(PUB) Investing 2015

S P E C I A L E X P A N D E D 1 6 - P A G E I S S U E

Model Portfolios................................................................ 2 Moving More Overseas.................................................... 3 March Special Distributions.............................................. 5 Going Against Convention................................................. 6 Performance Review.................................................... 8-11 Should You Fly to Safety?................................................ 12 Buy the Manager, Not the Fund. .................................... 13 Dan’s Do-It-Now Action Recommendations.................... 16 APR I L 2015

Six of One, Half Dozen of Another? IT’S BEEN A TERRIFIC SIX-YEAR BULL RUN. So are we at the tail end of a raging bull market that’s about to be gored? Or does our slow-growth-not-no-growth economy drive prices even higher? It depends on your perspective. The catalyst for these musings is the recent run in the NASDAQ Composite, which crossed 5000 for the first time since March 2000—at the peak of the tech bubble—on March 2. For some investors, this signals we are back in bubble territory. In my book, though, 5000 is just a BRN, or “big, round number.” Forget all the posturing around it. Today’s NASDAQ, unlike in 2000, is made up of companies that are hardly selling at astronomical multiples of earnings, as they did 15 years ago, and that actually pay divi- dends, something they didn’t do those many years ago. Note that I said they have earn- ings, which by itself distinguishes them from the highflyers of the dot-com age. But a better way to look at the recent surge in stock prices is to compare returns over the six years since the market bottomed on March 9, 2009, to the period starting at the market’s peak on Oct. 9, 2007, prior to the financial crisis and massive bear market of 2008 and 2009. From the bottom through the end of March, 500 Index has returned an outstanding compounded annualized return of 22.6%. If that sounds bubbly, well it is. But if we instead measure from the prior market top, about seven and a half years ago, 500 Index’s annualized return is a much more conservative 6.0%, which doesn’t even match the average 9% to 10% return investors have historically earned by investing, long-term, in the market.

AVERAGEVANGUARD INVESTOR* March: -0.6% YTD: 2.1%

-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%

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*See the footnotes on page 2.

DOW JONES INDUSTRIALS March Close: 17776.12

15600 16275 16950 17625 18300

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STANDARD & POOR’S 500 March Close: 2067.89

1750 1850 1950 2050 2150

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NASDAQ COMPOSITE March Close: 4900.88

SEE SIX PAGE 15 >

3900 4200 4500 4800 5100

RETIREMENT Start Your Teen Early

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IT’S A GIVEN. Year after year, when I suggest that you or your parents should open an IRA for your teen or grand-teen, I hear from FFSA members, friends, and even family who say, in a nutshell, “Great idea.” And it is. Helping a young person get on board the retirement train may not get you lots of appreciation today, but trust me, the beneficiary of your forward thinking will thank you for years to come as they move into adulthood. Whether you call them Millennials, Gen Ys, or Echo Boomers, the Internet generation is a massive group of teens and 20-somethings who could use a swift kick in the pants when it comes to planning for retirement. I know it sounds a bit crazy to talk to teenagers about retirement and IRAs. I can hear the howls of derision. “Retirement? Who are you kidding?” Most kids are, not surpris- ingly, more interested in Instagram and Twitter than they are in retirement. In fact,

3-MO.TREASURY BILLYIELD March Close: 0.03%

0.00% 0.01% 0.02% 0.03% 0.04%

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10-YR.TREASURY NOTE YIELD March Close: 1.93%

1.6% 2.0% 2.4% 2.8% 3.2%

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SEE RETIREMENT PAGE 3

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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 25, NO. 4 The Independent Adviser for Vanguard Investors and FFSA are completely independent of The Vanguard Group, Inc.