Jack Bogle: The Undisputed Champion of the Long Run

Expect lower returns going forward, don’t reach for yield (I.e., take on more risk), and just save more. Another subtle but important point in the article regarding fees:

“Inattentive investors can expect to lose as much as 70% of their profits to “hidden” fund management costs in addition to the “expense ratios” touted in mutual-fund prospectuses. (These hidden costs include things like sales load, transaction costs, idle cash and inefficient taxes.)”

So yes, stocks are relatively high now. The P/E ratio is currently 25.22 well above the historical average of 15.61 (multpl.com, based on trailing 12 month earnings). Does this mean sell stocks and go to cash? No. Personally, I address high market multiples with a lower (but greater than zero) percentage of my allocation to stocks. I continue with my monthly contributions and have increased them once already this year. After reading this article, it may be time to consider another increase.

Good luck everyone!

-Dt. Moore


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