'If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks' - John Bogle WednesdayWisdom
It's no surprise to note that John Bogle, founder of Vanguard and inventor of the index fund as we know it, is among the most influential investors of the past half-century. Bogle's savvy wisdom is often distilled in quotable things he's said and written. Today I'll look at nine such quotes and add my comments.
Everybody "knew" that active mutual-fund managers could — and usually did — outperform passive indexes. That was the whole point of having a fund: Hire a smart manager who knew how to pick the best stocks and when to buy and sell them. In other words, every dollar you save by refusing to pay for an active manager is a dollar of return that belongs to you, not the manager. Reality turns out to be just the opposite of the marketer's beloved slogan: You get what you pay for.
The biggest practical problem with timing is this: Timing is likely to stop working if too many investors move in and out of the market at the same time. The very popularity of such a system would be its downfall. Index funds: "The index fund is a sensible, serviceable method for obtaining the market's rate of return with absolutely no effort and minimal expense. Index funds eliminate the risks of individual stocks, market sectors and manager selection, leaving only stock market risk."
Entire books have been written on the topic of "avoiding serious mistakes." So investing is not quite as simple as he makes it out to be.Very well stated, and this quote needs no comment from me.
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