John C. Bogle (aka Jack): Re: Merriman interview with John Bogle

» bob90245 - Re: Merriman interview with John Bogle

In response to message posted by bob90245:

I think Merriman's message is significant. I went back to Bogle's book Common Sense on Mutual Funds. In chapter 10, Bogle discusses reversion to the mean. He displays 3 great charts showing relative performance over the preceding several decades. The first chart is on Growth vs. Value, another on Large-cap vs. Small-cap and a third on U.S. stocks vs. International. Bogle makes the point that over the full sweep of history, no style ultimately wins out. Each style ebbs and flows between outperformance and underperformance.

So given that, Bogle seems to prefer the Total Market fund as the only stock fund an investor needs. However, the typical investor's timeframe to hold stocks is much shorter. And as Kirk writes in his articles on Asset Allocation, rebalancing non-correlating funds will add value to one's portfolio. The 5 year results of Merriman's 4 fund combination portfolio illustrates the value of rebalancing most dramatically.

So why am I writing about all this? Well because Bogle's Total Market fund recommendation made sense to me when I read his book a few years ago. However, now that I've recently read Grangaard's books on investing during retirement, I've come around to Merriman's point of view. During retirement, the idea of having a choice of stock funds to take profits from has greater appeal to me.

-- posted by bob90245