Tuesday, February 3, 2009

Six Lessons from John Bogle of Vanguard

I am a big fan of John Bogle. He is on a mission to expose the scams perpetuated by the mutual fund and institutional investment firms and the fees they represent. A few weeks ago Mr. Bogle wrote a piece in the Wall Street Journal that covered six lessons individual investors need to be aware of. In my opinion, these a very important and I have considered how they have impacted my own portfolio. I would suggest that we all do the same - it sounds cliche but it is times like these that investors learn the most and hopefully will be more successful in the future. However, if human nature is any guide, then we will all probably just continue on the path of least resistance and not put these lessons into effect. I hope to not be that guy!


So what are Bogle's six lessons. Here that are in the order that were presented in the article. I encourage you to check out the full article as there are examples of what he is getting at with each lesson.

1. Beware of market forecasts, even by experts
2. Never underrate the importance of asset allocation
3. Mutual funds with superior performance records often falter
4. Owning the market remains the strategy of choice
5. Look before you leap into alternative asset classes
6. Beware of financial innovation

Not to sound like I am kissing Bogle's butt here, but these are a really important summary of what will make an investor successful. The theme of these IMHO - keep it simple and don't get fancy. Pick a simple asset allocation and stick with it through thick and thin.


This article was written by The Dividend Guy. You may email questions or comments to me at info@thedividendguyblog.com.

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