John Bogle...

[Tiger8693]

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.

 

[USGrant1962]

Historical 60/40 gross return is 8.8% according to Vanguard. https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-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.

 

[VanWinkle]

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.

 

[ERD50]

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

 

[MichaelB]

Depends on the volatility. A real return of 3.6% can be fine with low volatility. High volatility could sharply reduce the effective return.

 

[6miths]

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.

 

[street]

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.

 

[Dtail]

I also would be happy with 3.6% return.

+2

 

[mickeyd]

I have usually been happy with what the market delivers to me over the long term. Not too much. Not too little. Goldie Locks?

 

[nash031]

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?

 

[Oz investor]

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 )

 

[NW-Bound]

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: http://www.early-retirement.org/forums/f28/question-on-vanguard-10-year-market-forecasts-94174.html.

 

[Fedup]

He tries to set our expectations. He’s been predicting this for a while.

 

[ERD50]

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

 

[ERD50]

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.

-ERD50

 

[W2R]

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!

 

[W2R]

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.

 

[Lsbcal]

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.

 

[NW-Bound]

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.

 

[ripper1]

W2R, im in love with your Avatar....or is that you...

 

[W2R]

W2R, im in love with your Avatar....or is that you...

Neither of my recent avatars is me.

The present one of a girl jumping up in the air, is something I found on Google images and I think it is a great illustration of what retirement feels like to me.

The one I had until a few minutes ago, of the beautiful blonde woman (see below), is a photo of actress/model Eva Habermann. It was one of several default avatars back when this forum was run on different software so I used it all the time when I first arrived here. I think she looks beautiful, intelligent and caring. So, I would use it all the time still, except that sometimes people think it is really me and it affects their behavior towards me in some very strange ways.

 

[OldShooter]

I have a lot of respect for Bogle. He has done a lot for us individual investors and provided a lot of useful insight into investing through his books and talks.

I don't know, though, why I would expect him to have any more credibility than any other economic prognosticator, which in general is none.

Maybe he is just forecasting regression to the mean, which is somewhat predictable but its timing is not.

 

[Lsbcal]

W2R, what happened to the snarling scary bear of a few days ago? Somehow I knew that wasn't you.

 

[W2R]

W2R, what happened to the snarling scary bear of a few days ago? Somehow I knew that wasn't you.

You're right! It wasn't me.

I'll probably bring it out again the next time the Dow loses a thousand points in two days. I save almost all of my avatars and love changing them around.

 

[pb4uski]

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.

From Vanguard's 2018 economic and market outlook... for next decade:

U.S. Equities... 3.0-5.0% nominal
Non-U.S. Equities.... 5.5%-7.5% nominal
Global Equity.... 4.5%-6.5% nominal

Global fixed income... 2.0%-3.0% nominal

Global 60/40 portfolio.... 3.5%-5.5% nominal

Inflation.... less than 2%

https://pressroom.vanguard.com/nonindexed/Research-Vanguard-Market-And-Economic-Overview-120417.pdf