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John Bogle...
Old 10-14-2018, 02:17 PM   #1
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John Bogle...

Have been listening to the Little Book of Common Sense Investing 2017 Edition (one of several recommended on another thread), and the last chapter I listened to was pretty pessimistic on the next decade for stocks and bonds return (60/40). Based on RTM, etc, he expects conservatively about 3.6% return after all fees, inflation etc.

I sure hope he is wrong.
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Old 10-14-2018, 02:23 PM   #2
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Historical 60/40 gross return is 8.8% according to Vanguard. https://personal.vanguard.com/us/ins...io-allocations

Adjust for inflation and fees and that is probably a real return of about 6%, or maybe a little less. IMO a real return of 3.6% isn't great, but it is not time to hide under a chair.
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Old 10-14-2018, 02:25 PM   #3
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Originally Posted by Tiger8693 View Post
Have been listening to the Little Book of Common Sense Investing 2017 Edition (one of several recommended on another thread), and the last chapter I listened to was pretty pessimistic on the next decade for stocks and bonds return (60/40). Based on RTM, etc, he expects conservatively about 3.6% return after all fees, inflation etc.

I sure hope he is wrong.
His opinion is shared by many in the financial business. But the phrase"nobody knows nuthin" also applies here.

I was lucky enough to meet "Jack" Bogle and he would also tell you your guess is as good as the next.

Better to plan on pessimism than be overly optimistic.
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Old 10-14-2018, 02:36 PM   #4
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I'll be more than happy with 3.6% real return over the next decade. After this big run up, ecstatic, in fact.

You do know it's possible to go negative for a decade? Like, oh, that far distant time like 2000-2009? Or the 1970's? Or any time in the future?

Bring it on! Real return of 3.6% is party time!

-ERD50
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Old 10-14-2018, 02:52 PM   #5
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Depends on the volatility. A real return of 3.6% can be fine with low volatility. High volatility could sharply reduce the effective return.
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Old 10-14-2018, 03:26 PM   #6
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I'd be very ok with 3.6% net after inflation and fees going forward. Especially given the massive run up over the last 9 years. If I were retiring right now and was close to the edge I'd be very concerned about sequence of returns rearing its ugly head. Have met Mr Bogle on a few occasions and have thanked him each time. He always couches any opinion he gives with a caution about opinions.
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Old 10-14-2018, 03:42 PM   #7
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Originally Posted by ERD50 View Post
I'll be more than happy with 3.6% real return over the next decade. After this big run up, ecstatic, in fact.

You do know it's possible to go negative for a decade? Like, oh, that far distant time like 2000-2009? Or the 1970's? Or any time in the future?

Bring it on! Real return of 3.6% is party time!

-ERD50
I also would be happy with 3.6% return each year for the next decade.
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Old 10-14-2018, 03:43 PM   #8
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I also would be happy with 3.6% return.
+2
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Old 10-14-2018, 03:49 PM   #9
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I have usually been happy with what the market delivers to me over the long term. Not too much. Not too little. Goldie Locks?
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Old 10-14-2018, 03:51 PM   #10
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Inflation is at least 2%, probably approaching 3%. Fees, 0.25% or less at VG, but up to 1% or more for many.

Say 2.25% + 3.6% = 5.85% return. Who knows if he included dividends in that, with S&P 500 dividend about 1.8% in 2017 = more than 7.5%. What's the big deal?
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Old 10-14-2018, 03:56 PM   #11
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Depends on the volatility. A real return of 3.6% can be fine with low volatility. High volatility could sharply reduce the effective return.
4% ( nett dividend and interest ) return i can live with but i see the trend towards inflation and would prefer 6% plus .

i am planning to resist any major sell-down of my portfolio ( except the inverse index ETFs held as a liquidity buffer )

so volatility is less relevant to me ( a big drop might be a buying opportunity )
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Old 10-14-2018, 04:03 PM   #12
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Originally Posted by ERD50 View Post
I'll be more than happy with 3.6% real return over the next decade. After this big run up, ecstatic, in fact.

