Is diversification dead?

Written by John Osbon on September 14, 2011

Recent violent swings in the equity markets – more down than up – have spawned familiar rallying cries from every corner of the investing world, including “Diversification is Dead!” and “Buy and Hold is Obsolete!”

Is it really time to throw out the fundamental tenets of passive investing? John Bogle says No.

Amid the chaos, we welcome the perspective of Bogle, the inventor of the first (and largest) index mutual fund – Vanguard’s S&P 500 index. Having lived through the worst market environments of the last eight decades, and the best, this investing icon has a calm, multi-generational viewpoint that provides context easily forgotten in the fog of volatile markets.

This Wall Street Journal article explores Bogle’s reactions to what he sees going on in today’s markets (as well as an interesting video interview.) As usual, Bogle is forceful and unapologetic in rejecting the idea that investors are better off picking stocks for short-term gains than holding a diversified portfolio for the long term.  Read the article here.

And here’s another Osbon Capital piece on Bogle from mid-2009.

 


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