Podcast #188 — Bogle’s Contradictions

I’ve posted Podcast #188 to the “RobCasts” section of the site. It’s called Bogle’s Contradictions.

Vanguard Founder John Bogle often says that not only does he not know anyone who has successfully timed the market, he doesn’t even know anyone who knows anyone who has timed the market. Yet interviewers who have asked about Bogle’s portfolio have learned that valuation concerns prompted Bogle to dramatically reduce his stock allocation at the time when valuations were at insane levels and thereby protect himself from suffering as much as most of those who follow his investing advice did during the stock crash.

Bogle has also said in interviews that he believes that Valuation-Informed Indexing can work. Yet he has never publicly objected to the Campaign of Terror employed by Mel Lindauer (co-author of The Bogleheads Guide to Investing) to silence discussion of Valuation-Informed Indexing at the discussion boards at Morningstar.com and www.Bogleheads.org.

And Bogle has on numerous occasions argued that Reversion to the Mean is an “Iron Law” of stock investing and warned investors of the huge price drops likely to be experienced at times of insanely high valuations. Yet many of his followers portray Bogle as believing that it is not necessary for investors to change their stock allocations in response to big price changes (and Bogle has done little to change the impression thereby created that he believes that Buy-and-Hold Investing can work for long-term investors).

What gives?