I’ve posted Entry #75 to my weekly Valuation-Informed Indexing column at the Value Walk web site. It’s called Bogle’s Crazy, No-Good, Terrible, Mixed-Up 15 Percent Rule for Tactical Asset Allocation.
Juicy Excerpt: Bogle has never said. He has cited the 15 percent rule on numerous occasions. He has never once explained where it came from.
I have a hunch.
I think he pulled it out of the air.
I really do. I think he recognized that an absolute prohibition on market timing sounds too dogmatic. So he felt a need to note an exception to the general Buy-and-Hold rule. But his heart wasn’t in it. So he made the exception so tiny that it’s not likely to make much difference. So long as none of his followers ever see much benefit from market timing (which they cannot if they limit their allocation shifts to 15 percent), it will be hard for anyone to appreciate how much following a Buy-and-Hold strategy sets an investor back and the dominant Bogle idea (that market timing is not required) will remain in effect.