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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerA lot people look to religion or spirituality when things appear to be in chaos. But when the financial markets are looking out of control, investors should look up Vanguard Group founder John Bogle for reassurance.
BusinessWeek did just that, and Bogle was his same-old self: Investors should stay the course, ignore the volatility, but make sure that they have an adequate percentage of their portfolio in bonds. Of course, that right ratio depends on your time horizon and the size of your portfolio.
Bogle explains more intelligently than I can here why investors shouldn't do anything. As I said in my Volatile Market: Just ignore it, don't try to time it, individual investors (and the experts too) have a terrible record of timing the market. It's why the average investor's return is so much lower than the market's average return: We have a tendency to jump in and out at precisely the wrong times. What's the solution? Buy and hold!
I love Bogle's use of Shakespeare to describe the current market turmoil: "A tale told by an idiot -- full of sound and fury, signifying nothing."
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