Bears, market volatility don’t scare these investors
On the morning of Oct. 13, as the Dow Jones industrial average plunged more than 500 points, a gathering of 370 investors and financial advisers — who were, as a group, losing tens of millions of dollars that very moment — calmly noshed on oatmeal and Danish.
“Don’t just do something, stand there!” cheered the meeting’s speakers, quoting the inspiration of the conference, the late Jack Bogle, founder of Vanguard and early proselytizer of the index mutual fund.
During a three-day conference at a Chicago-area hotel, the self-described “Bogleheads” did indeed just stand there. And sit there. Nobody called their broker. Instead, on what turned out to be one of the most volatile days in the stock market’s history, they recalled Bogle-isms about ignoring short-term blips. Their adages about patience, discipline, simplicity and bargain hunting may well strike a chord with any investor worried about today’s volatile investing environment.
Over the long term, the U.S. stock market has more than recovered from every bearish slump, said Jim Dahle, a physician-turned-investing guru and author of “The White Coat Investor.”
“I expect to live through 17 bear markets as an investor,” Dahle told the crowd. In October 1987, “the stock market had the biggest one-day drop ever, but it still finished positive for the year.”
Bogle, who died in January 2019, founded Vanguard in 1974. Two years later, he launched the first publicly available index fund, which followed the
S&P 500 index. Wall Street professionals and money managers scoffed at what they called “Bogle’s folly.” Bogle stayed the course, and Vanguard’s low-cost index funds attracted a growing fan base because they generally out-earned expensive funds managed by professionals who actively tried to beat the market.
In 1998, a small group of cost-conscious investors who called themselves “Vanguard Diehards” formed a group chat on a Morningstar electronic forum. Two years later, 22 Diehards met Bogle for dinner at a member’s Florida house. The gatherings turned into annual events and grew in popularity.
By 2007, the group had evolved into Bogleheads. One of the central tenets of the group: Investors should just stick with a basic, low-cost, three-fund portfolio of Vanguard’s Total Stock Market Index (symbol VTSAX), Total International Stock Index (VTIAX) and Total Bond Market Index (VBTLX).
The focus on simplicity and safety is what attracted Maggie Oldham, a Nashville-based nurse, to this latest Boglehead
convention. Oldham says she spent the first 40 years of her life in a “financial coma,” paying too much for everything from her mortgage to investments. Whenever she’d talk to friends or relatives about investing, they’d suggest “you should see my guy” — typically a commission-based broker who often pushed expensive or complicated strategies. Searching online led her to several “financial independence” proponents. Some of them recommended the Boglehead books and website (www.bogleheads.org).
After reading and interacting with the forum (and putting her taxable savings in the three-fund portfolio), Oldham had finally found her tribe. At home, her focus on simple saving and investing makes her feel like a bit of a loner. But at the Boglehead conference, she says, “I fit right in — and I got validation that I am on the right path for me.”