You do know it's possible to go negative for a decade? Like, oh, that far distant time like 2000-2009? Or the 1970's? Or any time in the future?

Bring it on! Real return of 3.6% is party time!

-ERD50
+1000

But did Bogle change his mind recently, or did he readjust his 2017 outlook based on some new info?

As reported in another thread, Bogle recently said his expectation was 2%/year, and that was with dividend, and after inflation.

See: Question on Vanguard 10 Year Market Forecasts.
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Old 10-14-2018, 04:10 PM   #13
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He tries to set our expectations. He’s been predicting this for a while.
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Old 10-14-2018, 04:26 PM   #14
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I also would be happy with 3.6% return each year for the next decade.
I'd even be happy (not ecstatic) with 3.6% real return for the entire 10 year period.

That means my portfolio did better than inflation. Much better than being negative with respect to inflation, or just plain negative.

Heck, the past 10 years, VTI (Total Market) is up ~ 113% inflation adjusted, and a 50-50 (with BND) is up ~ 69% inflation adjusted. Can't expect gravy all the time.

edit/add - the previous decade, 1998-2008, saw S&P500 down 15% wrt inflation. So yeah, I'll take +3.6%.

-ERD50
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Old 10-14-2018, 04:47 PM   #15
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Depends on the volatility. A real return of 3.6% can be fine with low volatility. High volatility could sharply reduce the effective return.
I'm pretty certain that Bogle is talking 3.6% real net (CAGR) after 10 years. Not the 3.6% 'simple average annual' number that some other huckster that will go un-named had mentioned.

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Old 10-14-2018, 04:48 PM   #16
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Oh wow!!! When I saw the title of this thread, I thought that John Bogle had passed away. He IS 89 years old, after all. Whew, so glad this isn't an R.I.P. thread.

As for market returns, 3.6% *after* inflation? I can't imagine anyone having a problem with returns like that! Let's see; if this year's inflation is 2.8%, then that would be around 6.4%? Sounds pretty good!

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Old 10-14-2018, 04:54 PM   #17
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I'd be very ok with 3.6% net after inflation and fees going forward. Especially given the massive run up over the last 9 years. If I were retiring right now and was close to the edge I'd be very concerned about sequence of returns rearing its ugly head.
+1

I don't think this is a good time to be retiring close to the edge.

It was simply amazing to me to see for myself what the sequence of returns did for those of us who retired in 2008-2009. Unfortunately the reverse is likely to be true for those retiring at any time when the bull market may be near its peak.
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Old 10-14-2018, 05:00 PM   #18
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That 3.6% real return is based on buy-hold. We could have great returns in the next couple of years and then a very bad year. Or some other equally volatile scenario.

I think some very modest market timing might be in order should key indicators of the past for a recessionary business slowdown go red. Items like the Fed leading index going down, the unemployment rate ticking upwards, a negative sloped yield curve, etc. None of this is true of the present.
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Old 10-14-2018, 05:07 PM   #19
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Originally Posted by ERD50 View Post
I'd even be happy (not ecstatic) with 3.6% real return for the entire 10 year period.

That means my portfolio did better than inflation. Much better than being negative with respect to inflation, or just plain negative.

Heck, the past 10 years, VTI (Total Market) is up ~ 113% inflation adjusted, and a 50-50 (with BND) is up ~ 69% inflation adjusted. Can't expect gravy all the time.

edit/add - the previous decade, 1998-2008, saw S&P500 down 15% wrt inflation. So yeah, I'll take +3.6%.

-ERD50

Whoa! 3.6% for the entire decade means 0.35% annualized for each year.

I guess I am right to write covered calls whenever I can. I can get a couple of percents a year by doing that.
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Old 10-14-2018, 05:08 PM   #20
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W2R, im in love with your Avatar....or is that you...
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