Graham advised keeping at least 25% of one's portfolio in bonds, even in the most attractive markets.
Between 25% and 75%
"the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequent inverse range of between 75% and 25% in bonds. There is an implication here that the standard division should be an equal one, or 50–50, between the two major investment mediums... According to tradition the sound reason for increasing the percentage in common stocks would be the appearance of the “bargain price” levels created in a protracted bear market."
Graham's framework is as much about psychology as it is about numbers. Accordingly, a lot of Graham's recommended investment processes are designed to keep the investor's more dangerous instincts in check.
"These copybook maxims have always been easy to enunciate and always difficult to follow—because they go against that very human nature which produces that excesses of bull and bear markets... 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."
The process of maintaining a balance between equity and debt in one's holdings has both psychological and practical benefits for the investor.
On the one hand, such a strategy keep the investor's energies focused on the right activities; and more importantly, away from the wrong ones. On the other, it ensures a sensible outcome for the investor no matter what the future outcome of the market.