob actually had what we would call “Good Investor Behavior”.

First, Bob was a diligent and consistent saver. He never waivered from his savings plan (recall $2k/year in the 70’s, $4k in the 80’s, $6k in the 90’s, $8k in the 2000’s, $10k in the 2010’s until his retirement in 2013 at age 65).

Second, Bob allowed his investments to compound through the decades, never selling out of the market over his +40 years of investing – his working career.

During that time Bob endured tremendous psychological toil from seeing huge losses accumulate right after he made each investment. But Bob had a long-term perspective and was willing to stick with his savings and investment plan – even if his timing was “a bit off”. He saved and kept his head down.

Certainly you realize Bob is an illustration. We would never advise only investing in a single strategy, let alone a single investment like an index fund. If Bob had invested systematically, the same amount each month, increasing his savings like he did he would have ended up with even more money, (over $2.3M) – but that would not have been Bob, the Worlds Worst Market Timer.

So what are the lessons?

If you are going to invest, invest with an optimistic outlook. Long-Term thinking often rewards the optimist. Unless you think the world is coming to an end, optimists are typically rewarded.

Temporary, short-term losses are part of the deal when you invest. How you react to those losses will be one of the biggest determinants of your investment performance.

The biggest factor in investment success is savings. How much you save, and how methodically you save has a much bigger impact than investment return.
Get these three things right along with a disciplined investment strategy and you should do well. Even Bob did well. Nice work Bob.

As part of your Snowball, add a tracker, add funds from your dividends when markets crash

A yield close to 60% a year

First posted on

October 26, 2025 

Near-zero savings ? Start building wealth with Warren Buffett’s golden method

Learning these Warren Buffett tips can help investors potentially become significantly richer in the long run, especially when starting early.

Posted by Zaven Boyrazian, CFA

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice.

Warren Buffett is one of the most successful stock market investors in the world, with a net worth of almost $150bn. That’s despite starting out with only around $2,000.

Throughout this journey, he’s been quite a vocal teacher, offering powerful advice over the years to guide the next generation of investors. And while the economic landscape’s very different in 2025, Buffett’s method remains a proven strategy for building long-term wealth, even when starting with little-to-no savings.

Focus on the business

In the short term, the stock market can feel a bit like a casino with prices jumping up and down almost randomly. But in the long run, shares ultimately move in the same direction as the underlying business.

So long as the company’s able to grow and create value, the share price will eventually follow. Yet that rarely happens overnight. That’s why Buffett once said: “What we really want to do is buy businesses that we will be happy to hold forever”. And in order to do this confidently, investors need to dive deep into research, or as Buffett puts it, “you have to understand the business”.

Depending on the company, the process can be a lengthy one. And it’s also why the ‘Oracle of Omaha’ strategically only looks at stocks within his circle of competence. But even then, when hunting for the best businesses in the world, Buffett admitted, “we can’t find a lot of them”.

As someone who’s been analysing stocks for over a decade, following these core principles, my research often ends with a ‘not good enough’ conclusion. And it’s why Buffett also advised that investors who lack the stamina to invest in this way should opt for passive index funds.

But “for those willing to put in the required effort”, stock picking can open the door to tremendous long-term wealth.

Practising what he preaches

Perhaps a perfect example to consider is Coca-Cola (NYSE:KO). Buffett first bought its shares in 1988, recognising the soft-drink company’s powerful global brand that granted the business an enduring competitive advantage.

Since then, he’s never sold a single share. And with earnings expanding as the firm entered and captured new markets, dividends have been hiked consistently. The result ? His initial investment’s now generating a yield close to 60% a year !

Fast forward to 2025, and Coca-Cola continues to demonstrate the world-class traits Buffett loves to see. Management has been adapting its product range to shifting consumer tastes, most notably with its Coke Zero variant. And with the group’s digital transformation offering new efficiency opportunities, Buffett continues to hold his shares, enjoying consistently and reliable dividends.

Does that make Coca-Cola a no-brainer buy in 2025? Not necessarily. Having reached a $290bn market-cap and worldwide dominant status within the beverages industry, Coke’s future growth is likely to be less impressive moving forward. And while management’s diversifying the product portfolio to tap into new opportunities, the group nonetheless faces rising pressure for both its growth and profit margins. 

