Jack
Bogle
Mark
Lennihan
|
AP
Boring
investing
is
making
a
comeback.
With
the
meme-stock
rally
in
the
rearview
mirror
and
interest
rates
surging,
individual
investors
are
rediscovering
the
philosophy
made
famous
by
Vanguard’s
founder,
Jack
Bogle.
The
father
of
market
indexes
preached
low-cost,
passive
investments
that
compound
over
years.
Fans
call
themselves
“Bogleheads,”
and
the
strategy
“lazy”
investing.
They’re
well
positioned
for
the
current
market.
Timing
has
proved
difficult
this
year,
with
eight
days
accounting
for
all
of
the
S&P
500’s
gains,
according
to
DataTrek.
Higher
rates
have
slammed
tech
and
growth
stocks,
which
dominated
retail
traders’
portfolios
during
the
pandemic.
GameStop,
the
original
meme
trade,
is
down
roughly
85%
from
its
all-time
high.
Dan
Griffin,
a
self-proclaimed
Boglehead
based
in
Florida,
said
he
watched
the
meme
stock
rally
in
amusement.
The
current
market
condition
is
proof
that
his
“tortoise”
investing
approach
is
the
right
one
to
building
long-term
wealth,
he
said.
“It’s
a
little
bit
of
vindication,”
Griffin
told
CNBC.
“I’m
happy
to
be
the
boring
investor,
I’m
happy
to
be
the
tortoise.
While
the
hare
does
win
sometimes,
the
tortoise
more
often
than
not,
is
going
come
out
ahead.”
Christine
Benz,
a
director
of
personal
finance
and
retirement
planning
for
Morningstar,
said
investors
are
gravitating
towards
higher
yields
right
now
to
capture
value
—
another
core
principle
of
the
Bogleheads.
“Bogleheads
are
investing
for
the
very
long
haul
—
the
idea
is
that
you’re
putting
money
into
your
account
and
just
adding
to
it,
maybe
not
touching
it
or
looking
at
it
for
another
30
years,”
she
said.
“The
meme
stock
phenomenon
seemed
so
focused
on
being
incredibly
plugged
into
your
portfolio
and
monitoring
your
investments
—
I
see
the
Bogleheads’
philosophy
as
being
antithetical
to
all
of
that.”
Wall
Street
Bets
to
Bogleheads
Brokerage
firm
Robinhood,
once
synonymous
with
day
trading,
is
seeing
a
similar
pivot
to
higher
yields
and
longer-term
thinking.
The
company
launched
retirement
accounts
this
year,
and
offers
3%
back
on
cash
as
it
tries
to
diversify
away
from
slumping
trading
fees.
Robinhood’s
co-founder
and
CEO
Vlad
Tenev
told
CNBC
that
investors
have
been
moving
into
cash,
money
market
funds
and
bond
ETFs.
He
noted
more
chatter
in
Bogleheads’
Reddit
group,
versus
the
infamous
Wall
Street
Bets.
“One
of
the
really
interesting
things
that
we’ve
seen
over
the
past
couple
of
months
is
Robinhood
being
mentioned,
and
discussed
in
these
traditional
passive
investing
forums,
like
Bogleheads
on
Reddit,”
Tenev
said.
“People
are
building
long-term
portfolios
on
Robinhood,
taking
advantage
of
the
better
economics
and
the
tools
to
do
that.”
Bond
ETFs
are
one
way
retail
investors
have
tried
to
capture
rising
interest
rates.
The
SPDR
Bloomberg
Barclays
1-3
Month
T-Bill
ETF
(BIL)
was
the
third
most-bought
name
last
week
after
the
Invesco
QQQ
Trust
(QQQ)
and
SPDR
S&P
500
ETF
(SPY),
according
to
Vanda
Research.
It
saw
the
largest
single-day
of
net
inflows
to
the
ETF
since
the
firm
began
measuring
it
almost
a
decade
ago.
“Clearly,
income-seeking
retail
investors
are
taking
advantage
of
the
new
high-rate
regime,
which
had
been
missing
from
the
investment
landscape
since
the
pre-GFC
[Great
Financial
Crisis]
years,”
Marco
Iachini,
senior
vice
president
of
Vanda
Research,
said
in
a
note
to
clients.
“Some
are
calling
it
‘T-Bill
and
chill.'”
Younger
investors
are
even
more
exposed
to
fixed
income
compared
to
their
older
counterparts.
In
its
annual
study,
Schwab
Asset
Management
shows
millennial
ETF
investors
have
45%
of
their
portfolios
in
fixed
income
—
compared
to
37%
for
Generation
X.
The
survey
showed
51%
of
millennials
plan
to
invest
in
bond
ETFs
next
year,
compared
to
40%
of
baby
boomers.
While
far
from
a
meme
stock,
the
move
to
fixed
income
could
still
be
risky.
The
iShares
20+
Year
Treasury
Bond
ETF
(TLT),
has
seen
$19.8
billion
in
assets
flood
in
this
year,
according
to
BlackRock.
If
yields
go
up,
funds
like
TLT
will
suffer
—
since
bond
yields
move
inversely
to
prices.
That’s
been
the
case
this
year,
with
TLT
down
about
50%
from
its
record
high.
On
the
other
hand,
if
yields
fall,
bond
funds
should
outperform.
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