John C. Bogle is the founder of The Vanguard Group, an American investment management company. The company is famous for enabling low-cost investing by individuals. Although Bogle is 88 by now, he is still active in doing research into investing. Recently, he published an essay on values and investing. Bogle has always been an opponent of the greedy Wall Street culture and a believer in slow but sound investing. In the essay, he summarizes what he has learned into seven timeless lessons. 1. Invest you must. In the long run, investing always makes better results than saving. 2. Time is your friend. The magic of compounding returns: start early with investing, preferably at birth. 3. Impulse is your enemy. Use a (preferably well-tested) strategy and stick to that. Don’t be influenced by the noise from Wall Street or promises made out of tinsel. 4. Basic arithmetic works. Net return is the result of your investment strategy minus the costs. Keep the costs as low as possible. 5. Stick to simplicity. Basic investing is simple: a sensible allocation among stocks and cash reserves. 6. Never forget reversion to the mean. Stock prices can’t go up and up and up. They will always revert to the mean. 7. Stay the course. Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor.
At These Dutch Guys, we offer you strategies which adhere to these principles. Our models are simple, exclude emotions and impulses, make use of the fact that stock prices reverse to the mean and offer you an easy way to stick to a plan. And best of all: their costs are very low, they are free!
US stocks fell for a second day yesterday, triggered by geopolitical issues. The S&P 500 lost 0.28%, the Dow closed 0.23% lower and the NASDAQ slid 0.33%. Volatility strengthened further: the VIX is now well above ten points at 10.45. UVXY ETFs continued their march into positive territory and closed almost 5% higher. XIV ETNs had to take another step back and closed more than 2% lower.
Danny Daredevil‘s RSS is back above 400%. Adventurous Anny is still holding cash. Her RSS remained at 39%. Solid Suzy and Lazy Larry saw their RSS drop below 20%.
None of our models gave a trading signal at the end of yesterday’s session.
RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return
Meanwhile in Florence
The courtyard between the two wings of the Galleria degli Uffizi at night. During the day, the place is overwhelmed by tourists. But after midnight, it becomes as good as deserted. While René walked back to his hotel after a long night walk through the historic city center, he passed the Uffizi and noticed a lone saxophone player, standing under the dim gallery lighting. René stopped for a moment to enjoy his performance. What would motivate this musician to play his music at night, without an audience to witness it (and/or to donate a coin or two)? Could it be that he was insecure about his qualities as a musician? It didn’t appear to René that this was the case. Maybe he was not used to playing in public, and therefore decided to gradually expose himself to the smallest audience possible, namely that of nocturnal passers-by? Or did he completely immerse himself in his music, so much that it had escaped his attention that his audience had long gone home?
After listening to the saxophone performance for a while, René suddenly understood why. It’s the acoustics!