Edit

Stockwatch: how much notice should we take of Warren Buffett?

He’s the best-known and most widely followed professional investor in history, but stocks have become more expensive and economies fragile. Analyst Edmond Jackson gives his view on the 95-year-old Sage of Omaha.

4th November 2025 12:38

by Edmond Jackson from interactive investor

Warren Buffett, CEO of Berkshire Hathaway. Photo by Johannes EISELE/AFP via Getty Images.

The revelation that Berkshire Hathaway Inc Class B  BRK.B

has accumulated record cash holdings – $377.5 billion (£287.7 billion) in cash and near-term US Treasury Bills, or nearly 54% of its net assets – is eye-popping.

That’s not just a red flag about some US equity valuations but also the economy, and is key to understanding Warren Buffett’s style.

Yet his sayings can be somewhat contradictory, and it’s interesting to critically consider his key points to smaller investors.

In his annual reports and AGM conversations, a regular Buffett theme over the decades has been long-term prosperity of the US economy. There’s a sense of “trust in Uncle Sam”, explaining why he has barely diversified outside US businesses in his investment career (albeit global exposure via multinationals).

He has also advocated that smaller investors use a low-cost S&P 500 index fund as the best means to achieve satisfactory returns, and put regular sums into the market this way.

It’s akin to the “semi-strong” theory of market efficiency, which you might describe in less abstract terms as “trust market prices” – where guessing market moves is probably futile. A further implication is that doing well over the long run is achievable by owning the whole market rather than fretting over stock selection.

Yet on the grand scale of Berkshire Hathaway – one of the top 10 US companies and the first non-tech firm to break the $1 trillion valuation – does the exact opposite. Its portfolio of marketable securities is highly concentrated, its five largest holdings constituting 66% of equities at 30 September, down from 71% at the end of 2024. These are 

American Express Co  AXP

 Bank of America Corp BAC0 

Coca-Cola Co KO2.1  

Chevron Corp CVX

And Buffett seems to be trading more amid caution at valuations and possibly scope for a cyclical downturn.

Looking at Berkshire’s trend in filings this year, cyclicals such as communications have been targeted: T-Mobile US Inc  TMUS

is now eliminated and Charter Communications Inc Class A 

CHTR 0.92% 

cut 46.5% to $435 million, albeit small in portfolio context.

Most notably in terms of a macro view, the Bank of America holding has been pared down 41% since mid-2024 to $28.6 billion. Banks are usually a leading indicator of the stock market – something you ideally buy in the trough of a recession and sell after a boom.

At Berkshire’s 2024 AGM, and in relation to Apple, Buffett also cited the prospect of the peak marginal corporate income tax rate rising in future – as justification for selling down Apple (and by implication possibly Bank of America also). This to me feels like another adage-break in the sense not to put tax considerations before quality of business.

Amber lights for Apple equity

Berkshire’s Apple stake is another candidate for scrutiny. Last year it was cut by two-thirds, but in a demonstration of how the world’s shrewdest investor can still get things “wrong”, Apple has continued to advance despite the March-April slide on tariff fears:

Source: TradingView. Past performance is not a guide to future performance.

Past “bubble” periods in markets suggest this latest tech-driven one could still be early stage and last several years. Compared with valuations in 1999-2000, today’s tech giants have colossal earning power, which the rush to adopt AI is helping advance, for now anyway.

Perhaps Buffett would say we have no real idea of how long such overvaluation might last and that the long-term median valuation should be respected. Apple’s trailing price/earnings (PE) ratio is in the mid-thirties (I recall drawing attention some years ago on 12x when Apple was out of favour) and in Buffett’s investing lifetime there is a precedent of how the “Nifty 50” growth stocks de-rated and Polaroid filed for bankruptcy in 2001 after it failed to adapt.

I do not imply a parallel with Apple but note that various Chinese Android smartphone manufacturers now enjoy their devices rated equally if not better than iPhones, so if the cult of Apple users contracts over years, then, yes, the stock’s PE can mean-revert down.

