>>> WELCOME BACK TO WALL STREET.
HERE'S MORE OF MARIA'S INTERVIEW
WITH INVESTING LEGEND VANGUARD
FOUNDER JACK BOGLE.
MARIA: LOOK AT HOW MANY INDEX
FUNDS THERE ARE.
5,000 INDEX FUNDS TODAY VERSUS
THE NUMB OR F STOCK LOWER, 3,385
STOCKS.
WHAT DOES THAT TELL US?
>> IT TELLS US THAT PEOPLE ARE
CRAZY, MARIA.
WE DON'T NEED 5,000 INDEX FUNDS
OR 6,000.
THE WHOLE IDEA OF INDEX FUNDS
WAS SIMPLIFY, SIMPLIFY,
SIMPLIFY, RIGHT OUT OF RALPH
WALL DO EMERSON.
SEMP FIE
SIMP FIE
SIMPLIIE
SIMPLIFY EVERYTHING.
WE'VE NOW COMPLICATED IT BY
GIVING PEOPLE MANY CHOICES AND
BUILDING A SYSTEM WHERE THEY CAN
TRADE THOSE CHOICES IN THE GLOAT
GROWTH AND OUT OF VALUE AND SO
ON.
SO THERE'S TOO MUCH TRADING
GOING ON, WHICH IS THE
INVESTOR'S ENEMY FINALLY.
THE ANSWER IS TO BUY AND HOLD
THE STOCK MARKET VERY WELL
EXEMPLIFIED BY THE 500, AND HOLD
IT FOREVER.
AND THAT'S THE WINNING STRATEGY.
ANY OTHER STRATEGY INVOLVES
CHANGING THINGS.
AND OVER AN INVESTMENT LIFETIME
YOU COULD PROBABLY HAVE 40
CHANGES, 50 CHANGES.
THERE'S IN WAY THAT CAN BE A
WINNING STRATEGY.
MARIA: YOU MAKE A REALLY GOOD
POINT.
WHAT ABOUT THE IDEA THAT PEOPLE
WANT TO CASH OUT SOMETIMES.
I MEAN, WHAT ARE YOUR MOST
IMPORTANT ISSUES IN TERMS OF
SELLING?
YOU SAY HOLD ON FOR A LONG TIME.
BUT WHAT IS A LONG TIME?
WHEN CAN YOU ACTUALLY GET THOSE
RETURNS AND WHAT DO YOU LOOK FOR
AS A RUN TO SELL, JACK?
>> THAT'S A GREAT QUESTION.
I GUESS MY FAIR TIME PERIOD IS
THE SAME AS WARREN BUFFET'S TIME
PERIOD, FOREVER.
YOU KNOW FB FOR
YOU KNOW,FB FOR
YOU KNOW, F FOR
YOU KNOW, FOROR
YOU KNOW, FOR YOUR WHOLE LIFE.
THERE WILL BE OPPORTUNITIES
ALONG THE WAY.
WE'VE SEEN THEM IN THE LAST 25
YEARS.
TO GET OUT AND GET BACK IN.
MARIA: VANGUARD IS CHANGING.
THE RETIREMENT PLAN.
NOT HAVING THE FLAGSHIP S&P 500
FUND IN THE 401(k).
WHY IS THAT.
WHAT IS YOUR REACTION TO THE
FACT THAT VANGUARD IS DROPPING
12 FUNDS FROM THE EMPLOYEE
401(k) RETIREMENT PLAN?
IT WILL NOW OFFER 15 FUNDS, DOWN
FROM 27.
WHY?
>> WELL, THE ANSWER IS THAT
COMPANIES ALL OVER THE COUNTRY,
AND I PRESUME VANGUARD, ALTHOUGH
I DON'T RUN THIS PLACE ANYMORE,
THERE HAVE BEEN TOO MANY CHOICES
IN RETIREMENT PLANS.
