{"id":1059,"date":"2015-07-24T10:03:58","date_gmt":"2015-07-24T15:03:58","guid":{"rendered":"http:\/\/johncbogle.com\/wordpress\/?p=1059"},"modified":"2015-07-24T10:20:32","modified_gmt":"2015-07-24T15:20:32","slug":"memo-to-veterans-and-principals-12","status":"publish","type":"post","link":"https:\/\/johncbogle.com\/wordpress\/2015\/07\/24\/memo-to-veterans-and-principals-12\/","title":{"rendered":"Memo to Veterans and Principals"},"content":{"rendered":"<p><strong>To: Vanguard Veterans and Principals<\/strong><br \/>\n<strong>From: John C. Bogle<\/strong><br \/>\n<strong>Date: May 12, 2015<\/strong><br \/>\n<strong>Re: Recent Vanguard News Items<\/strong><br \/>\n<strong>\u00a0<\/strong><\/p>\n<p>The media attention on our structure and strategies goes on unabated\u2014or maybe has even increased in intensity. I attach some of the major items for the period ended May 8, 2015.<br \/>\n<strong>\u00a0<\/strong><\/p>\n<ul>\n<li><strong><a href=\"http:\/\/www.bloomberg.com\/news\/articles\/2015-04-29\/even-financial-pros-choose-indexing-for-retirement-savings\" target=\"_blank\">\u201cFinancial Pros Choose Indexing for Retirement Savings.\u201d<\/a> <\/strong>In April, Bloomberg Business cited studies showing that fully <strong>70%(!)<\/strong> of financial professionals who recommend mutual funds\u2014\u201cpeople who are paid to make money for investors\u201d\u2014side with our index philosophy. (42% of all investment pros choose index funds, versus only 18% who recommend actively managed funds.) Of the remainder, 17% recommend individual stocks and bonds; 14% recommend real estate.<\/li>\n<li><strong><a href=\"http:\/\/www.wsj.com\/articles\/bogle-vs-grant-in-the-great-fund-debate-1430709409\" target=\"_blank\">\u201cBogle vs. Grant in the Great Fund Debate.\u201d<\/a><\/strong> Jason Zweig, <em>The Wall Street Journal<\/em>, May 3, 2015. (Despite the photo, I was <em>not<\/em> yelling! Photoshop?) Jason may have seen the result as a &#8220;split decision;\u201d to me, the winner was obvious. In his newsletter, <em>Grant\u2019s Interest Rate Observer,<\/em> Jim Grant conceded that the 500 Index Fund\u2019s superiority over active managers \u201cmay be generally true \u2026 for the average lay public investor \u2026 [and] for the run-of-the-mill \u2026 professional investor.\u201d But for \u201cnot a few people in this room, it certainly isn\u2019t true.\u201d (He names no names.) In the <em>Philadelphia Inquirer<\/em>, