John Bogle Discloses His Personal Asset Allocation

By on March 13, 2013

John Bogle - Vanguard GroupSpeaking to CNBC’s Mandy Drury yesterday, John Bogle, founder of the Vanguard Group, said the stock market will do “a lot of funny things” over the next 10 years. Over that timeframe investors can expect two stock market declines of 25-30%, he added.

Bogle said he preferred stocks over bonds, but he liked safety even more. He added that his allocation was probably around 70% bonds and 30% stocks. He explained that most of his bond holdings were in short and intermediate-term bonds as he favored them over long-term bonds at this stage.

SMA Comment: The SMA Portfolio is positioned similarly to Bogle’s account and is lagging the major U. S. indexes by a fairly wide margin so far this year. Personally, I see a stock market decline unfolding later this year as corporations have squeezed out most of the profit opportunities enabled by the Fed’s zero interest rate policy. The U. S. economy is also beginning to face major demographic headwinds which will keep a lid on economic growth. Whether this will be one of the 25-30% declines Bogle mentions is questionable, but certainly within the realm of possibility.

Back in August 2012 Bogle provided his expectations for equity and fixed income returns over the coming decade [link].

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