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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: dick_from_chgoo who wrote (22964)8/3/2006 9:45:11 AM
From: Kirk ©  Read Replies (2) of 42834
 
"Kirk stated: 'John Bogle admits he invests some of his money in managed funds.'

Of course he does. I saw him interviewed on CNBC one afternoon several months ago. During that interview he commented that he has personal money in every one of the Vanguard funds. As you know, they deal in managed funds as well as Index funds. "

Interesting. When I saw him interviewed several years ago, he said he owned the same fund at Vanguard I have had some of my IRA money in since the late 1980's or early 1990's, Vanguard Windsor 2 Fund or Vanguard International Growth Fund. I forget exactly which one he mentioned, I only remember he said he has some money in managed funds and I owned the specific fund he mentioned.

It would not be logical to own every fund at Vanguard because there is overlap in the funds. For example, some asset allocation funds there buy bond and stock index funds for you and change the asset allocation over time as you approach retirements. You would not want to own those funds if you did the asset allocation yourself. Maybe Bogle has a token amount in each for advertising purposes...

My reasoning is you really don't know "which experts" are correct so it is good to diversify. Have some money in index funds and have some money in managed funds. Most of your return comes from the asset class you are in so the most important thing is to be properly weighted across many asset classes. Even if your managed funds (Via a newsletter like mine or a managed mutual fund at Vanguard, Fidelity, Price, etc...) don't out perform the benchmark indexes, you should still greatly out perform the average investor who only makes about 20% of the return of the S&P500.

See "Winning on the zigs, losing on the zags" at investment.suite101.com which explains how the average investor made 2.6%, roughly 1/5th the return of the S&P500 between 1984 and 2002.
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