Passive Indexing Benefits
There are five key benefits of constructing a Warren Buffett portfolio that is passively managed:
1. You can sleep well knowing you are following the advice of the greatest investor of all-time, Warren Buffett.
2. By buying and holding for decades while reinvesting dividends, the power of compounded returns is realized.
3. With passive indexing in low cost index funds, you are keeping fees as low as humanly possible which maximizes returns.
4. You are maximizing tax efficiency by buying and holding for decades instead of days (only relevant when investing in a personal portfolio versus a retirement account).
5. The portfolio is easy to implement and straight-forward to follow.

What Is a Cyclical Stock?
A cyclical stock refers to an equity security whose price is affected by macroeconomic, systematic changes in the overall economy. Cyclical stocks are known for following the cycles of an economy through expansion, peak, recession, and recovery. Most cyclical stocks belong to companies that sell discretionary items consumers can afford to buy more of during a booming economy. These stocks are also from companies that consumers choose to spend less with and cut back on during a recession.
Understanding Cyclical Stocks
Companies whose stocks are cyclical include car manufacturers, airlines, furniture retailers, clothing stores, hotels, and restaurants. When the economy is doing well, people can afford to buy new cars, upgrade their homes, shop, and travel. When the economy does poorly, these discretionary expenses are som