After a week of big equity market swings and the Canadian banks paying up to 9.5% to raise capital in the income markets, I have attached below an article by John Bogle, founder of Vanguard, to underline lessons of the past. They include:

1. Beware of market forecasts, even by experts.
2. Never underrate the importance of asset allocation.
3. Mutual funds with superior performance records often falter. 
4. Owning the market remains the strategy of choice.
5. Look before you leap into alternative asset classes
6. Beware of financial innovation. 
    

Also, I quote from a recent article by Larry Swedroe who spoke to PWL clients last summer.

“Investment returns are not earned smoothly – returns are not even close to being normally distributed (like a bell curve).  The result is that most of the market’s returns come from short, but powerful, bursts of bull and bear markets.  That is why Warren Buffet concluded:  “Inactivity strikes us as intelligent behavior.”

The second attachment, S&P 500 – 184 Years of % Returns, supports Larry Swedroe’s statement that most market returns come in short powerful bursts.  And, finally, the 2008 corrections have created some very cheap assets.

In closing, I also invite you to peruse our Market Statistics as well as other information that may be of interest to you.  Thank you and best regards,

Tony

John Bogle: Six Lessons for Investors

S&P 500 – 184 Years of % Returns