The Cult of the Vanguard Investor

[Scanner]

SCFR,

My original beef was the Money magazine pundits moved the people out of individual stock and put them in what they called a "better performer" - VFINX. While I didn't necessarily disagree with the move for other reasons (diversification) . .I find callling VINFX a "good performer" generous. . .fair is more like it, at best, at 5.8% for 10 years.

I am not trying to convince anybody of anything. If you like Vanguard, you like Vanguard. . .just trying to get some insight on how people can be satisified with a 5.8% return over 10 years.

My working thesis is there is a bit of a cult there, like Apple computers - loyality beyond what is called for.

I don't want this to be an indictment against indexing. I think indexing is cool.

[disneysteve]

My working thesis is there is a bit of a cult there, like Apple computers - loyality beyond what is called for.

I think there is some truth to that. Many people, including some here, stick with Vanguard for everything. They are attracted by the good reputation, super low fees and great customer service. At the same time, though, I think you need to look outside of Vanguard when choosing funds because no one fund family, not Vanguard, not Janus, not Fidelity, not T. Rowe Price, has the best funds in every category. When I'm selecting a fund, I don't want the best Vanguard has to offer. I want THE best no matter what fund family it is from.

[scfr]

SCFR,

My original beef was the Money magazine pundits moved the people out of individual stock and put them in what they called a "better performer" - VFINX. While I didn't necessarily disagree with the move for other reasons (diversification) . .I find callling VINFX a "good performer" generous. . .fair is more like it, at best, at 5.8% for 10 years.

I am not trying to convince anybody of anything. If you like Vanguard, you like Vanguard. . .just trying to get some insight on how people can be satisified with a 5.8% return over 10 years.

My working thesis is there is a bit of a cult there, like Apple computers - loyality beyond what is called for.

I don't want this to be an indictment against indexing. I think indexing is cool.

Fair enough. I like Money magazine (I subscribe), but my one beef is that their advice can get a bit "one note" at times ... And this is coming from someone who's a plain-vanilla investor herself.

Without seeing the article (Is it in the March issue? Which page?) it's hard to gauge what they mean by "better performer" but my suspicion is that they are not just referring to the return over the past 10 years.

If you'd like insight as to how at least 2 people can be satisfied with more modest returns, just click on my blog link there in the upper-right corner.
The older you are and the more you have saved, the more conservative you can "afford" (and probably should) be.

As far as the so-called Vanguard "cult" I can tell you that I do currently have all of my mutual funds with Vanguard, but it hasn't always been that way. BTW, the length of time I've been investing in mutual funds is over 10 years ... closer to 15. I have had Vanguard and T.Rowe Price funds, but Vanguard has consistently met our needs the best and so we have gravitated to them. I think Fidelity offers very good funds, and I visit their site occasionally and look at their offerings, but the majority of my dealings with them had to do with my grandparents' finances (and estate), and experiences with Fidelity Customer Service left such sour tastes in my mouth that if all other things are equal, I will stick with Vanguard. I am a fan - yes indeed.

Some people may be loyal to Vanguard beyond what is called for ... I don't know. I am currently invested with them because it works for me.

[buzz]

33 posts in a thread about long-term investing and not a word about rebalancing? Effective asset-allocation in tandem with periodic rebalancing increases return significantly.

[Aleta]

buzz: I think that when you have something like a target retirement fund, that rebalancing is the explanation why you keep so much in stocks, bonds, etc. I have notices that their allocations do change occassionally, but now by that much. The idea is to provide decent returns without hurting your overall plan.

[Scanner]

Well, I am not anti-indexing. My ETF tracks an index (silver) and it's up 41.5% in 13 months.

[autoxer]

My working thesis is there is a bit of a cult there, like Apple computers - loyality beyond what is called for.

That's because they are both user friendly!

[Scanner]

Up 45.5%. . .this is insane!!!!

[scfr]

Scanner - If that is your total portfolio or your net worth you are talking about, then that is something to get excited about.

Otherwise, isn't it just one piece of a very large puzzle?

[sweeps]

Time to sell!

[buzz]

Time to sell!

That was my first thought.

[Scanner]

Sell? Hell no. . .the dollar has much further to fall.

The Conservatives have run things amok in Washington. . .keeping what I have in silver and riding this bull!!!

[Aleta]

I think that both sides have run things amok in Washington. Both parties are guilty but just in different areas.

[Scanner]

Hot damn! 50% today!!!

[scfr]

Hot damn! 50% today!!!

The following is Commandment #3 of the 10 modern commandments of portfolio management, from Lee Eisenberg's "The Number" (page 125):

"Thou shalt know that past performance is no guarantee of future results, nor shalt thou become so exuberant so as to forget that eggs drop, cookies crumble, bubbles burst, and that which goes up will eventually come down."