Bogle calls for bonds and calm

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Bogle calls for bonds and calm

Postby mickeyd » Fri Aug 17, 2007 4:03 pm

BusinessWeek Associate Editor Emily Thornton asked that very question of John Bogle, founder of the Vanguard Group and a pioneer of index investing. The fund-industry veteran, who recently wrote The Little Book of Common Sense Investing, recommends at least two pieces of sage advice: First, be sure to keep an adequate portion of your portfolio in bonds. Second, try to remain calm: Bogle says it's possible the stock market could slide by another 15-20%.

I'm an indexer. I own the market. And I'm happy.

Pretty darn good quote; I wish I had said that. 8)
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
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Postby livesoft » Fri Aug 17, 2007 4:35 pm

Well, duh!
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Postby Jason » Fri Aug 17, 2007 4:49 pm

good stuff from Bogle. wise words indeed.
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Postby carolo » Fri Aug 17, 2007 6:36 pm

I have a question regarding bond funds used for part of our current income. Although I've read the discussions about Intermediate Index Fund versus Total Bond Market Fund and discussion on GNMA Fund, I seem to question which is best for our own situation. A long time investor in VFIJX (Ginnie) I exchanged it for VBILX last month. Had probably been in Ginnie for over 10 yrs but even tho Treasury backed, I had the impression Intermediate Bond Index was somewhat better in order to avoid subprime mortgage problems. Yet even before I did the exchange, I looked at VBILX holdings and saw 53% Treasury/Agency. It is the "Agency" part that I question. Obviously, the fund is holding up well, but is this where part of our monthly income and a large part of our "safe haven" money belongs? We also use VFIRX (Short Term Treasury Fund) in an equal amount for the same purpose.

These two funds comprise largest "slice of our pie" in our unsheltered account. We do have some individual bonds, but for simplicity and monthly income the funds have made for many a good night's sleep. So could someone please give me an explanation of the "Agency" part of VBILX? I thought Mr. Bogle specifically liked this fund even over Total Bond Market to avoid Fannie and Freddie.

Since we are enjoying retirement years, using bond funds for part of our monthly income, which of the intermediate term bond funds is best for us? We can handle NAV fluctuation but not wholesale underlying bond defaults.

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