Benjamin Graham

We are led to put forward to most of our readers what may appear to be an oversimplified 50-50 formula. Under this plan the guiding rule is to maintain as nearly as practicable an equal division between bond and stock holdings. We are convinced that our 50-50 version of this approach makes good sense for the defensive investor. It is extremely simple; it aims unquestionably in the right direction; it gives the follower the feeling that he is at least making some moves in response to market developments; most important of all, it will restrain him from being drawn more and more heavily into common stocks as the market rises to more and more dangerous heights.

Furthermore, a truly conservative investor will be satisfied conservative investor with the gains shown on half his portfolio in a rising market, while in a severe decline he may derive much solace from reflecting how much better off he is than many of his more venturesome friends.