In praise of doing very little
- September 23rd, 2011
John Bogle has in the news of late, including here on Abnormal Returns. Many investors believe that the tenets emphasize by Bogle over time including indexing and diversification have gone by the wayside.
Jame Picerno at The Capital Spectator recently wrote up a summary of a speech that Bogle recently gave to NACUBO i.e. The National Association of College and University Business Officers. In this speech Bogle revisits the performance of a really simple portfolio that includes 50% equities and 50% bonds against the average peformance of college endowments. The following were the results:
There is no doubt that much time, effort and money was spent trying to generate the returns at the nation’s endowment funds. In addition there are certainly some funds, like Yale and Harvard, that have handsomely outperformed over this time period. However a reasonably long time period the most simple portfolio imaginable performed as well or better than most funds.
I have often written that a sub-optimal portfolio strategy is superior to a strategy that cannot be followed. A 50/50 portfolio, rebalanced quarterly, is about simple as things get. This yet another example why most investors would be well served by doing very little with their portfolio as opposed to too much.
Items worth reading in their entirety:
A 15-year review. (Capital Spectator)
The Lessons of History – Endowment and Foundation Investing Today (John C. Bogle)
Is John Bogle a dinosaur? (Abnormal Returns)
Abnormal Returns is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. If you click on my Amazon.com links and buy anything, even something other than the product advertised, I earn a small commission, yet you don't pay any extra. Thank you for your support.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Abnormal Returns has over its seven-year life become a fixture in the financial blogosphere. Over thousands of posts we have striven to bring the best of the financial blogosphere to readers. In that time the idea of a “forecast-free investment blog” remains as useful as it did six years ago. More »
- What books Abnormal Returns readers purchased in August 2014
- Monday links: valuation moralists
- Top clicks this week on Abnormal Returns
- Sunday links: trusting the market
- Saturday links: financial karma
- Friday links: perception and reality
- Thursday links: a growth mindset
- Moving past the active vs. passive debate
- Wednesday links: for what ends
- Tuesday links: valueless portfolios