Transcript
More Videos
New Articles

Christine Benz: Investors who are using a strategic asset allocation plan and doing that rebalancing--if they are looking at their asset allocation right now, it probably calls for doing some rebalancing into bonds. Would you say: Just do it, just go ahead and buy bonds at this juncture, even though the prospects, as you say, aren't that exciting?

Jack Bogle: I am in a small minority on the idea of rebalancing. I don't think you need to do it. The data bear me out, because the higher-yielding asset is going to be stocks over the long term. That's the way the capital markets work. Not in every 10-year period, or even for that matter every 25-year period. But the higher-returning asset you're getting rid of to go into a lower-returning asset, so it dampens your returns, and the differences turn out to be, if you look at 25-year periods, very, very small. And sometimes rebalancing improves your returns. Sometimes it makes them worse.

Benz: It helps on the volatility front, generally, when you look at the data.

Bogle: Yes. There is a comfort level for an investor, and a feeling of he's kind of protected, as much as you can be protected in these volatile days. So it's a behavioral problem. Anybody that feels they should rebalance, I think they should rebalance. I wouldn't tell them not to. But I'd say, do it in a little more sensible way than it's done.

I wouldn't have some formula: oh my God, I've gone from 60% to 61%. I better get back to 60%. On a given day, that may happen in these markets. So it should be some range. Say you want to stay close to 65%. If you get below 60%, you can rebalance. If you get above 70%, you rebalance. And you try and not do it not with any great frequency.

Benz: So if you do it, set really wide bands …

Bogle: Wide bands. That's actually a decently wide band. And you can set it a little wider or a little narrower. But right down to the decimal point is just foolish, it's over-managing.

<< 
Back To Video
  |  
 >>

3 ETFs for Dividend Seekers

High-quality dividend payers can make excellent holdings for retirees and accumulators.

Jack Bogle's Stock and Bond Market Return Expectations

The Vanguard founder says low dividend yields, modest earnings growth potential, and still-low rates mean returns are set to be lower.

Investing Insights: New Fund Ratings, Dividend Showdown

We look at a nontraditional bond fund pick, real estate in retirement, and market-cap-weighted index funds on this week's episode.

<< 
Back To Video
  |  
 >>








<< 
Back To Video
 SHARE