Jack Bogle Was Wrong About These 3 Things

Jack Bogle founded Vanguard and was considered the “father of index investing,” but he did have a few takes on things that weren’t quite right.

// TIMESTAMPS:

00:00 - Intro - Who Is Jack Bogle?
01:09 - ETFs
02:13 - Corporate Bonds
03:26 - International Stocks
05:54 - Recap & Outro

// SUMMARY:

Humans have a tendency to latch onto specific people and believe everything they say is true without assessing the content of each piece of information or advice on its own merits. This is known as authority bias. Investors tend to do this with figures like Warren Buffett and Ray Dalio, and Bogleheads specifically do this with the late Jack Bogle. Not everything one person says should be taken as gospel, including things that I say.

One could make the argument that Jack Bogle did more for retail investors than anyone else in history. He is one of the most well-known figures in the investing world. He founded the shareholder-owned brokerage firm Vanguard and constantly fought for lower fees and the power of things like passive index investing and diversification.

Bogle definitely espoused some fantastic ideas and very quotable pieces of sage advice over the years, and many of his followers, called Bogleheads, adhere to those ideas with an almost cult-like idealogical rigidity. But there are several areas where it may be wise to deviate from Bogle’s advice on 3 things:

- ETFs - Bogle didn't like them as a product.
- Corporate Bonds - Bogle seemed to prefer them over treasury bonds.
- International stocks - Bogle did not see the need for them.

In summary, Jack Bogle was one of the greatest minds in investing, but ETFs are fine, treasury bonds should probably be preferable alongside stocks to corporate bonds, and it’s likely wise to invest globally in stocks.

#investing #bogleheads #bogle

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[OptimizedPortfolio]

Thankfully some Bogleheads don't blindly follow everything Bogle said. Are there any areas where you stray from his teachings? Let me know in the comments.

[thomasm]

As you said, Bogle is and isn't wrong about ETFs. He would eventually state in interviews that ETFs in and of themselves were not bad, so long as investors could stick to a buy-and-hold strategy. Retail investor behavior PLUS marketing turned him off regarding the instant trading potential. Derivatives markets in particular have proven Bogle correct that ETFs would become another slot at the casino. Cooler heads have done well with them, though.

[conrad_t]

Bogle did more for the average investor than anyone in history and his contributions should never be forgotten. But we shouldn’t disregard new information because Bogle had a differing opinion something 20+ years ago.

[tissuewizardiv]

A recent rational reminder episode discusses an improved historic multi-country dataset showing that domestic-only investing has(at least historically) a much higher chance of significant losses over long terms compared to international investing. To be fair, I don't think they accounted for taxes or fees, but it's another good reason to invest internationally.

[butteredmap]

I love index funds as much as other Bogleheads but it’s interesting how Jack Bogle’s tastes on US vs International still heavily influence a lot of other Bogleheads into very international-light portfolios. I believe on the Bogleheads forum, I see common allocations between 40% at most to sometimes 0% international allocation. Those are just really heavy underweights for often seemingly arbitrary preferences in my view when there is good evidence that international exposure provides good diversification.

For full disclosure I have slight US tilt and some SCV factor exposure.

[nickcorcoran]

Great video, just wondering what’s you educational background

[MrJeffgonz]

Not a fan of international. I'm pretty happy with just holding VTSAX. Even if a mix of US and international is optimal, I still prefer the simple way for wealth accumulation.

[Howell_Jolly]

One of the authority biases of Bogleheads is avoiding SCV stocks. They say that SCV stocks are present enough in the total stock market. Indeed, SCV stocks comprise <1% of the Total stock market.

[RobRiley-uo]

#1. for the average investor, Bogle is mostly correct. ETF, s are more easily to move in and out of and from Bogle's view, staying in and nver selling has proven to be a winning stratagey. for #3, one only has to look at the past fourty years of international performance.

[peter]

Great vid. I wish I discovered your content earlier.

[yoshortyb]

Great vid, but I'm not sure I agree with the corp bonds vs treasuries point. They both play an important role in portfolio and it is likely any backtest since the 80s where a government printed money to religiously its own debt is going to skew results.