Despite Apple’s market value soaring over 24% in the third quarter of 2025, it is speculated that Berkshire continued to offload, given that its latest report cites the cost basis of its consumer products equity holdings down $1.2 billion from Q2. This category is dominated by the Apple stake.

Time will tell whether Buffett’s conservatism – to protect value by locking it in – will win versus the adage to “run winners”. Yet Berkshire can only sell into strength of demand, otherwise valuation would plunge or even face illiquidity.

So, while I have been bullish about Apple in the past, and for smaller nimble investors still regard it as a “hold”, best note this Berkshire selling in a context of strong Chinese competition challenging Apple’s profit margin.  

Ultimately Buffett embraces active over passive investing

In Berkshire Hathaway’s annual reports Buffett has often said “our favourite holding period is forever”, but this may not square with the real world.

He has also often enjoyed quoting Benjamin Graham – a 20th-century dean of value investing – who used to characterise share investing as being in a partnership with “Mr Market”, an incurable manic-depressive. Sometimes he will bid/offer you extravagant prices, other times well below what the businesses could fetch in a private sale. Intelligent investors must avoid falling under his spell and be patient to do the opposite.

Such a view can still reconcile with stock market valuations being “semi-strong efficient” in the long run; for example, mean-reversion up or down. It accords with another Graham/Buffett adage about how the market is a voting machine in the short run but a weighing machine longer term.

Where does this leave Berkshire Hathaway as an investment proposition?

Over the last 30 or so years, I have encountered investors who not unreasonably believe that it is worth having a share in Berkshire’s fortune, given that Buffett is also highly attuned at acquiring private companies. Last month, for example, the petrochemicals division of Occidental Petroleum Corp  OXY

was acquired for $9.7 billion.

While the A class are the original higher-priced shares with more voting rights, the B are more affordable with significantly less voting power but identical investment performance. They have had a very good run up to $530 last May. Indeed, they are up about eight-fold since the 2008 financial crisis, although more recently appeared to drop below trend-line:  

Source: TradingView. Past performance is not a guide to future performance.

At around $475 currently, the trailing PE is 15x but there is no yield as Buffett would see paying out as a thumbs down on his capital allocation, but until this year Berkshire has periodically engaged in share buybacks.  

On the face of it, third-quarter results showing operating profit up 34% year-on-year to $13.5 billion – driven mainly by insurance, railroad and energy – implies momentum from the fully owned businesses that are strongly positioned. Insurance underwriting soared over 200% to $2.37 billion.

Yet there appear at least two cautionary stances among US brokers following Berkshire, on the grounds of Buffett’s succession risk at age 95 and also headwinds that could weigh on earnings and share performance. Vehicle insurer Geico and railroad Burlington Northern Santa Fe may face cyclical and structural challenges.

A chief risk I see is the US economy becoming two-tier: big tech and AI masking a trend towards sluggish growth elsewhere, which might resolve in due course, but maybe not if tariff-induced inflation creeps in.

Greg Abel was Buffett’s clear first choice as successor CEO and has been with Berkshire some 25 years; time enough to ingrain plenty of Buffett’s mindset.

I regard Berkshire as essentially a well-honed spread of US businesses and shares, yet the economy is in question and Buffett’s actions suggest the market is high-priced. At best, I therefore rate “hold” and would let events play out further.

Edmond Jackson is a freelance contributor and not a direct employee of interactive investor.

I’ve tried to deal AIRE but it’s restricted trading, although you can buy 3,000 shares. The problem being you could build a position but be locked in when you want to sell, so not a suitable share for the Snowball. I will look for something to buy over the weekend.

I’ve sold the shares in PHP for a profit of £333.00, mainly because PHP was bought xd and dividends are the only consideration for the Snowball.

The replacement share is going to be Alternative Income AIRE, most probably.

How big does a Stocks and Shares ISA need to be to target a £1k monthly passive income?

Christopher Ruane explains how a Stocks and Shares ISA can be used as part of a strategy to try and earn a four-figure monthly passive income.

Posted by Christopher Ruane

Published 6 November

LGEN

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

Ever thought of stuffing a Stocks and Shares ISA with dividend shares as a way to earn passive income?

Lots of people do.

Such an approach can be lucrative over the long term.

