John Bogle’s Index Fund Improved Your Life

When someone becomes famous, particularly if they are famous because they have some type of views that are relevant in the public policy sphere, their ideas can often become oversimplified and indistinguishable from the person himself.

John Bogle made Wall Street fee managers feel like a bird flown into a badminton match.

I have noticed this already occurring in the remembrances of John Bogle, who recently died, and by all accounts, was one of those rare individuals whose adult life successes managed to exceed the ambitions he set out for himself in youth.

As you all know, Bogle pioneered the concept of the S&P 500 index fund in 1976. In that year, the average cost for an investment in a mutual fund was 1.89%. There was a common practice to charge 2-5% sales loads at the time you made an investment.

As in, if you gave your broker $100,000 to … Read the rest of this article!

No Investment Is Forever?

If you pay attention to John Templeton’s “Sixteen Rules For Investing Success”, you have likely encountered the wisdom of Rule Number 9, which tells investors that they should “aggressively monitor their investments”. Here is the Templetonian rationale:

“Expect and react to change. No bull market is permanent. No bear market is permanent. And there are no stocks that you can buy and forget. The pace of change is too great. Being relaxed, as Hooper advised, doesn’t mean being complacent.

Consider, for example, just the 30 issues that comprise the Dow Jones Industrials. From 1978 through 1990, one of every three issues changed—because the company was in decline, or was acquired, or went private, or went bankrupt. Look at the 100 largest industrials on Fortune magazine’s list. In just seven years, 1983 through 1990, 30 dropped off the list. They merged with another giant company, or became too small for

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Do Not Be A Cooter Brown Investor

Back at the start of the Civil War, Southern legend says that a man named Cooter Brown lived at the dividing line between the North and South. In addition to an unclear home, Cooter had friends and family that were declaring their allegiances to both the Union and Confederate causes.  Because of the mixed loyalties around him, Cooter was unsure whether to side with the Yankees or Southerners. As the war started, Cooter devised a shifty plan to remain in a state of permanent intoxication—he drank himself into alcoholic oblivion every night so that he would be useless to either the Union or Confederate causes. Throughout the war efforts, Cooter’s assistance was sought by no side, as the drafters found him to be more trouble than he could possibly be worth.

Although the story of Cooter Brown is one of caricature, the moral lesson is that an extended period of … Read the rest of this article!

The Thin Line Between Poverty And Wealth

If you read finance content regularly, most of it is a blur. There are only so many different ways that a person can say: diversify, live below your means, set aside an emergency fund, and so on. It’s like reading about weight loss. Everyone knows the answer to the question is some derivation of “put the cheeseburger down” and “hop on a treadmill”, but people are always on the look out for something new.

I mention all of that for one reason—it’s hard for a particular personal finance article to get “stuck” in my head. If you skim through 15-20 articles in less than 25 minutes of reading per day, it takes something special (or anti-special) to catch my attention.

For some reason, I keep finding myself going back to this article I read in the St. Louis Post-Dispatch this week about a family that found themselves in $22,000 worth … Read the rest of this article!

You Must Buy Stocks Today, Tomorrow, And Next Year

I’m very skeptical of writing of writing about “social contracts” in the American employment landscape because there is a good argument to make that they never existed in the first place. Namely, large employers do not hire people for the joy of “creating jobs”, but rather, because they actually need a living, breathing human being to do something in order to make a profit (unless you own a cemetery, in which case you will also need non-living, non-breathing human beings to make a profit).

Johnson & Johnson does not hire an engineer to make Listerine more effective at fighting cavities simply because they desire to pay someone $180,000 per year, but rather, because successful innovations will make Listerine a more indispensable item in the bathroom cupboards of Americans nationwide, and will drive up sales and ultimately make more profits. More profits mean bonuses for executives making the calls, and nice … Read the rest of this article!