cho, page-94

To end the yeat off with a common sense of understanding, John "Jack" Bogle on Nightly Business Report in the US, comments on the investment practices (more to the point; folly & irrationality) of the last decade.

Mr. Bogle is the Vanguard founder and the stalwart for index funds, a practice that really 99% of people should follow, although for some reason - dont.
Why is a low cost index fund for those 99%?
1. They dont bring intensity to the game.
2. Irrationality gets the better of people. People are not as disciplined as they think...YES, this is true. There are only a few in this world who are!
3. Lack of discipline & focus leads to greater activity. Activity in this game leads to dumb things being done. As one great super investor says: "Inactivity strikes us as intelligent behaviour".
4. Greater activity leads to herd like behaviour. In the end you get the "blind following the blind". Game Over.
- Being in a low cost [quality] index fund allows one to gain year on year the returns of multiple businesses.

Some of what Mr Bogle had to say:
"....I don't do one-year market outlooks because the year is unpredictable.... believe that stocks will return something like 7 to 9 percent during the coming decade, because the dividend yield is 2 percent today, around 2 percent, a little above that and earnings growth should be around six. So that would give us an 8 percent business return to underpin the market. So I think that's a reasonable expectation for stocks in the coming decade whether they get any of that this coming year, who knows."

Also,

"Don't put your money in last year's winners. Don't put your money in high cost funds. Remember in asset allocation that bonds are there to help you, although bond returns will be smaller than stock returns in the coming decade. They'll give you an element of stability. And just be careful and invest for the long term or put it another way, rely on the wisdom of long-term investing and forget the folly of short-term speculation because it's a loser's game."

For those Bogle fans the full transcript:
http://www.pbs.org/nbr/site/onair/gharib/john_bogle_vanguard_mutual_fund_group_091229/

Happy 2010!