It also means that passive income can hopefully be earned from proven blue-chip companies. That sounds genuinely passive to me, compared to some other approaches people use.

Setting a goal and working towards it

How much might such a plan earn?

It is a bit like asking how long is a piece of string. The amount of passive income a Stocks and Shares ISA can generate in the form of dividends depends on three factors: how much is invested, for how long, and at what dividend yield.

£1k a month equates to £12k per year. At a 5% yield, that would require an investment of £240k. At a 7% yield, it would require a bit less than £172k.

That may make it sound as if higher yields are the thing to go for. But no dividend is ever guaranteed to last, so when looking for shares to buy, it is always important to look at the likely source of any future dividends, not just the current yield.

£1k a month is a realistic target, like this

Both 5% and 7% are above the current FTSE 100 yield. But I think 7% is a realistic target in today’s market.

Not everyone has a spare £172k in their Stocks and Shares ISA that would let them get going straight away. That is fine – it is also possible to start from zero, by making regular contributions.

Putting £20k a year into the ISA and compounding at 7% annually, it would take just 7 years to hit the target size of close to £172k.

It could also be done with smaller contributions, though it would then take longer.

Finding shares to buy

One share I think investors should consider is Legal & General (LSE: LGEN). The FTSE 100 financial services firm has an 8.9% dividend yield.

It also aims to grow its dividend per share each year. The sale of a large US business ought to generate cash to help do that, though I see a risk that it could also leave a gap in the company’s profit generation ability compared to previously.

But with its strong brand, long history, large customer base, and proven cash generation ability, I think there is a lot to like about Legal & General.

Over the long term, I am hopeful it can use those strengths to keep generating more cash than it needs to run its business – and hopefully distributing lots of it as dividends.

Invesco Bond Income Plus (BIPS)

05 November 2025

Disclaimer

This is a non-independent marketing communication commissioned by Invesco. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

KEPLER

BIPS uses the investment trust structure to maximise the potential in high-yield bonds.

Overview

Invesco Bond Income Plus (BIPS) is designed to offer an attractively high yield with a diversified, risk-conscious approach. The investment trust structure allows the manager, Rhys Davies, to invest in a diversified set of high-yield bond markets, including into some smaller and less liquid areas, and to boost the yield by taking on gearing rather than extra credit risk. Meanwhile, the ability for the board to build up revenue reserves makes it easier for it to provide a smooth income output (see Dividend).

Rhys can invest in high yield globally, but focusses on the UK and Europe, supplemented by the best ideas from Invesco’s large US-based credit teams. He runs a portfolio very diversified by issuer, and uses his and his team’s expertise in subordinated bank debt to provide a boost to the yield without taking excessive credit risk (see Portfolio). Currently, this allocation to subordinated financials is balanced by a large position in lower-yielding, investment-grade debt. Overall, Rhys is positioned cautiously, waiting for opportunities to take advantage when high valuations recede — as he did to good effect during the tariff tantrum of April 2025. Nonetheless, the portfolio yield is c. 7.5%, reflecting Rhys’ ability to generate income without leaning on credit risk. Board and manager agree a dividend target at the start of each year, with 2025’s 12.25p per share equivalent to an ongoing share price yield of 7.0%.

Strong demand for the shares means the trust has tended to trade on a premium for the past three years and the board has issued substantial amounts of shares to meet demand, which has contributed to BIPS having the lowest charges in its sector by some way. Nonetheless, the shares still trade on a small premium of 1.5% at the time of writing.

Analyst’s View

BIPS has strong credentials to be the first option considered for any high-yield bond allocation. It uses the features of the investment trust structure well to its advantage, providing an edge over open-ended funds or ETFs. Rhys doesn’t have to keep cash on hand for outflows, and so can remain fully invested. In fact, he tends to run with a geared position, boosting the yield and the capital growth potential. He also invests in more specialist and less liquid areas like subordinated financial debt and some small issue bond deals, providing off-benchmark allocations that passive options can’t. The annual dividend target provides some visibility on the yield, while revenue reserves provide some protection in the event that market yields fall. Invesco’s large credit teams in Europe and the USA allow Rhys to manage a broad and diversified portfolio with prudently managed issuer and geographical risks.

