Your Questions for Jack Bogle

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Mel Lindauer
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Your Questions for Jack Bogle

Post by Mel Lindauer » Mon May 07, 2007 6:50 pm

Hi Fellow Diehards:

As many of you know, we'll be holding our sixth annual Diehards get-together with Jack Bogle in early June. Each year, Jack does a Q&A with the Diehards, but since many of you can't attend Diehards VI, here's your chance to have Jack address your question.

Please post your questions for Jack as a reply to this post. I'll assemble them by topic, and Jack will address as many of your questions as time allows.

Fire away!

Best regards,

Mel

PS - Multiple questions allowed.

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bob90245
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Question on Equity-Fixed Allocation

Post by bob90245 » Mon May 07, 2007 7:10 pm

Last November, I had sent the following question to askjack@johncbogle.com

Dear Mr. Bogle,

I would like to submit the following as a question to you:

You have repeatedly stated that it is important for all investors to stay the course. A 65-year old retired investor might use various means to arrive at his equity-fixed allocation. You suggest a rule of thumb of bonds equal to age. So let's suppose this retiree has 35% in stocks and 65% in bonds. As I understand your general advice, once the retiree sets his allocation, he should then stay the course.

However, in your recent Las Vegas speech you pointed to several matters that might indicate that the market is on shaky ground. You summarized these by saying:

"Conclusion: with (A) subdued returns in prospect: (B) low equity risk premiums; (C) a time of substantial risk; with (D) bond income dwarfing stock income (5 3/4% vs. 2 percent); and (E) the pleasant sensation of more safety when, and if, stocks take a tumble, carefully consider whether your own portfolio balance provides, not only adequate opportunity, but adequate protection."

How do you square your cautious sentiments expressed in your speech with the general advice to stay the course? Are you suggesting that a careful consideration of these matters might or should lead this retiree to adjust his equity allocation downwards from his current setting of 35%?

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jeff mc
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Post by jeff mc » Mon May 07, 2007 7:36 pm

1. in the equity portion of a portfolio, what's the highest % international that you would be comfortable recommending for someone with a 30+ year investing window?

2. do you believe that it's been a good thing that vanguard has introduced VIPER ETFs? what's your current ETF philosophy? are they like guns; if used responsibly they can be a great tool, but if abused can be terrible? are there not millions of responsible ETF owners? (...or how about at least thousands?)

3. do you ever visit your new namesake forum, the bogleheads at diehards.org?

=========
i'm sure it'll be another great get together... looking forward to seeing pix and video of it.

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Post by leroyvandyke » Mon May 07, 2007 8:15 pm

I feel a bit like a "notch retiree". I retired in 1991 on a governmental pension with an annual 3% COLA. This has brought about some issues which are a bit out of the mainstream. Examples: I continue to invest from my "income" and use the tables that normally apply to, perhaps, a 45 year old. Also, I am trying to move as much of my traditional IRA into a ROTH to avoid moving into a higher tax bracket when I begin RMD's in a couple of years. This I began only when I realized I would be giving more to Uncle if I didn't do somthing. Since I have most of your books I could use one addressing this subject to add to the set.
With regards and respect, Lee
leroyvandyke

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Post by White Coat Investor » Mon May 07, 2007 8:30 pm

Mr. Bogle:

Do you feel it prudent to "value-tilt" a portfolio over the long-term?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Rick
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Inflation Protected Bond Fund

Post by Rick » Mon May 07, 2007 8:34 pm

Mr. Bogle:

What do you think about including Inflation Protectcted Bond Fund in the FI portion of a portfolio?

Rick - Houston, TX
"Money doesn't grow on fees." "Money in motion-costs money"

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rob
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TIPS Related....

Post by rob » Mon May 07, 2007 9:43 pm

Given the disparity between the published inflation rates and the personal inflation rates people experience; Would you recommend TIPS over short and/or intermediate bonds for someone in the accumulation phase? and why is one approach better then the other?

Thanks for the thought Mel....
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

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Post by bpp » Mon May 07, 2007 10:26 pm

What geographical allocation would you recommend for an investor in a country other than the US?

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Q re. ETF Trading Volume

Post by docneil88 » Tue May 08, 2007 1:35 am

Hi Mr. Bogle,

You have criticized ETFs for their unusually high trading volume. What do you see are the bad effects, if any, of that high trading volume on a true buy-and-hold ETF investor? And what do you see are the good effects, if any? (Perhaps the chance for the ETF to offload stock with a low cost basis when large down volume causes a significant discount to NAV and brings the arbitrageurs into play?)

Best wishes, and thanks for playing the key role in bringing index funds to the public. Yours, Neil (Thanks Mr. Lindauer for soliciting questions.)
Last edited by docneil88 on Tue May 08, 2007 2:34 am, edited 1 time in total.

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Post by fundtalker123 » Tue May 08, 2007 2:12 am

Have you ever gotten "hate mail" from active fund managers for "stealing" away their business?

