Jack Bogle: 'This is the most difficult time to invest'

[REWahoo]

Next thing you know jokes about old ladies with walkers on icy sidewalks will be tut-tutted.

You mean this isn't funny?

 

[ronin]

Now this is funny! No walkers on the sand.

 

[NW-Bound]

I thought that I was eccentric, but you people do have a stranger sense of humor.

I read Bogle's interview, and the message I got was that he was concerned that both stock and bond yields were terrible. It sounded like he was trying to get investors to lower their expectations.

As a pessimist myself, I am looking to see if I can live on 2% SWR. I probably can if they still give me my SS.

Else, I've got my 25' motor home and a tank of gas to get me to the New Mexico mountain. I am covered.

 

[clifp]

I thought that I was eccentric, but you people do have a stranger sense of humor.

I read Bogle's interview, and the message I got was that he was concerned that both stock and bond yields were terrible. It sounded like he was trying to get investors to lower their expectations.

As a pessimist myself, I am looking to see if I can live on 2% SWR. I probably can if they still give me my SS.

I have been bitching about horrible investment environment since the spring of last year. Bonds have horrible yields and stock don't seem all that promising given their recovery from 2008/09 lows and the fundamentally lousy economy.

For most of the last decade I've always had an asset class that I felt was undervalued and offered good absolute and relative returns. From TIPs in 2000s, to value stocks in 2003, MLPs in 2006, PenFed 6% CDs in 2007, junk bonds in 2008,and stocks in Q4/08 through Q2/09. Now I haven't always been right; clearly financial stocks were a down right stupid thing to buy back in Jan 2008. However, there was also something that I've wished I had more easy cash to purchase. Not this year.

 

[traineeinvestor]

I have been bitching about horrible investment environment since the spring of last year. Bonds have horrible yields and stock don't seem all that promising given their recovery from 2008/09 lows and the fundamentally lousy economy.

For most of the last decade I've always had an asset class that I felt was undervalued and offered good absolute and relative returns. From TIPs in 2000s, to value stocks in 2003, MLPs in 2006, PenFed 6% CDs in 2007, junk bonds in 2008,and stocks in Q4/08 through Q2/09. Now I haven't always been right; clearly financial stocks were a down right stupid thing to buy back in Jan 2008. However, there was also something that I've wished I had more easy cash to purchase. Not this year.

+1

There is usually something out there that looks good value (although my list would a bit different from yours because of where I live). While I can see plenty of assets that I think will provide reasonable returns, the screaming bargains of late 2008 - mid 2009 aren't there at the moment. A time for patience.

 

[NW-Bound]

Wishing for more crises there, my friends?

 

[HFWR]

sadly perverted humor?

 

[Zero]

It did seem that the gist of the interview was, stay with Vanguard index funds.

 

[traineeinvestor]

Wishing for more crises there, my friends?

Well, a short term flash crash about now would work for me as I am still accumulating and will get my year end payout for last year at the end of January/begining of February. But only this year mind you - I may be able to FIRE as early as Feb 2012 in which case I'd prefer to see an absence of such events thereafter.

 

[haha]

I read Bogle's interview, and the message I got was that he was concerned that both stock and bond yields were terrible. It sounded like he was trying to get investors to lower their expectations.

Yes, lower expectations or stay very short. What happens after you invest is always a priori unkown. However, other than huge outliers like the 90s, the maximum potential upside is pretty well known before you invest, at least stochastically.

Right now the landscape is littered with risk, though perhaps no more than many other times. But I believe that to expect high rewards from today's levels of valuations, interest rates and dividends requires suspending one's sense of past history, assuming that one has a sense of past history to suspend.

Ha

 

[Danmar]

It did seem that the gist of the interview was, stay with Vanguard index funds.

Agree. Too difficult for you guys so let us do it for you.

 

[ERD50]

OK, here's the joke. ... -- that is, "the most physically difficult time to invest."

Ahhh - now I get it, physically difficult to invest versus mentally difficult. It is funny, a little twisted (humor often needs to be a little twisted to be funny), not really perverse IMO, though it could go in that direction if delivered differently (or just received differently). And now I'm wondering why I didn't get it the first time round, but that's how it goes.

Yes, lower expectaions or stay very short. What happens after you invest is always a priori unkown. However, other than huge outliers like the 90s, the maximum potential upside is pretty well known before you invest, at least stochastically.

Right now the landscape is littered with risk, though perhaps no more than many other times. But I believe that to expect high rewards from today's levels of valuations, interest rates and dividends requires suspending one's sense of past history, assuming that one has a sense of past history to suspend.

Ha

Excellent perspective - thanks.

-ERD50

 

[ziggy29]

For most of the last decade I've always had an asset class that I felt was undervalued and offered good absolute and relative returns. From TIPs in 2000s, to value stocks in 2003, MLPs in 2006, PenFed 6% CDs in 2007, junk bonds in 2008,and stocks in Q4/08 through Q2/09. Now I haven't always been right; clearly financial stocks were a down right stupid thing to buy back in Jan 2008. However, there was also something that I've wished I had more easy cash to purchase. Not this year.

Yeah, I tend to agree. Nothing looks attractively valued now. Much of the rebound in earnings has come from cost cutting and layoffs, not real revenue growth. That sort of earnings growth is not sustainable and doesn't really help the overall economy.

 

[W2R]

Yeah, I tend to agree. Nothing looks attractively valued now. Much of the rebound in earnings has come from cost cutting and layoffs, not real revenue growth. That sort of earnings growth is not sustainable and doesn't really help the overall economy.

Condos in Florida? I don't know but have heard that they are getting pretty cheap. It may not be the bottom of the real estate crash, but then one doesn't have to invest at the exact bottom to make money.

Of course, all I NEED is more real estate to maintain. No way, no how, not this girl.

 

[DeborahB]

Now this is funny!
No walkers on the sand.

OMG... this is frightening! I no longer feel bad about how I might look in a bikini at 62...

 

[DeborahB]

Jack's assessment of the situation.

Jack Bogle: 'This is the most difficult time to invest' - Dec. 31, 2010

I finally read the article after being transfixed by the elderly woman in the thong pic... I'm investing in dividend stocks, not mutual funds, some bonds...... I'm doing very well. I've posted my portfolio somewhere else before. Really there are good solid companies out there paying decent dividends.

My two cents.

 

[Zero]

One statement that Bogle made that has me perplexed is:

"our economy grows at 5%".

Anyone know what measure of the "economy" he is using? It does not appear to me that GDP grows at 5%, so wondering what he is referring to.

 

[ziggy29]

One statement that Bogle made that has me perplexed is:

"our economy grows at 5%".

Anyone know what measure of the "economy" he is using? It does not appear to me that GDP grows at 5%, so wondering what he is referring to.

If you look at *nominal* GDP growth (real growth plus inflation) this sounds about right.

 

[Zero]

If you look at *nominal* GDP growth (real growth plus inflation) this sounds about right.

Thanks, I just looked at Wiki and yeah, I guess 5% is close for the last 7 years but I could have sworn that it was more like 3.07% from 1970-2010 in another source, just can't find it.

 

[DeborahB]

If you look at *nominal* GDP growth (real growth plus inflation) this sounds about right.

There's inflation?

 

[harley]

There's inflation?

Only if you need to buy food or energy. Other than that, we're golden.