YOU COULD RUN A RETIREMENT PLAN
WITH THREE OR FOUR CHOICES WITH
ABSTOCK INDEX FUND, A BOND INDEX
FUND, A BALANCED INDUCKS FUND
AND THAT COULD BE IT AND
INVESTORS CAN MAKE THE CHOICES
EASILY.
AN ASSET ALLOCATION ISSUE.
AND BY GIVING THEM QUITE SO MANY
ISSUES AT VANGUARD, NOT IN THE
INDUSTRY GENERALLY, WE'VE
CONFUSED INVESTORS.
FOR VANGUARD IN PARTICULAR, THIS
IS NOT GOING TO SURPRISE YOU, I
THINK IT'S TOO BAD NOT TO HAVE
THE 500 AS AN OPTION.
BUT IT'S PRETTY MUCH INDIFFERENT
FROM AN INVESTMENT STANDPOINT
BECAUSE OUR CREW MEMBERS, AS WE
CALL THEM HERE AND BOGLE
HIMSELF, JUST GO INTO THE TOTAL
STOCK MARKET FUND WHICH IS 85%
OF THE S&P 500 ANY WAY.
I LIKE THE S&P 500 BUT I'M
PERFECTLY SATISFIED WITH THE
VANGUARD TOTAL STOCK MARKET
INDEX FUND.
A LITTLE BROADER.
MARIA: WHAT DO PEOPLE NEED TO
KNOW ABOUT THEIR 401(k) PLAN.
I FEEL LIKE PEOPLE PUT THEIR
MONEY IN THE 401(k) AND THEY
DON'T NECESSARILY KNOW WHAT THE
PLAN IS INVESTED IN.
IS THERE ANY ADVICE YOU WANT TO
GIVE US IN TERMS OF MANAGING
THEIR 401(k) PLAN?
>> WELL, THE LESS YOU MANAGE
YOUR 401(k) PLAN THE BETTER.
MAKE SOME CHOICES, ASSET
ALLOCATE -- ALLOCATE YOUR
ASSETS, TO SOME DEGREE BASED ON
YOUR AGE, AND YOU CAN DO THAT OF
COURSE THROUGH THESE POPULAR
TARGET DATE RETIREMENT PLANS IN
WHICH VANGUARD IS SO TOTALLY
DOMINANT IT'S ALMOST NOT WORTH
TALKING ABOUT, AND GRADUALLY
BUILD UP A BOND POSITION OVER A
PERIOD OF TIME.
BUT THE OTHER OPTION IS EVEN
SIMPLER AND THAT IS BUY THE
BALANCED INDEX FUND, YOU'LL BE
60% IN STOCKS AND 40% IN BONDS
FOR THE REST OF YOUR LIFE AND
THAT MAY EVEN BE A BETTER
STRATEGY.
ONLY TIME WILL TELL.
MARIA: IT'S SO IMPORTANT, JACK,
JUST THIS WEEK WE LEARNED THAT
THE SOCIAL SECURITY FUND IS
GOING TO BE TAPPING INTO ITS
FUND FOR THE FIRST TIME IN 36
YEARS.
PEOPLE NEED TO UNDERSTAND SOCIAL
SECURITY MAY NOT BE THERE FOR
YOU WHEN YOU RETIRED.
THE 0 NOWS
THE O NOWS
THE ONUOWS
THE ONUSWS
THE ONUS IS ON INDIVIDUAL TO
MAKE SURE THEY HAVE A 401(k)
AND SAVINGS IN THE STOCK MARKET,
CORRECT?
>> THAT'S CORRECT BTS.
I WOULDN'T WRITE OFF SOCIAL
SECURITY QUITE SO SOON.
I DON'T THINK THE NATIONAL
POLICY OF THE UNITED STATES OF
AMERICA, I BELIEVE THAT POLICY
PRECLUDES A SIGNIFICANT
REDUCTION IN SOCIAL SECURITY.
AND TO ME IT'S KIND OF SAD THAT
WE COULD FIX WIT SUCH TINY
LITTLE CHANGES, CHANGE THE
RETIREMENT AGE A LITTLE BIT,
MAKE THE SOCIAL SECURITY MINIMUM