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Post by SteveB3005 » Tue May 08, 2007 6:45 am

I second the question by bob90245 and add it would be a fine one to also ask the panel at Diehards VI. Thank you.

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Post by donocash » Tue May 08, 2007 8:02 am

My question is similiar to bob90245, but more general:

If one projects "subdued" returns in equities (as you did at the Money Show in Las Vegas), should one then change their asset allocation?

If so, how? If not, then is it a matter of only reducing your expectations for portfolio growth?

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Post by norm » Tue May 08, 2007 9:39 am

You recommend the bond portion of a portfolio be equal to the investor's age. Do you think that since the life span of today's people are extended the bond portion should be decreased accordingly?

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question for Jack

Post by hollowcave2 » Tue May 08, 2007 12:38 pm

What's your opinion of index ETFs that are not market cap weighted, but weighted on other factors, such as dividends or fundamentals? How would these new indexes compare with your traditional indexes?

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Mel Lindauer
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Questions for Jack Bogle

Post by Mel Lindauer » Wed May 09, 2007 10:10 am

Anyone else have any questions they'd like to add to the list? If so, fire away!

Regards,

Mel

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JohnYaker
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Sucession

Post by JohnYaker » Thu May 10, 2007 2:50 pm

.
Mr. Bogle,

Many of us 'Bogleheads' manage our family assets while our spouses and other family members are woefully less aware of important financial principles. There are many sharks in the waters. What advice can you give us to improve our chances that our assets can be managed efficiently by our families after we are gone?

Thank you,

John

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nick22
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Motivation

Post by nick22 » Thu May 10, 2007 3:56 pm

What have been your primary motivators to advocate for the average investor and challenge the traditional practices of the mutual fund industry?
Nick22

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Paul Douglas Boyer
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Capital Gains and Dividend Taxes

Post by Paul Douglas Boyer » Thu May 10, 2007 7:35 pm

What do you think will happen to long term, short term, and dividend tax rates in the next few years and what do you think SHOULD happen?

Would you be an advocate for a flat tax where capital gains are not taxed?

tennow
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When to begin investing into index funds?

Post by tennow » Fri May 11, 2007 3:19 am

Dear Mr. Bogle,

I am 68 and reading your latest book. Naturally I am sold on investing into index funds. 4 questions:

1) since the market is presently at an all time high, is it smart to wait for a pullback in order to avoid an inevitable melt down of my investments?

2) or do you consider this as trying to "time" the market and advise to start right now, no matter how high the market?

3) I want to go with your 60 % bond and 40 % stock formula. How much international stock exposure do you suggest?

4) since you predict volatile times for the market, is it not better to invest everything into Emigrant.com or ING.com, which pay presently 5.05 % and 4.5% respectively?

Thanks and kind regards
tennow
May 11, 2007

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Kathleen Ryan
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A Question For Mr. Bogle

Post by Kathleen Ryan » Fri May 11, 2007 8:10 am

Dear Mr. Bogle,

Let's say a person had an investment portfolio and held a Total Stock Market Index Fund and a Total Bond Index Fund in it, and they only had enough money to invest in one more fund with their goal being to diversify further with low correlation to their present holdings. Which do you feel would be a better fund to invest in; a REIT index fund or an International Index Fund?

I wish I could be there to ask you in person.

Thank you and best wishes always,
Kathleen Ryan
[/u]
Best wishes, | Kathleen

norm
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Post by norm » Fri May 11, 2007 9:29 am

Mr. Bogle,

Do you think that emergency funds should be considered part of one's AA?

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simba
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Q's for Jack

Post by simba » Sun May 13, 2007 3:29 pm

Dear Jack,

Thank for you everything you do for a common investor.

1. Roth or Traditional?
2. NIRA (Non-deductible TIRA) or Taxable
3. Pay off Mortgage or Invest in Taxable?
4. Do you recommend TIPS for someone early in the accumulation phase (20's or 30's)? If not when do you recommend one should include them in the allocation (%'s ?)
5. What's your opinion about MBS? Total Bond or ST Bond?

Thanks

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avram53
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Still read our forum?

Post by avram53 » Sun May 20, 2007 4:36 pm

Jack,

1. Do you still read our forum?
2. The original Morningstar forum or both, including the new one?
3. Any comments or tidbits about what you've enjoyed reading on our forums?

4. Lastly, any good stories to entertain us?! ;-)

Thanks so much for being with us!
Ave (NY/NJ/CT Chapter organizer)

============
PS Mel, mention the NY/NJ/CT Chapter, if you can, so he will become familiar with us....I've emailed Kevin in the past about the possibility of Jack joining us at some future meeting, and Kevin said it would be possible, probably when Jack is speaking in the NY area. Thanks, Ave
(Life is good, appreciate every day! Simplicity in investing works for me.)

