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Death, Taxes, and Reversion to the Mean

Bogle says no asset class or strategy stays extraordinary for long.

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Small caps stocks outperform large cap stocks over the long term. Value shares eventually do better than growth issues. The S&P 500 index is too heavily larded with large companies to be an accurate proxy for the market. Such statements have become maxims among many who invest as a vocation or avocation. Investors, however, should view these and other comparisons with a healthy dose of skepticism, because the data used to substantiate them depend on the starting and concluding dates of the periods chosen, said Vanguard Group founder and former chairman John C. Bogle at Morningstar's Investment Conference Wednesday.

"Compilations of historical financial market returns are not actuarial tables, and, as you'll see, the past is not prologue," said Bogle during his keynote address at the conference. "Indeed the past is usually, well, anti-prologue…each thesis, it turns out, tends to bear the seeds of its own antithesis."

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Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.