What is the ideal Jack Bogle portfolio?

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What is the ideal Jack Bogle portfolio?

Postby deepdrive » Tue Mar 10, 2009 10:13 pm

From what I've read, it would consist of only two funds and two funds forever: age in Total Bond Market and the rest in Total Stock Market.

Has he ever supported any other classes like REITs? Any international investing? Any TIPS?
Investment difficulty and long-term success are perfectly negatively correlated. Keep it simple.
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Re: What is the ideal Jack Bogle portfolio?

Postby Mel Lindauer » Tue Mar 10, 2009 10:27 pm

deepdrive wrote:From what I've read, it would consist of only two funds and two funds forever: age in Total Bond Market and the rest in Total Stock Market.

Has he ever supported any other classes like REITs? Any international investing? Any TIPS?


Jack's ideal portfolio for you would be the one that's ideal for you, based on your risk tolerance, time horizon and willingness and need to take risk.

A good starting point would be TSM and TBM. Jack has recently allowed that a percentage in foreign equities may also help.
Best Regards - Mel | | Semper Fi
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Re: What is the ideal Jack Bogle portfolio?

Postby Wagnerjb » Tue Mar 10, 2009 10:31 pm

deepdrive wrote:From what I've read, it would consist of only two funds and two funds forever: age in Total Bond Market and the rest in Total Stock Market.

Has he ever supported any other classes like REITs? Any international investing? Any TIPS?


Don't forget to listen to the many other excellent sources of investing advice. Fama and French are excellent resources with great ideas. Personally, I also listen to much of what Bill Bernstein says.

Best wishes.
Andy
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Re: What is the ideal Jack Bogle portfolio?

Postby petrico » Tue Mar 10, 2009 10:45 pm

deepdrive wrote:From what I've read, it would consist of only two funds and two funds forever: age in Total Bond Market and the rest in Total Stock Market.

Has he ever supported any other classes like REITs? Any international investing? Any TIPS?

Bogle quote in Money magazine article wrote:What would Rip do?

A lot of other things can change in 20 years. As John Bogle, founder of the Vanguard funds, puts it, "What could be more absurd than the idea that the long term is more predictable than the short term? We can't be quite as secure about America's position in the world 20 years from now as we can be today."

Therefore, Bogle thinks, it's prudent to hedge against the possibility that other countries might grow faster than the U.S. over the next 20 years. That's why Bogle's Rip Van Winkle portfolio (see the chart) includes international stocks and bonds -- assets that he has traditionally shunned.

Image

Link to 2004 Money magazine article.

Thanks to CyberBob for the quote, graphic and link!

Disclaimer: That's a snapshot of Jack Bogle's thinking in 2004 in response to a somewhat specific question. I highly recommend his Little Book of Common Sense Investing (2007) for a much fuller appreciation of his approach and recommendations.

--Pete
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Postby Sunny Sarkar » Tue Mar 10, 2009 11:57 pm

I think it'd simply be the following...

Age in Intermediate Term Bond Index (upto 50% TIPS is fine)
Rest in Total Stock Mkt Index (upto 20% equities in Total International Index, if you must)

Most importantly: stay the course
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Postby asset_chaos » Wed Mar 11, 2009 5:05 am

Having read many times Mr Bogle's antipathy (or perhaps more fairly characterized as lukewarmness) to international investing, I was surprised to read him say in the latest Journal of Indexes (http://www.indexuniverse.com/component/content/article/5426.html?magazineID=2&issue=146&Itemid=11) that

"At one extreme, you can take an all-market index fund—all U.S. market or all global market as you wish—and do nothing with it; that's the extreme of passive management. And that is the position that I endorse." (emphasis added)

What I was surprised about is Mr Bogle's seeming endorsement of a global stock market index as on par with a total US stock market index, which, given his previous statements, I think is new or revised thinking from him. I hope he chooses to elaborate on this point in the future.
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Postby freedomfunds » Wed Mar 11, 2009 6:59 am

Bogle himself has money in actively managed mutual funds.

