 Good day, fellow investors. Warren Buffett recently said this. Let me give you a figure that will blow your mind, I think. I bought my first stock when I was 11 years old. It was the first quarter of 1942, shortly after Pearl Harbor. I spent $114.75. Three shares, $114.75. If I put that $114 into the S&P 500 at that time and reinvested the dividends, think of a figure as to what it might be worth today. Oh, man. Well, I just want your audience to think for a second. The answer is about $400,000. So, if I, as a little kid, had taken that $114, I'd save a shovel or whatever I'd done. $400,000 today, one person's lifetime. That's America. That isn't me. It is the huge tail with the American economy gives to any equity investor. So he's saying that $114 invested in the S&P 500 with reinvested dividends would now be $400,000. And that is what he's saying to sell the stock market because he's a capital allocator. He likes also stock prices to go up to give him a better return. And that's why he's selling stock, stock, stock market, stock market. And he's especially selling index funds because he's telling you, you cannot do what I did. It's better for everybody else to just invest passively in the stock market, even if he never reinvested in index funds. And let me show you how his view is a little bit biased. I have looked at 140 years of returns of the S&P 500, 10 year and 20 years to show how stock market index investing is also risky. And let's go into that. But before that, first is who has a 75 year investment horizon? Buffett? Yes, because he has no life. But I bet that 99% of us, we have a 10, 5, 20 year investment horizon max as we want to live our life and we want to take advantage of our money and we want to spend it. We want to die penniless. We don't want to die with 90 billion. So that's the difference between Buffett and the rest of the normal world we have to think about. Now, let's see about the S&P 500 returns and the distribution of the returns over time. So I have taken the S&P 500 yearly returns, added the dividends and adjusted for inflation. Everything is adjusted for inflation to see what are the real returns over time. Here you have the distribution of 10 year returns over the last 139 years of S&P 500 available data. And in 18 out of the 139 cases I analyzed, real 10 year returns with reinvested dividends have been negative, with the worst case scenarios being a 30, 32% and 45% real loss if you invested in stocks and reinvested the dividends in 1964, 1910 and 1999. So my data shows that if you're investing stocks in index funds, there is a 14% chance for your returns to be negative over the next 10 years. Negative. And the CAPE ratio is now extremely high and we have seen that in the past I'll make a special video I have to dig into the data to see what are the average returns in relation to the CAPE ratio. But there is a big probability that after 10 years with the higher ratios the real returns are 40% down. That's something Warren Buffett never mentions. He just says buy index funds, buy index funds, buy index funds. The best returns are 416%, 388% and 361% returns from 1948 and 1918, respectively when the CAPE was at 663, 1042 and 609 respectively. So when the CAPE was low, high 10 year returns. When the CAPE was high, low 10 year and even 10 year negative returns. So Buffett don't just tell people to invest in the stock market, why don't you tell them to do what you did, learn, invest much time and then invest accordingly for proper risk reward situations. At this moment in time, yes it has worked well over the past and that's why Buffett feels good but I don't think it's smart to say to people to just blindly invest in index funds. Dollar cost averaging, okay, but who can dollar cost average over 75 years? Let's look at 20 year returns. A little bit better than 10 year returns. The worst returns are 14, 15 and 21%. Over 20 years I'm talking, not yearly returns. Coming from 1961, 1901, 1902 when the CAPE ratios were 18.97, 2094 and 22.3. The best returns and this is good to hear are 1014%, 924% and 918% from 1947 close to when Buffett invested his $114, 1978 and 1979 when the CAPE ratio was at 1174, 924 and 926. So when the CAPE is low, long-term returns are high and vice versa. So why doesn't Buffett see that? I don't know. Perhaps he is high on his good returns over the last 45 years thanks to index funds investing, thanks to others buying stocks high when he bought them low. Further back to Buffett, his nominal returns from the period he picked would be around 11% per year since 1942, which is remarkable as the average 10 year real returns and 20 year real returns were 7.6% and 7.2% respectively. If I invest his $114 over 76 years at a 7.2 real interest rate, I get to 22476 which is 20 times less than the story he is selling us. It's not bad, but let's keep inflation in mind when looking at those huge numbers. So my point is, okay, there are a lot of people with a lot of money, with retirements, with everything and Buffett is saying buy index funds, buy index funds, buy index funds. And that's a wrong message for most people because some people will need that money in 5, 10, 15 years and there is a 14% statistical change chance. I have to adjust it for the CAPE ratio, which will make it much higher that the returns will be negative, negative. And that's why I must disagree with Buffett on this call. Dollar cost averaging 40 year horizons. In 40 years I will be 75. I want to live my life so I don't have such a long horizon to wait for. I'm sorry. Thank you for watching. Looking forward to your comments on this extremely important topic. How do you see it, my way or Buffett way? Let me know. See you in the next video.