I think each time you make the index a smaller portion—I'm talking about the indexes that are now out in the ETF field, which seem to get narrower and narrower—you're offering more choices. We know that the investor is his or her own worst enemy. In the last 10 years, the average mutual fund in the market grew at about 10 percent a year. And the average mutual fund investor putting money into the wrong funds at the top, getting out at the wrong time, putting nothing in at the beginning of the bull market and pouring money in at the end, had a return, believe this or not, of about 3 percent. So in the last 10 years, if you compound those two mutual fund numbers, that 10 percent grows to 125 percent of whatever the number is that is being compounded, and that 3 percent grows to 30 percent. And that has something to do, I think, with how we look at risk.
I look at the stock market, I think correctly, as in the long run having very, very low risk. Because my view of investing is that you own the business, it has the capital, and that capital will ultimately grow over an investment lifetime. And when the market went down 50 percent in 1973 and '74, and 50 percent in 2000 and 2002, it doesn't even matter. You've got all this money at the end of the period, and you just put blinders on and ignore these foolish fluctuations. What the stock market is, quoting Shakespeare I think, is a tale told by an idiot, full of sound and fury, signifying nothing. And when you think about the daily machinations of the stock market … that's probably an understatement.
Quote by John Bogle in That Was Then, This Is Now from Journal of Indexes