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As markets experience increasing volatility, it is worth reflecting on some truths of investing.  Read below.  Written by Barry Ritholtz, sourced from Dimensional Fund Advisers, Australia.




Vanguard founder Jack Bogle passed away 3 years ago today.

Bogle argued for an approach to investing defined by simplicity and common sense. His book The Clash of the Cultures: Investment vs. Speculation has 10 rules laid out in great detail in Chapter 9, and they sum up the Bogle philosophy as:

Investing Versus Speculation
1. Remember Reversion to the Mean
2. Time Is Your Friend, Impulse Is Your Enemy
3. Buy Right and Hold Tight
4. Have Realistic Expectations: The Bagel and the Doughnut
5. Forget the Needle, Buy the Haystack
6. Minimize the Croupier’s Take
7. There’s No Escaping Risk
8. Beware of Fighting the Last War
9. The Hedgehog Bests the Fox
10. Stay the Course

Bogle goes into the specific details of each of these 10 rules. You can also learn more at John C. Bogle, or at the Bogleheads site.

A few other people have tried to reduce this to its most basic rules for investing, including Bogleheads and Wikipedia :

Bogle’s Rules
1. Select low-cost funds
2. Consider carefully the added costs of advice
3. Do not overrate past fund performance
4. Use past performance to determine consistency and risk
5. Beware of stars (as in, star mutual fund managers)
6. Beware of asset size
7. Don’t own too many funds
8. Buy your fund portfolio – and hold it

Do not underestimate the power of their simplicity  — this is far more subtle and nuanced than appears at first glance. And for many people, it is much harder to follow than you might imagine

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