These are my favourite quotes from John Bogle:
- Diversification: “Don’t look for the needle in the haystack. Just buy the haystack.” – fully agreed, this is the same as John Maynard Keynes’s quote “It is better to be roughly right than precisely wrong.”
- Market timing: “The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently.” – agreed, if you try to time the market, the main challenge is getting it right consistently. One has to know that each timely trade is the end of the new beginning, unless you called it a day, not to invest any further.
- Trading volume: “In recent years, annual trading in stocks — necessarily creating, by reason of the transaction costs involved, negative value for traders — averaged some $33 trillion. But capital formation — that is, directing fresh investment capital to its highest and best uses, such as new businesses, new technology, medical breakthroughs, and modern plant and equipment for existing business — averaged some $250 billion. Put another way, speculation represented about 99.2% of the activities of our equity market system, with capital formation accounting for 0.8%.” – what is missing here is that most of those trades are done by computer, not human.
- Investing simplified: “Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes.” – Absolutely agreed!
- Stock-market risk: “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” – for stocks, the reality is the loss is not 20% it could be 50% or even 70%!
MarketWatch, Paul A. Merriman, 2016-11-25, “The Genis of John Bogle in 9 quotes”