As you probably know, Bill McNabb, our chairman and chief executive officer, spent part of Monday, January 23, interacting with Vanguard clients via social media—”taking over” our Twitter and Facebook channels.
“It’s not every day that a CEO reaches out to their client-base. The information has been valuable,” wrote one fan.
“Why not get social every day?” another fan commented.
It’s a new year, so here are a few investment and retirement thoughts that come to mind for 2012.
When it comes to investing, Theme #1 among investors, especially among the majority of the retired or conservative crowd, continues to be the insatiable search for yield. In this regard, I would encourage investors not to be misled by the spectacular total returns on fixed income markets. Long-term Treasury bonds were up 30% in 2011 (as measured by the Barclays Long-Term Treasury Index). That substantial total return arose mainly from a large capital gain due to falling interest rates. (Recall the sequence: Panic about Europe and a volatile U.S. stock market led to a flight to Treasuries by global investors, which drove up bond prices—i.e., resulting in a capital gain on bonds—and consequently drove down their yields.)
Along with about 50 million others, I’m a product of Generation X. I had a Dorothy Hamill haircut, spent my weekends at the roller-skating rink, and grew up watching Madonna on MTV (back when she was more controversial and they actually aired videos). And while there are plenty of characteristics—not all of them positive—broadly attributed to the “slackers” and “latchkey kids” of my generation, we’re generally turning out OK.
I have to admit up front that if you’re reading this blog based on the title, you’re in for a bit of a surprise, and I hope you won’t feel too bad about being hoodwinked.
Articles with titles like this are almost obligatory in the financial press this time of year. If you’re reading this, you know why: They get people to read. Everyone wants an inside track on what’s going to be “hot” next year.
I remember first being introduced to the concept of market efficiency during business school. At the time, I was working for a large Wall Street firm in close proximity to the equity trading floor. As I thought about the precision with which market efficiency was being described in class and contrasted that with the controlled chaos of the trading desk, I couldn’t quite reconcile the two.
As the years have passed, I’ve had more opportunities to learn about financial theory, as well as observe how people make financial decisions in general, and investment decisions in particular. I still struggle with how markets can be efficient when people are involved!
