Hi all,
If you are a Bogle/Bernstein fan like myself, you are
probably concerned about the long term forecast
for the "market". The Gordon formula says:
Return = Current Dividend + Dividend Growth
(assumes constant P/E ratio)
I believe that for a well diversified fund, you could
assume that earnings growth is a proxy for dividend
growth. With this in mind, I applied the formula to
several Vanguard funds:
FUND DIV % GROWTH % RETURN%
Index 500 1.44 7.8 9.24
Total Stock Mkt 1.31 5.2 6.51
Value Index 2.30 5.0 7.30
Growth Index 0.48 11.3 11.78
Extended Mkt 0.81 5.1 5.91
Mid Cap Index 1.10 9.1 10.20
Small Cap Grth 0 12 0 12.00
Small Cap Index 0.94 6.5 7.44
Small Cao Value 1.90 3.3 5.20
Windsor II 1.93 9.3 11.23
Growth & Income .24 11.3 12.54
What do you guys make of this? I was surprised
that Index 500 looks better than the Total Stock
market. Also Windsor II looks better than both.
I will be 70 this spring and struggled for years
picking stocks, bonds, managed funds, etc. After
reading Bogle and Bernstein I became convinced
that Index investing was the answer. I switched
everything over recently to Target Retirement 2025
thinking this was the best compromise, for me. I
still believe this, but I feel myself wavering.
Help!!!
Charlie
P.S. Please forgive the messed up appearance of
the table. I could not figure out how to fix it.
If you are a Bogle/Bernstein fan like myself, you are
probably concerned about the long term forecast
for the "market". The Gordon formula says:
Return = Current Dividend + Dividend Growth
(assumes constant P/E ratio)
I believe that for a well diversified fund, you could
assume that earnings growth is a proxy for dividend
growth. With this in mind, I applied the formula to
several Vanguard funds:
FUND DIV % GROWTH % RETURN%
Index 500 1.44 7.8 9.24
Total Stock Mkt 1.31 5.2 6.51
Value Index 2.30 5.0 7.30
Growth Index 0.48 11.3 11.78
Extended Mkt 0.81 5.1 5.91
Mid Cap Index 1.10 9.1 10.20
Small Cap Grth 0 12 0 12.00
Small Cap Index 0.94 6.5 7.44
Small Cao Value 1.90 3.3 5.20
Windsor II 1.93 9.3 11.23
Growth & Income .24 11.3 12.54
What do you guys make of this? I was surprised
that Index 500 looks better than the Total Stock
market. Also Windsor II looks better than both.
I will be 70 this spring and struggled for years
picking stocks, bonds, managed funds, etc. After
reading Bogle and Bernstein I became convinced
that Index investing was the answer. I switched
everything over recently to Target Retirement 2025
thinking this was the best compromise, for me. I
still believe this, but I feel myself wavering.
Help!!!
Charlie
P.S. Please forgive the messed up appearance of
the table. I could not figure out how to fix it.