October 2015 PDF

It Isn't a Loss Unless You Sell

It's been a while since we've seen paper losses in our portfolios like those suffered over the past few months, and the fact that the calendar quarter has just ended means there'll be an inordinate focus in the media on the past few months' returns. But what we've experienced is actually quite normal. Historically, our Model Portfolios have been down during 25% to 29% of all three-month periods since their inception, yet their long-term returns remain excellent. So I wouldn't chalk this up to anything more than what it is–a market setback. It isn't a loss unless you sell. And as Don Kilbride, manager of Dividend Growth, pointed out when Jeff and I spoke to him recently, selling just means you have to make another decision about what to do with the proceeds–or in other words, creates a reinvestment risk you didn't have before.

In this month's issue, Jeff and I have our complete interview with Don. I hope you take note of what he has to say, because his fund has given us a 73.1% return since I added it to our Models, while its index competitor, Dividend Appreciation Index, has returned just 58.3%. So much for the triumph of indexing the media has been touting lately. In reality, the active versus passive investing debate is largely a distraction, and I'll explain why in the newsletter. (Did you know Jack Bogle owns both actively managed funds and even shares in his own son's hedge fund?) But getting back to the issue of selling, while the media likes to make it sound like investors all rush for the exits at the first sign of trouble, the fact is most investors actually stay in their seats. So there is no reason to panic over sensational predictions like the one made by a prominent analyst in 2010 claiming the following year would bring widespread defaults in the municipal bond market. That said, don't jump for a muni fund just because it's tax-exempt—what you really want to look for is the best after-tax return, as Jeff and I will show you in the conclusion to our multi-month series on bonds. Read More »

October 1, 2015

Here's to Your Health

September was lousy for stocks, but only half as bad as August, and the third quarter was one of the worst calendar quarters since 2011. Does that mean the sky's falling? Hardly. Jeff and I have been saying for many months now that a 10% to 15% correction was in the cards—we didn't say (or know) when, but simply figured that having gone for so long without one, we'd have to prepare emotionally, if nothing else, for the inevitability of a market downdraft. Well, we've had one with the Dow and S&P indexes falling at one point to just shy of 15% but ending the quarter off 11.1% and 9.9%, respectively, from their all-time highs. Read More »

September 22, 2015

Vanguard Seeks Dividends Overseas

Bowing to investor demands for greater income, and finding it in non-U.S. stocks, Vanguard filed plans with the SEC today to launch two new funds, International Dividend Appreciation Index and International High Dividend Yield Index in both open-end and ETF formats. The funds are expected to launch on Dec. 7. Read More »

Most Recent Forum Threads
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Re: Capital Value

zippy (10-08-2015) wrote: It has been a nice move so far and it is adding a little zip to my portfolio. I was sitting on some cash and am happy to have it deployed and making some money. Read More »


Re: Capital Value

KevinLangan (10-08-2015) wrote: Since DW suggested the purchase on Set.30, Capital Value is up 8.9% in 5 trading days. That is a nice pop right out of the gate for those of us that took his advice. We'll have to see if it continues to turn out DW made a pretty good call at just... Read More »


Re: Blodget on Market History

butwait (10-08-2015) wrote: T4 Thanks for sharing Mauldin's article: Market history is calling, and it’s saying stock performance will be crappy for another ~10 years. By Henry Blodget Business Insider, Oct. 4, 2015 Stock performance has been weak for the past 15 years. If history is a guide, it’s likely to stay weak for at least another... Read More »

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"America's leading expert on investing in Vanguard funds"

Daniel P. Wiener is editor of The Independent Adviser for Vanguard Investors, a monthly newsletter that keeps abreast of recent developments at Vanguard, and the annual FFSA Independent Guide to the Vanguard Funds. Through his newsletter and guide book, Dan helps tens of thousands of Vanguard investors choose wisely among more than 100 Vanguard mutual funds. The Adviser is a five-time winner of the Newsletter Publishers Foundation's Editorial Excellence Award. View More »

Vanguard Funds Correlation
What's This?
Model Portfolio Performance
Models September 2015
Growth -2.9% -3.9%
Conservative Growth -2.7% -3.8%
Income -1.5% -2.5%
Growth Index -3.1% -4.8%
The average
Vanguard investor
-1.8% -3.8%
Past Performance »