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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: J. W. Schneider who wrote (4598)	4/14/1998 4:13:00 PM
From: Thomas M. Carroll	Read Replies (1) \| Respond to of 42834

Because his Model Portfolio II has much less risk. It is also a diversified portfolio which is a key to safety. Please don't confuse the returns of the Vanguard Index 500 (or any other such fund) over the past five years with how you should be allocating your hard earned resources for retirement. End of sermon.

To: J. W. Schneider who wrote (4598)	4/14/1998 9:51:00 PM
From: Alan Bell	Read Replies (1) \| Respond to of 42834

J.W., This seems like it is a matter of the level of diversification that you are happy with. The Index 500 is pretty narrow -- not investing in mid or small caps nor in international funds. In market conditions other than the recent bull run, this diversification may end up being important. The majority of the performance discrepancy can be attributed to the lack of any international exposure. BB makes a good case for having 25% of your portfolio in international funds. (As the US is so richly valued, I think we may start seeing international funds start outperforming the US.) So if you took the 75% Vanguard Index and 25% Vanguard Intl Growth for 10 years, it would have reduced your gain to 350%. If you listen to BB's Moneytalk show, you will hear him advocate the use of index funds as a good way to invest in the US. He suggests the Vanguard Total Stock Market because it includes small and mid cap as well as the large caps thereby providing more diversification. -- Alan