For those who are not familiar with Vanguard -- the company was founded (I think in about 1971) by John Bogle, who more than anyone else has been an advocate of index investing with minimal charges to investors.
Mr. Bogle was forced to involuntarily retire from Vanguard's Board when he turned 70 (possibly because of a policy that he had started when he was younger)! *But as a concession to the numerous Vanguard shareholders like me who objected to this, the company supports him in conducting ongoing research/advocacy via the "Bogle Center." *His periodic speeches are reproduced on the "Bogle Center" link at the Vanguard Home Page (www.Vanguard.com
One of Mr. Bogle's key observations is that, over time, the performance of all U.S. stock indices "reverts to the mean" -- in other words, becomes virtually the same. *Thus, debating the exact composition of stocks in a sub-index like "small cap growth" is like debating how many angels can dance on the head of a pin. *In general, he and I advocate simply investing in the "total market index" rather than trying to identify which sub-index (or other asset) is going to outperform the overall market in the near term. *I think that Vanguard's current efforts to revise the sub-indices that its specialty index funds follow may slightly reduce their volatility without affecting their long-term returns.
Mr. Bogle made a strong case for his "reversion to the mean" position in a paper that he wrote in 1998, which was carried on the before-mentioned web site but has since been deleted. *Perhaps the Vanguard company deleted it because it casts doubt on their efforts to market their "specialty" index funds (as well as their actively managed funds).
One of Mr. Bogles speeches that is still on the website is this: * "Public Accounting: Profession or Business? " (October 16, 2000). * This speech was delivered prior to the emergence of the Enron fiasco, and in it he took accountants to task for not exercising sufficient professional responsibility in protecting the right of shareholders to be truthfully informed about corporate finances. *Very insightful and still highly relevant!