Bogle’s Investment Formula

“The winning formula for success in investing is owning the entire stock market through an index fund, and then do nothing. Just stay the course.” –John Bogle

01-19-2021

Truer words were never spoken John. As easy as this formula for success seems, most investors choose to ignore it. Many investors are driven more by their emotions than logic when making investment decisions. Some investors, contrary to all credible research, still think they can outsmart the market. They can’t. Nobody can.

As much as we’d all like to be guru’s who could perfectly time the stock market to get in and out at the right time, no such fairy tale exists. The good news is that we don’t have to be guru’s. We can do exactly what Bogle is proposing and capture the global capital return of the market that’s there for the taking. We just have to stay out of our own way.

Invest in low cost index funds to develop a properly diversified global portfolio. Find the right mix of assets/bonds for your personal risk tolerance. Rebalance when necessary to maintain this proper risk tolerance. Then most important….be patient and let the markets work for you to capture this generous long term global market rate of return.

Here’s a good essay that was in the NYT last week that helps drive this point home, How to Be a Better Investor: Do Nothing