S&P500 Performance & John Bogle's Views

I spotted a little piece in last weekend's Wall Street Journal by Jason Zweig concerning Vanguard founder John Bogle's recent remarks on equity markets.

Bogle has written a clear and wonderful volume in the The Little Book series entitled Common Sense Investing. Bogle doesn't endorse active management of any equity portfolios- ever. The book explains why.

So it wasn't surprising that he spoke of equity market returns for the next decade averaging 7% per annum. He pointed out that this will double one's investment. It's reasonable to assume, knowing Bogle, that he would expect one to follow his advice by way of investing in a passive S&P500 Index fund.

Of course, many are fixated on the last decade's being a so-called 'lost decade' for equities.

Out of curiosity, then, I calculated the S&P500 Index annual average from January, 1970 through last Friday. Despite the flat performance during the last decade, the Index continues to have an average annual total return of 10.9%, before inflation.

One could do much, much worse than dollar-averaging into and out of the S&P over time. I suspect most retail investors have, indeed, done far, far worse.

And, to Bogle's point, paid handsomely for the privilege.