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Post by chaz » Sun May 20, 2007 4:58 pm

Mr. Bogle: Why hasn't Vanguard created an Admiral class for its Target Retirement funds?
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

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Post by richard » Sun May 20, 2007 6:29 pm

Dear Mr. Bogle,

What would you consider a very safe withdrawal rate for someone in their late 40s or early 50s? What would be an appropriate asset allocation under those circumstances?

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Post by Karl » Sun May 20, 2007 6:40 pm

Mr. Bogle:

Do you think the valuation of asset classes should be taken into consideration when deciding how much to put in various classes like stocks vs bonds, US vs domestic, developed vs emerging, etc.? And, if so, to what degree?

While I realize I'm not so brilliant that I can outsmart the market, it probably isn't a good idea either to say prices are always fair and I'm going to buy stocks regardless of what the valuation is as measured by P/E, yield, or any other meaningful measure. Such thinking seems like the foundation for a bubble.

Karl

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Mel Lindauer
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Last Call for Questions

Post by Mel Lindauer » Wed May 23, 2007 7:57 pm

Hello Everyone:

I'm getting ready to start assembling and arranging the questions for the Q&A, so this is your last chance. If you have any more questions, fire away before it's too late!

Best regards to all,

Mel

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SoonerSunDevil
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Re: Last Call for Questions

Post by SoonerSunDevil » Wed May 23, 2007 7:59 pm

Mel Lindauer wrote:Hello Everyone:

I'm getting ready to start assembling and arranging the questions for the Q&A, so this is your last chance. If you have any more questions, fire away before it's too late!

Best regards to all,

Mel
Hi Mel,

I just read your post that details Jack's thoughts on International equities. Could you please ask him how he came up with this figure and why he's talking about splitting his foreign equity into 50% Emerging Market?

Thanks!

John

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NORTON
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Re: Last Call for Questions

Post by NORTON » Wed May 23, 2007 8:27 pm

Mel Lindauer wrote:Hello Everyone:

I'm getting ready to start assembling and arranging the questions for the Q&A, so this is your last chance. If you have any more questions, fire away before it's too late!

Best regards to all,

Mel
Hi Mel,

I've just read your post on Mr. Bogle's comments on International Investing and was very interested in this part of his quote: "I'm worried about the US economy now--our excessive borrowing for costly wars, an underfinanced pension system and the dollar's weakness."

Could you ask him to share more of his thoughts on the US economy, more to the point, what things must change to make it right.

Thanks, Stan Norton
Choose a few low cost index funds in different asset classes, rebalance occasionally, and forgetaboutit! - Rick Ferri

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Karl
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Post by Karl » Thu May 24, 2007 1:22 am

Mr. Bogle,

If (or rather when) Vanguard finally tops Fidelity in size will you celebrate?

I know you've said in the past you never focused on growing Vanguard when you were in charge, but simply looked at providing the best investment choices. Well, it's look like if you build something good they will come, and have in huge number.

I'll have to look up where Fidelity stands in assets relative to Vanguard.

Karl

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shadowrings
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Post by shadowrings » Thu May 24, 2007 2:14 am

If (or rather when) Vanguard finally tops Fidelity in size will you celebrate?
Last total aggregate figures of bucks under management from M* fund family aggregate data pages were
Vanguard: 1,034,946 ($ in millions)
Fidelity: 922,225 ($ in millions)

vickie
Knowing your own darkness is the best method for dealing with the darknesses of other people. | --- Carl G. Jung

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Karl
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Post by Karl » Thu May 24, 2007 4:19 pm

One final question if not too late.

Mr. Bogle,

How do you feel about the level of advertising that Vanguard does? Do you think it helps produce enough economies of scale to benefit existing investors with lower costs?

Also, what about the size of Vanguard's various actively managed funds. They seem to keep getting ever larger and simply add on yet another advisor to the team. Doesn't make them more & more like a closet index, making one wonder why they shouldn't just buy an index.

I read that you have 80% of your stock allocation in Total Stock Market -- does this indicate that you've largely given up on active funds?

Karl

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the soul of capitalism

Post by jiclemens » Fri May 25, 2007 2:33 pm

Dear Mr. Bogle,
I have been a fan, customer and student of yours for nearly 30 years. I am concerned for the future of the US. Do you have an opinion of libertarianism? Do you believe libertarians can make a positive contribution to our future and our standing in the world due to their views on free markets and freedom in general or do you feel they contribute more to the loss of the "soul of capitalism" due to a ruthless form of social Darwinism where the "end always justifies the means?"

John Clemens
Half Moon Bay, CA

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Post by mickeyd » Fri May 25, 2007 2:52 pm

Hello Mr. Bogle;

I have read that only 10%-15% of individual investors use index funds.
Do you foresee any future event, other than a mass conversion to your indexing philosophy, that will cause many more of my fellow Americans to adopt indexing as a standard way to invest.
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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Post by Mel Lindauer » Sat May 26, 2007 3:30 pm

Questioning is closed. Thanks to everyone for your interesting questions. We'll get to as many as time allows.

Best regards to all,

Mel

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