Today’s Wall Street Journal contains an op-ed by Mr. Bogle on the proliferation of exchange traded funds. In it, he writes:

But if long-term investing was the paradigm for the classic index fund, trading ETFs can only be described as short-term speculation. And it was only a matter of time until trading overwhelmed diversification as the driving force in the ETF world. Of the 690 ETFs in existence today (including 343 in registration at the SEC), only 12 represent broad market segments, such as the Standard & Poor’s 500, the Dow Jones Wilshire Total (U.S.) Stock Market Index, and the Morgan Stanley EAFE (Europe, Australia and Far East) Index of non-U.S. stocks. With each passing day, the market segments available through ETFs seem to get narrower. (Can you believe that we now have a “HealthShares Emerging Cancer” ETF?)

These nouveau index funds starkly contradict each of the principal concepts underlying the original index fund. If the broadest possible diversification was the original paradigm, surely holding small segments of the market offers less diversification and commensurately more risk. If the original paradigm was minimal cost, then holding market-sector index funds that may themselves be low-cost obviates neither the brokerage commissions entailed in trading them nor the tax burdens incurred if one has the good fortune to do so successfully.

The full piece is available at either of the links below.

Wall Street Journal website

PDF of article

Today’s Wall Street Journal contains a letter to the editor from Mr. Bogle, which was written in response to an editorial on corporate governance that ran in the November 27 issue of the Journal.

Link to letter on WSJ site (includes a link to original editorial)

Link to PDF of Mr. Bogle’s letter

On May 9, Jack Bogle spoke at an event hosted by the American Enterprise Institute, offering his thoughts on the mutual fund industry. Following his remarks, he participated in a roundtable discussion with former Investment Company Institute chief economist John Rea and industry consultant Geoff Bobroff.

A video of the event is available here.

Mr. Bogle was recently interviewed for a special Frontline did on America’s retirement system. This link will take you to the interview’s transcript. And by 5:00 PM ET today, you will be able to watch the episode here.

The Times’ Gretchen Morgenson had a wonderful profile this past Sunday of the proxy battle going on over executive compensation at Pfizer. I was especially pleased, as you might imagine, that she saw fit to quote my new book, writing:

But recommendations from proxy advisers, who are paid by institutions for advice on how to vote, are not always heeded — a vivid example of a power shift outlined by Mr. Bogle, in his book, “The Battle for the Soul of Capitalism.” Ownership of American companies, he argued, has moved from a diffuse group of individual shareholders into a handful of powerful financial institutions such as mutual funds and banks. These organizations are “reluctant dragons” when it comes to exercising corporate citizenship, Mr. Bogle wrote.

(Full text)

I was pleased that the New York Times’ Gretchen Morgenson picked up on my call for the SEC to include mutual fund executives in any new executive compensation disclosure regulations (see Gretchen’s article here).

My letter to the SEC on the topic is available here.

The February 25, 2006 issue of the Wall Street Journal carried an op-ed piece by Eugene Fama and and Ken French (here, for subscribers). Their article inspired me to submit a letter to the editor, which was, for better or worse, never published by the Journal. I’m pleased to have the opportunity to share it with you here:

To the Editor of the Wall Street Journal:

While I greatly respect the major contributions that Professors Fama and French have made to modern portfolio theory, I take strong exception to their recommendation to change the tax code so that mutual fund investors pay taxes only as gains are realized when they sell their shares, rather than be subject to taxes paid as their funds realize gains on their underlying portfolios. (“Keep it Simple,” February 25, 2006.)

(Full text)

In this morning’s New York Times, columnist Paul Krugman reinforced my criticism of today’s version of capitalism, writing:

. . . we’re seeing the rise of a narrow oligarchy: income and wealth are becoming increasingly concentrated in the hands of a small, privileged elite.

See the rest of his article here.