The current issue of the Wharton School’s “KnowledgeLes joueurs sur Top poker promotions placent leurs mises avant chaque donne des cartes. @ Wharton” features an article on exchange traded funds, in which Mr. Bogle is quoted.
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Mr. Bogle appeared on CNBC’s Squawk Box this morning to discuss the sale of Bear Stearns. A video of the interview is available on CNBC’s website.
The December 24, 2007 issue of Fortune magazine includes a Q&A with Mr. Bogle (available online), in which he answers questions from readers. There is also an extended version at Fortune’s website.
Dallas Morning News columnist Cheryl Hall recently interviewed Mr. Bogle about his Georgetown University speech. Following is her piece:
Vanguard founder questions money managers’ takes
When is enough, enough?That’s what John Bogle, the 78-year-old founder of Vanguard Group Inc. and pioneer of the index mutual fund, wants young people entering the business world to think about.
And if some of us older folks also would mull whether we’re contributing to or sapping from society, so much the better.
Last month, Mr. Bogle, who’s now president of Bogle Financial Markets Research Center in Malvern, Pa., addressed the MBA graduates at Georgetown University and began with an anecdote:
“At a party given by a billionaire on Shelter Island, the late Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel, Catch-22, over its whole history. Heller responds, ‘Yes, but I have something he will never have: Enough.’ ”
Mr. Bogle then asked the MBAers to let their consciences be their guides in a brave new financial world where money managers feast first.
“If you do enter this field, do so with your eyes wide open, recognizing that any endeavor that extracts value from its clients may, in times more troubled than these, find that it has been hoist by its own petard.”
An investment fund manager e-mailed me Mr. Bogle’s “Enough” commencement speech last week, saying he found it thought-provoking. I did, too, and called Mr. Bogle to discuss it.
“As Kurt once said, I was trying to poison their minds with a little humanity before they get positions in the world,” the mutual fund legend said.
I decided to spread the “poison” with salient points from his speech and our interview.
Money for nothing?
“This country is moving to a world where we’re no longer making anything,” Mr. Bogle says. “We’re merely trading pieces of paper, swapping stocks and bonds back and forth with one another, and paying our financial croupiers a veritable fortune.”
Want proof?
“If you made less than $140 million dollars last year, you didn’t make enough to rank among the 25 highest-paid hedge fund managers,” he points out.
Mr. Bogle doesn’t claim to be an average John Smith in personal wealth. But he says his accumulated net worth is “pretty much a joke” when compared to that.
“I have no problem with people making a lot of money if they’re making contributions to society. But the financial industry withdraws money that businesses earn before it is passed down to investors at the bottom of the food chain.”
Taking a chunk of investors’ returns
Mr. Bogle says index mutual funds such as Vanguard’s offer the least expensive way for individual investors to get into the investing game.
The finance sector – hedge funds, mutual funds, brokerages, money managers, investment bankers, banks and insurance companies – now generates far more profits than the combined profits of the U.S. energy and health care sectors, and almost three times as much as either manufacturing or information technology, he says.
In the past 25 years, that share has gone from about 6 percent of the earnings of the 500 giant corporations in the Standard & Poor’s 500 index to an all-time high of 27 percent last year.
Add in the earnings of the financial affiliates of giant manufacturers – “think General Electric Capital or the auto financing arms of General Motors and Ford” – and that share rises to about a third.
By Mr. Bogle’s calculations, hedge funds, mutual funds, financial advisers, investment bankers, lawyers and their likes siphoned about $500 billion from shareholder returns last year. “That sum is surely enough to seriously undermine the odds of our citizens who are accumulating savings for retirement.”
‘Opportunity of a lifetime’
“Enough” also depends on what’s being measured, he says.
“Our world already has quite enough guns, political platitudes, arrogance, disingenuousness, self-interest, snobbishness, superficiality, war and the certainty that God is on one side or the other.
“But it never has enough conscience, tolerance, idealism, justice, compassion, wisdom, humility, self-sacrifice for the greater good, integrity, courtesy, poetry, laughter, and generosity of substance and spirit.”
Mr. Bogle says the Georgetown MBAers embraced his words.
“I believe profoundly that this generation – whether they are getting out of high school, graduating from college or from business school – is passionately seeking ways to improve the world that we damn fools have left them.”
Then he adds wryly, “It’s the opportunity of a lifetime.”
He says he’s not trying to dictate but wants to inspire.
“I’m not King Solomon. I’m not telling them to believe what I believe,” he says. “I’m just a guy who’s been around a long time and has a strong idea that this is a great country that has lost its way.
“I’m saying: Think about your contribution to society. Be careful when you get into a business that extracts value. Broaden your idea about what’s enough.
“And for God’s sake, think about who you are.”
Mr. Bogle thought that his eBlog readers might appreciate an update explaining the dearth of activity here lately. Towards that end, the link below will take you to a memo he recently sent out to Vanguard’s veteran crew members.
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.
Article by JCB in the May 11, 2006 Philadelphia Inquirer.
Boston Globe reporter Ross Kerber on my recent call for the SEC to require disclosure of the compensation paid to mutual fund executives:
A proposal by Bogle to require mutual fund companies to disclose the pay of their top executives ”is an idea worthy of exploration,” Christopher Cox, the new chairman of the Securities and Exchange Commission, said in a recent interview.
The full article is here.
From the Philadelphia Inquirer column “Influences: What shapes the minds that make the news”, Sunday April 30, 2006. Click here for the full text