The Dow Just Jumped 1,100 Points. Here’s What Warren Buffett’s 2008 Rule Says to a 66-Year-Old Retiree Who Almost Moved $600,000 to Cash on Friday

Quick Read

• The Dow rose about 1,100 points on Monday and the S&P 500 fund 2.4%, its biggest day since April 8, after the fund’s 4.4% drop on Thursday and stocks’ worst week since April 2025. Buffett’s Oct. 17, 2008 rule: “So if you wait for the robins, spring will be over.”

• The rule cost first: the S&P 500 fund fell 26.9% more in the five months after he wrote. It was 67.7% above its low by the day the recession’s end was announced, up 85.8% five years after the piece, and $100,000 held since then is $807,467 against $129,634 in Treasury bills.

• A couple, 66 and 63, with $1.8 million almost moved $600,000 to cash on Friday: Monday alone would have cost $14,158. Of the S&P 500 fund’s 20 best days since 2000, 12 came within 10 trading days of one of its 20 worst. Their $630,000 outside stocks covers 10.4 years of draws, the number that should decide it.

The Dow Jones Industrial Average jumped about 1,100 points on Monday, and Warren Buffett’s rule for exactly this moment is 18 years old: “So if you wait for the robins, spring will be over.” He wrote it in The New York Times on Oct. 17, 2008, a month after Lehman Brothers failed, in a piece titled “Buy American. I Am.” The sentence before it said what he meant: “What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.”

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Monday fit the rule. The Dow rose more than 2% to roughly 52,400. The S&P 500 index fund rose 2.4%, its biggest gain since April 8, and the Nasdaq-100 fund rose 3.5%. That came three trading days after the S&P 500 fund’s 4.4% drop on Thursday, its worst day since April 2025, and one trading day after stocks closed their worst week since the tariff week of April 2025. The worries that drove last week’s selling had not been settled over the weekend. The main change on Monday was a drop in oil prices.

Monday’s 1,100 points are a warning about the cost of waiting for the all-clear: the rebound came while the worries that caused the selling were still there, which is what Buffett’s rule says to expect. They are also one day, and one day says nothing about whether last Thursday was the low.

Take a retired couple, 66 and 63, with $1.8 million: $1,250,000 in a rollover IRA, $400,000 in a brokerage account and $150,000 in a Roth. They hold 65% in an S&P 500 index fund, $1,170,000 at Friday’s close, and $630,000 in bonds and a money market fund. Social Security pays them $4,800 a month, $57,600 a year, and they spend $118,000, so they draw $60,400 a year from the portfolio, 3.4% of it. On Friday afternoon, after a week of headlines, he typed an order to move $600,000 of the IRA’s index fund to cash, the money market fund, until things settled down. He did not send it. If you typed something like it, here is what the order would have cost by Monday’s close, what Buffett’s rule cost the people who followed it in 2008 before it paid them, and the one number that should decide this for you instead of the Dow.

What the order would have cost by Monday

Their stock sleeve was worth $1,239,695 at the S&P 500’s Oct. 6 record. Thursday took $53,799 out of it in one session. It closed Friday at $1,170,000 and Monday at $1,197,607, a gain of $27,607 in a day, and it is still $42,087 under the record.

The $600,000 that was almost in the money market fund would have missed $14,158 of Monday’s gain. That is one day. The larger cost is the one Buffett’s sentence describes. If you sell until it settles down, you need a signal that it has settled, and the usual one is the index back at its record. The S&P 500 fund’s record is 6.0% above Friday’s close, so $600,000 that waits for that signal buys back $566,268 worth of Friday’s shares, $33,732 less, and only if the record is the first sign of calm. In exchange, the money market fund would pay you about 4.17%, the 3-month Treasury bill rate: $25,020 a year, or $2,085 a month.

What the rule cost Buffett first

Buffett was careful to say what the rule does not do. “Let me be clear on one point: I can’t predict the short-term movements of the stock market,” he wrote, and he was right to be careful. He published on Oct. 17, 2008, with the S&P 500 fund at $93.21. It kept falling for five months, to $68.11 on March 9, 2009, a loss of 26.9% after his piece ran. If you had bought that week because of it, you were down by more than a quarter by spring.

Then the robins came late, exactly as he said. The recession ended in June 2009, but the National Bureau of Economic Research did not announce that until Sept. 20, 2010, and by that day the fund had risen 67.7% from its low. A year after the piece ran, the fund was up 17.8% from where he published. Five years after, 85.8%. Today it is 8.07 times the price on the day it ran, price only, with dividends excluded: $100,000 held through all of it is $807,467. The same $100,000 rolled in 3-month Treasury bills since that day is $129,634. His other line in the piece was about that choice: “Today people who hold cash equivalents feel comfortable. They shouldn’t.”

Why the best days hide next to the worst ones

The reason the rule works is in the calendar of the S&P 500 fund’s daily closes since 2000. Of its 20 best days in that span, 12 came within 10 trading days of one of its 20 worst days. The two biggest, Oct. 13, 2008 (up 14.5%) and Oct. 28, 2008 (up 11.7%), landed in the middle of the worst stretch of the crisis. The third biggest, April 9, 2025 (up 10.5%), came three trading days after the tariff drop that still marks the last week worse than the one just ended.

That clustering is what a sell-and-wait order buys you. $100,000 put in the fund on Jan. 3, 2000, and left alone was worth $517,501 on Monday, 6.31% a year, price only. If you missed the 10 best days, you have $224,552, 3.06% a year. If you missed the 20 best, you have $131,516, 1.03% a year, less than the $169,619 that 3-month Treasury bills returned over the same stretch. Those 20 days are fewer than one a year, and most of them fell in the weeks when you would most have wanted to be out.

Where the rule is weak

The rule says the recovery arrives before the all-clear. It does not say when, and it does not say Monday was the start of it. In 2008 the fund fell another 26.9% after Buffett wrote, and the 1,100 points the Dow gained on Monday leave the S&P 500 fund 3.4% below its record and the Nasdaq-100 fund 10.6% below its own. If you draw $60,400 a year, you cannot wait five years for the robins with money you need next year, and Buffett was writing about his personal account, which he said had held nothing but Treasury bonds until then.

That is why the decision for this couple belongs to a different number than the Dow. Their $630,000 outside stocks covers 10.4 years of draws at $60,400 a year. The 2007 to 2009 fall took the S&P 500 fund 5.4 years to repair, from its October 2007 peak to the first close above it in March 2013, and the 2000 to 2002 fall took 7.2 years. A reserve that covers a decade means no stock has to be sold in a bad year, which is the only thing the Friday order was trying to buy, at a cost of $14,158 on its first day. If your real worry is the mix, that 65% in stocks is more than you can sleep with at 66, change it once, inside the IRA where it costs you nothing in tax, and pick the day from your plan, which does not care what the Dow did on Monday.

The bottom line

The Dow rose about 1,100 points on Monday, the S&P 500 fund had its biggest day since April 8, and the worries that caused last week’s selling were still there when it happened. That is the moment Buffett’s 2008 rule describes: the market moves first, the news catches up later, and the people who wait for the robins miss spring. His rule cost its followers 26.9% in the five months after he wrote it and paid them 85.8% within five years. For a couple with $1.8 million, the $600,000 order that was never sent would have missed $14,158 on Monday and $33,732 of shares if they waited for the record to buy back. The number that should settle it for you is 10.4 years, the draws their bonds and cash already cover, and that number was the same on Thursday night as it is tonight.

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If you’ve saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.

Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)

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