Buffet, Lynch and other legends - Investing Strategies: John Bogle:Twelve Pillars Of Investment W

John Bogle:Twelve Pillars Of Investment W

Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Buffet, Lynch and other legends - Investing Strategies
Forum Discription: DIscuss about the strategies followed by the great investors. Share an idea which would have impressed the masters. Try and bring their International experience into the Indian Markets.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=86
Printed Date: 07/May/2025 at 4:36am

Topic: John Bogle:Twelve Pillars Of Investment W

Posted By: Mamta
Subject: John Bogle:Twelve Pillars Of Investment W
Date Posted: 28/Jul/2006 at 12:44pm

John C. Bogle,The founder of The Vanguard group,the world's largest no load mutual fund company, was named by Fortune as one of the four financial giants of the 20th century.In his best selling work,BOGLE ON MUTUAL FUND,he spelt out the"12 pillars of wisdom"

1. INVESTING IS NOT NEARLY AS DIFFICULT AS IT LOOKS

succesful investing calls doing just few things right and guarding against serious mistakes

2. WHEN ALL ELSE FAILS ,FALL BACK ON SIMPLICITY

the simplest policy for an investor would be to commit half of the assets to a stock index fund and the rest to the bond index fund and ignore short term fluctuations

3.TIME MARCHES ON

magic of compounding

4.NOTHING VENTURED,NOTHING GAINED

take reasonable interim risk to earn higher longterm rates of return

5.DIVERSIFY,DIVERSIFY,DIVERSIFY

Investment in mutual funds eliminates ownership risk

6.THE ETERNAL TRIANGLE

risk return and cost are the 3 sides of the triangle

7.THE POWERFUL MAGNETISM OF THE MEAN

returns try to regress toward the mean,implying that returns falls after exceeding historical norms by wide margins and vice versa

8.DO NOT OVERESTIMATE YOUR ABILITY TO PICK SUPERIOR EQUITY MUTUAL FUNDS, NOR UNDERESTIMATE YOUR ABILITY TO PICK SUPERIOR BONDS AND MONEY MARKET FUNDS

9.YOU MAY HAVE A STABLE PRINCIPAL VALE OR A STABLE INCOME STREAM BUT YOU MAY NOT HAVE BOTH

10.BEWARE OF "FIGHTING THE LAST WAR"

too many investors base their decision on their experiences of the recent past.While the past should not be ignored,remember that no cyclical trends last forever

11.YOU RARELY,IF EVER, KNOW SOMETHING THAT THE MARKET DOESNOT

12.THINK LONGTERM

BOGLE SAYS "THE BEST RULE IS :STAY THE COURSE"

To read more,click on http://www.theequitydesk.com/john_bogle.asp - http://www.theequitydesk.com/john_bogle.asp

Replies:

Posted By: kulman
Date Posted: 14/Jul/2007 at 9:59am

Today's http://www.thehindubusinessline.com/iw/2007/07/15/stories/2007071550641200.htm - BL has a book review about John C. Bogle. Here are some excerpts:

Bogle divides stock market returns into two parts. One, “investment return (enterprise), consisting of the initial dividend yield on stocks plus their subsequent earnings growth, which together form the essence of ‘intri nsic value’.” And two, “speculative return, the impact of changing price/earnings multiples on stock prices.”

When returns on stocks depart materially from the long-term norm, it is rarely because of the economics of investing, argues the author. “Rather, the reason that annual stock returns are so volatile is largely because of the emotions of investing… When greed holds sway, we see very high P/Es. When hope prevails, P/Es are moderate. When fear is in the saddle, P/Es are very low.”

According to Bogle, it is not possible to accurately forecast swings in investor emotions. However, forecasting the long-term economics of investing can be done with high odds of success, he says, because “in the long run it is reality that rules.”

“The stock market is a giant distraction that causes investors to focus on transitory and volatile investment expectations rather than on what is really important – the gradual accumulation of the returns earned by corporate business.” The real market is about investing, he urges. “The expectations market is about speculation.” Ignore the noise of emotions reflected in our financial markets, pleads Bogle. “[It is] like a tale told by an idiot, full of sound and fury, signifying nothing,” reads an apt quote of the Bard cited in the book.

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