Rhys’s cautious outlook doesn’t prevent the trust from offering a high yield while also having some built-in beta to any price appreciation that would come from falling interest rates, with a duration of 3.8 as of the end of September. This interest rate sensitivity is spread across the three key geographies, and so if UK rates remain high while European and US rates continue to fall, the portfolio will still benefit. We think that, given how narrow credit spreads are right now, BIPS’s approach, which allows a high yield to be earned without leaning on credit risk, is highly attractive.

Bull

• Experienced and well-resourced team with international presence
• Risk-conscious approach could provide stability through tougher markets
• Attractive yield on offer with high average credit rating

Bear

• Gearing also magnifies losses in falling markets as well as gains in rising markets
• Income would come under pressure with any sustained fall in market yields (as it would for peers)
• Duration would lead to losses if rates were hiked

City of London Investment Trust (CTY)

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by City of London Investment Trust (CTY). The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

KEPLER

A strong year of stock picking puts CTY well ahead of the benchmark.

Overview

City of London Investment Trust (CTY) aims to deliver income and capital growth. Job Curtis has an impressive tenure of 34 years managing the trust, giving him a depth of experience rarely matched. In particular, the last financial year illustrated the benefits of his active, stock-picking approach. That said, this is a cautious investment strategy that is arguably well suited to extending CTY’s unrivalled 59 year run of progressive dividend increases.

Job seeks to spread risks – both in terms of capital and income generation – across the portfolio. This has protected CTY against many sector-specific issues that have arisen over the years, but also in our view complements Job’s valuation-based investment framework, which favours quality companies, and sometimes has a contrarian tilt towards identifying new ideas. Job aims to balance any lower yielders in the portfolio by also investing in steady, highly resilient dividend payers with strong balance sheets. As we highlight in the Portfolio section, this means that CTY is exposed to a range of different types of companies, with varying growth and income characteristics.

Behind the headline-grabbing Dividend Hero moniker, CTY continues to deliver on a NAV total return basis too. CTY has delivered outperformance of the benchmark over one, three, five and ten years.

CTY’s dividend represents a yield of 4.25%. Whilst the dividend increase last year of 3.4% was a shade behind that of UK CPI at 3.6%, the board has stated that it understands the importance of growing the dividend in real terms through the economic cycle and long term. CTY has delivered real dividend growth over ten and twenty years, as we discuss in the Dividend section.

Analyst’s View

CTY has established itself as the leading trust in the UK Equity Income sector, a result not only of its long history of dividend increases over the past 59 years, but also because it has delivered good total returns to shareholders too. As a result, it has won investors’ confidence over time, issuing shares and growing organically so that it now dominates the UK Equity Income sector in terms of size, meaning good liquidity for investors and low Charges.

CTY’s 2025 dividend equates to a dividend yield of 4.25%. Not only is this attractive in absolute terms, so too is the fact that shareholders can derive an element of reassurance that comes with knowing CTY has a 59-year track record of delivering consecutive annual dividend increases. However, this is no UK domestic play – the majority of CTY’s portfolio revenues are derived overseas. Job sees the UK equities he owns as ‘global growth at a discount’. Job expects takeovers of UK companies to continue, highlighting the value available in the UK market.

CTY also provides reassurance in another way – the share price has tended to move in a relatively narrow band with regard to the NAV. As we discuss in the Discount section, a subtle change in wording means the board has underlined its commitment to try to protect shareholders from the discount widening out. As well as its other attractions, the tight discount has been fundamental to allowing CTY to grow organically in the past through share issuance. With this move, shareholders can continue to have confidence in continued good liquidity, and that the share price should follow the NAV. In our view, CTY appears well placed to continue its leadership within the UK Equity Income sector.

Bull

• Very low OCF of 0.36%
• Consistency and experience of manager who has delivered long-term outperformance of the FTSE All-Share Index in capital and income terms
• Track record of 59 years of progressive dividend increases

Bear

• Cautious approach means that NAV can underperform in some market conditions
• Income track record highly attractive, so manager might risk long-term capital growth in trying to maintain it
• Structural gearing can exacerbate the downside

A Trust to research for ‘pair trading’.