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Tags: jack bogle | invest | advie | chuck jaffe

Jack Bogle: 'Don't Bet the Farm' and Try to Outsmart the Market

Jack Bogle: 'Don't Bet the Farm' and Try to Outsmart the Market
Jack Bogle (AP)

By    |   Friday, 18 December 2015 08:24 AM EST

While Vanguard founder Jack Bogle does expect significantly lower returns — stock returns as low as 4 percent before inflation — over the next decade, he fears some investors may have overreacted to his prediction and “bet the farm” on what he has predicted.

“It’s not bet the farm; it’s not short term. It’s minor adjustments in your asset allocation, if any,” he told MarketWatch's Chuck Jaffe.

“Short-term market timing is a loser’s game. None of us know what tomorrow holds, not Bogle nor anybody else. And that’s why I have never done anything other than a 10-year reasonable-expectations perspective,” said the venerable founder of the Vanguard Group — the world’s largest mutual fund company.

“Any day, any week, any month, any year can do what it wishes, but 10 years it comes down to how corporations do, and that’s more important than how the stock market does.”

Highlighting a wide-ranging recent interview on the radio show “MoneyLife with Chuck Jaffe,” Bogle said:
  • On his current investment allocation: “Currently, I’m 53 percent invested in bonds, 47 percent invested in stocks, almost entirely indexed or in funds heavily correlated to the market. … I have reduced my equities a little bit this year, largely in view of the fact that I’m at a time in life when I am a little more interested in preservation than growth.”
  • On changing allocations and timing the market: “I caution people that maybe staying the course exactly where you are is alright to do, but you want to make sure you have saved enough for retirement.  I definitely lean to the low side, though I use this system: Roughly 3 percent for bonds and roughly 6 percent for stocks. And that’s where the 4.5 percent comes from.”
  • On how hard it is for investors to succeed in the market today: “The best way to do that is to tell people to stop paying so much darned attention to the stock market. … The stock market is a giant distraction to the business of investing. So the best thing to do is to not let the market dominate your thinking.”
  • On whether he’s glad to not be running Vanguard today: “I don’t know if I would be a very good person to run Vanguard today. I never looked at myself as a big businessman. In fact, I’ve never looked at myself as a businessman period.”
And while plotting your own investment strategy may seem like a difficult and intimidating task, but financial guru Matt Towery says it's all a matter of keeping on top of today's news headlines, public opinion surveys and other easy-to-find information.

"Warren Buffett says you have to read, read, read all the time and he's right," Towery — author of "Newsvesting: Use News and Opinions to Grow Your Personal Wealth," published by Looking Glass — said on "Newsmax Prime" with J.D. Hayworth on Newsmax TV.

"You start collecting and looking at news on a day-by-day basis and basically journal it down…. Oil is a great example. We had an oil glut long before anyone was writing about it, but no one was taking advantage of the opportunity to start investing in that and buying oil cheaper until it dropped.

"But if you had been following it, you would have been out of those oil stocks early and you would have been back in when they were down at $40 a share, such as with ConocoPhillips. So you can really do it, anyone can, if they just take a measured approach to it."

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Jack Bogle Owns More Bonds Than Stocks; The father of stock market indexing lightens up on his equity exposure
jack bogle, invest, advie, chuck jaffe
Friday, 18 December 2015 08:24 AM
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