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Most Recent Articles
October 8, 2015

Putting Theory Into Practice Could Lead To Losses

It was a very quiet week in terms of getting new reads on the state of the U.S. economy. The ISM service sector survey came in weaker than expected for September, though overall the service sector remains quite strong. It appears that companies are working through inventories and, hence, aren't as busy making stuff as they have been in the past. This could augur a weaker third quarter read on GDP than was anticipated. One weird divergence was a strengthening in the employment component of the index, but this may simply signal what we've already learned about the employment numbers—which is that they are subject to revision and that revision usually takes them higher, rather than lower. Read More »

October 1, 2015

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 »

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 »

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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 »

Model Portfolio Performance
Models May YTD
Growth 2.0% 16.0%
Conservative Growth 1.6% 14.4%
Income 0.2% 9.1%
Growth Index 1.6% 14.4%
The average
Vanguard investor
0.1% 7.2%
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