(PUB) Investing 2015

of which there have been 25, Capital Value has averaged a 16.4% three-year return compared to 16.5% for Total Stock Market or 18.3% for U.S. Value. So, that’s where we stand after five years. As a buy, hold and forget fund, this is probably not the best choice in the Vanguard firmament. Vanguard Chairman Bill McNabb sees Capital Value as a “complementary” fund rath- er than a core holding. McNabb, by the way, doesn’t own any shares in Capital Value, so he obviously doesn’t think the fund would complement his own holdings. Only one of Vanguard’s directors, Peter Volanakis, owns shares, and at something between $10,001 and $50,000 at last report, his position is the smallest of the more than 20 funds he reportedly owns. A Contrarian Strategy I still think Capital Value’s two man- agers are worth putting money with if you’re an aggressive investor who’s will- ing to buy the fund when it’s looking its worst and then taking some money off the top when it’s looking its best. In fact, Jeff and I modeled what would happen if you did exactly that— buying the fund in the month after >

its three-year performance began lag- ging, and selling it as performance improved. An investor who bought Capital Value when its three-year return dropped below the three-year return of Total Stock Market, and then sold the fund and bought Total Stock Market when Capital Value’s three-year return was better, would have made just six trades since the end of 2009, when both managers were fully on board. Those six trades would have netted a total return of 142.2% through the end of December 2014 compared to a total return of 106.0% for Total Stock Market and 91.4% for Capital Value. That’s a whopping big difference. I can’t guarantee this will always work to your benefit, but using a con- trarian strategy to invest with contrar- ians might be just the ticket to market- beating returns over the long haul. Now, that’s a complementary strategy. And by the way, you can think about this for a while since, at the present time, Capital Value’s three-year annual- ized return of 22.8% is a far sight better than Total Stock Market’s 20.3% return. The next “buy” signal will be when Capital Value begins underperforming over that three-year window. n

The Ultimate Fund Guide

25th Anniversary Edition!

WITHOUT TURNING ON A COMPUTER, without even looking up a telephone number, you can have at your fingertips all the data on your favorite Vanguard funds—with the new FFSA 2015 Independent Guide to the Vanguard Funds . This year, the 25th Anniversy Edition, we have more data than ever, plus new Vanguard funds, updated risk analysis, top holdings, etc. Even with our huge computer files and access to fund managers, Research Director Jeff DeMaso and I still find ourselves thumbing through the annual guide to find that quick statistic, a current redemption fee number, or even a total return figure for 2005. Best of all, the 2015 Guide will be available both in print and online, with a user-friendly interface for easier reading, searching and quick-reference access to the glossary, index, and table of contents. My 2015 Guide is a great resource for me, and for you. Call Customer Service at 800/211-7641 for all the details on how to sign up for the guide pre-publication.

DAN’S DO-IT-NOW ACTION RECOMMENDATIONS 4 U.S. stocks and long-maturity bonds may have led the way in 2014, but don’t let recency bias knock you from your long-term plan. Stick with Dividend Growth and International Growth . (See page 1) 4 Market predictions are a dime a dozen this time of year—though the record shows that even 10 cents is too high a price. (See page 12) And, as always, I take an honest look at my own forecasting efforts. (See page 5) 4 Saving limits may have only increased a tad, but don’t let that delay you from funding your IRA. (See page 13)

Daniel P. Wiener is America’s leading expert on the Vanguard family of funds. He is founder of the Fund Family Shareholder Association and chairman and chief executive officer of Adviser Investments, LLC, a Newton, Massachusetts, investment advisory firm (800-492-6868). As

Jeffrey D. DeMaso, Editor/Director of Research, works directly with Dan Wiener researching and writing the multiple-award winning Independent Adviser for Vanguard Investors newsletter. He also leads the analyst team for Adviser Investments, LLC, helping to oversee $2.7 billion in assets. Jeff graduated magna cum laude from Tufts University with a B.A. in economics, holds the Chartered Financial Analyst designation and is a member of the CFA Institute and the Boston Security Analysts Society.

editor of The Independent Adviser for Vanguard Investors , he is a five-time recipient of the Newsletter Publishers Foundation’s Editorial Excellence Award. He also edits the annual Independent Guide to the Vanguard Funds. Mr. Wiener is often quoted in the nation’s leading financial publications.

16 • Fund Family Shareholder Association

www.adviseronline.com