The Bear Market, Future Returns, and the History of Low-Cost Investing with Eric Balchunas

The Money with Katie Show

Money with Katie

Self-improvement, Education, Business, Investing, How To

4.8 • 1.3K Ratings

🗓️ 22 June 2022

⏱️ 45 minutes

🔗️ Recording | iTunes | RSS

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Summary

Every time the market experiences a drawdown, it feels like the echoing chorus of, “This time, it’s different,” gets more deafening. As the history buffs assure us, that’s very unlikely—but that doesn’t change the fact I want to hedge if it’s true. For many of us #n00b investors who started in the last decade, we’re experiencing a serious pullback for the first time (I no longer count the 30% COVID drawdown since it was so short-lived). I think it’s a (healthy) reminder that investing in the stock market is not a risk-free proposition, and returns are not guaranteed. So how do we adjust our expectations and behavior accordingly? I’ll tell you how I’m pivoting in this week’s episode. I invited Bloomberg ETF analyst Eric Balchunas on the show to talk about the history of low-cost investing, Jack Bogle’s legacy, and Vanguard’s role in changing the industry forever—plus, his spicy take on cryptocurrency. 👀 Resources Eric's book, The Bogle Effect Follow Along Listen to Money with Katie here: https://www.podpage.com/money-with-katie-show/ Read Money with Katie: https://moneywithkatie.com/ Follow Money with Katie! Instagram: https://www.instagram.com/moneywithkatie/ Twitter: https://twitter.com/moneywithkatie TikTok: https://www.tiktok.com/@moneywithkatie This episode is sponsored by Betterment. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome back to the Money with Katie Show Rich Girls and Boys.
0:11.0	This week we are welcoming an index fund expert to the show.
0:14.8	I guess I should say an ETF expert, but you'll see why soon.
0:18.2	Eric Balconis from Bloomberg who recently wrote a fantastic book about Jack Vogel, the founder
0:23.9	of Vanguard called the Vogel Effect.
0:33.6	The thing is, if you listen to a lot of personal finance content,
0:37.0	you probably don't need to be convinced that an index fund is a smart move.
0:42.2	And you'll hear more from Eric later in his interview about just how smart it is.
0:46.6	But I wanted to couch this conversation today in the broader context of what I assume other
0:52.7	people are worried about right now because it's what I'm worried about too, frankly.
0:57.2	And that's future returns being lower because of the current valuations,
1:02.7	the bear market, and our country's national debt.
1:06.0	Or maybe I'm the only regular person who worries about this.
1:08.4	I don't know. Maybe I should just lay off the podcasts.
1:10.8	Anyway, I get messages about this all the time, specifically this year.
1:15.3	The S&P 500 is going to have terrible returns over the next decade.
1:19.2	People will tell me as if it's this foregone conclusion.
1:22.7	And presumably they are repeating what they're hearing in the media or
1:26.7	they're quoting studies from Vanguard itself with predictions for the future.
1:31.9	Here's the thing though, we really don't know.
1:35.2	And I will absolutely kick myself if over the next 10 years I stop investing in the S&P 500
1:41.3	and it ends up tripling again.
	...

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