02-01-2007, 02:00 AM | #1 |
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Bogle-head
Jay,
You asked what I thought of the "bogle-head" way in another thread. I am not sure a fully understand the bogle-head connotations other than it is a reference to John Bogle the founder of Vanguard. I assume two general principles apply to bogle-heads given Vanguard's mutual fund offerings and overal philosophy:
Both of those points are wonderful advice when it comes to investing, and when family members ask me for advice (although I usually try to avoid giving financial advice) those are usually the first two things I tell them. Are there other specific tenants of the "Bogle-head" religion? |
02-01-2007, 04:37 AM | #2 | |
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Quote:
The basic theory is that no (or very few--and it's probably the random few not the talented few) money managers will beat the average market return after costs long term. |
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02-01-2007, 04:57 AM | #3 | |
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This is largely consistent with the empirical evidence when looking at after cost mutual fund returns. There is some persistence in mutual fund performance, but it is almost entirely confined to an one year ahead horizon (Also, it is probably not a manifestation of stock picking skill but the well known historical pattern of mediun term continuation in returns). There tends to be more persistence if you track managers instead of funds, but overall you assesment of the mutual fund industry sounds about right. |
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02-01-2007, 05:29 AM | #4 |
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None of this stuff is a big secret, so it is hard for me to understand why the general public persists in chasing the cult of the incredible stock picker mutual fund manager, cult of personality. I guess marketing is a more powerful force to most than empirical data. And all this time I thought that empirical data was so captivating to the average Joe. Go figure.
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02-01-2007, 02:28 PM | #5 | |
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