Heresy I know!

http://news.morningstar.com/articlenet/ ... px?id=3420

Jack Bogle's Asset Allocation

Bond Fund Type Allocation
( % )
Tax Exempt 23
Taxable (Index) 17
Taxable (Actively Managed) 2
Bond Fund Total 42


Stock Fund Type Allocation
( % )
Index 42
Actively Managed 16

Stock Fund Total 58

Bogleheads are much more orthodox than Bogle.
Index choice matters. | | Valuations matter even more.
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Postby simplesimon » Wed Mar 11, 2009 10:38 am

I believe he's owned some of these actively managed funds for so long that there would be huge taxable gains if he were to sell.

Also, he just doesn't care. :D
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Postby tutaloo » Wed Mar 11, 2009 12:04 pm

xx
Last edited by tutaloo on Tue Jan 18, 2011 5:23 am, edited 1 time in total.
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Postby cinghiale » Wed Mar 11, 2009 12:49 pm

Tax-sheltered accounts
John Bogle, founder of Vanguard

Where to put your money. How much?

Vanguard Total Stock Market Index 40 percent
Vanguard Intermediate-Term Bond Index 30 percent
Vanguard Total International Stock Index 10 percent
Vanguard Inflation-Protected Securities 10 percent
Pimco Foreign Bond D 10 percent



The Money article came out in 2004... five years ago. Has Mr. Bogle said or written anything since then about a 10% portfolio allocation in foreign bonds?? It seems oddly out of place with everything else he has been quoted as saying or has written since then.

Any evidence that this view is a current one in terms of asset allocation?

-- Cinghiale
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Re: What is the ideal Jack Bogle portfolio?

Postby HardKnocker » Wed Mar 11, 2009 1:53 pm

deepdrive wrote:From what I've read, it would consist of only two funds and two funds forever: age in Total Bond Market and the rest in Total Stock Market.


I'd say your on target.

That and an allocation based on your age. Your age in bonds.

Very simple. So simple and dull.

Simplicity is genius.
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Postby Gekko » Wed Mar 11, 2009 2:21 pm

VG Prime MM + VG Total Bond Fund % = Age
VG Total Stock Market Fund % = (100 - Age)

KISS!
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Re: What is the ideal Jack Bogle portfolio?

Postby petrico » Wed Mar 11, 2009 10:56 pm

tutaloo wrote:Small caps are also tilted toward here in this forum (and not mentioned by John Bogle directly).

Actually, in his Little Book of Common Sense Investing Bogle does mention small caps. In Chapter 18 -- What Should I Do Now?, he discusses "some acceptable variations" in the 2-fund TSM/TBM approach. One bullet point discusses "Slice and Dice":

Impressed both by the long term performance (and recent performance) of value stocks and small-cap stocks, some investors hold the all-market (or S&P 500) index fund as the core, and add a value index fund and a small-cap index fund as satellites. I'm skeptical that any kind of superior performance will endure forever. (Nothing does!) But if you disagree, it would not be unreasonable to hold, say, 85 percent in the core, another 10 percent in value, and another 5 percent in small-cap. But doing so increases the risk that your return will fall short of the market's return, so don't push too far.

--Pete
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The Gogle Portfolio

Postby CyberBob » Fri Mar 13, 2009 4:26 pm

Two quotes from Bogle's The Little Book of Common Sense Investing:
While I favor the pristine and classic all-U.S.-stock-market and all-bond-market approach...

My favorite rule of thumb is (roughly) to hold a bond position equal to your age - or maybe even your age minus 10 percent.

So this would, as Deepdrive mentioned above give you the following portfolio:
  • Total Bond Market Index Fund (%=age)
  • Total Stock Market Index Fund (%=100-bond%)
asset_chaos wrote:
John Bogle wrote:"At one extreme, you can take an all-market index fund—all U.S. market or all global market as you wish—and do nothing with it; that's the extreme of passive management. and that is the position that I endorse."

This statement would seem to endorse another alternative:
  • Total Bond Market Index Fund (%=age)
  • Total World Stock Market Index Fund (%=100-bond%)

Both options are simple, two-fund portfolios, the second just being more global (a global-Bogle or Gogle portfolio, if you will :D ). But both are similar in that they stress things that John Bogle has talked about for years: simplicity, diversification, passive investing/indexing and a more conservative stock-to-bond allocation as you age.

Bob (Gogle portfolio aficionado)
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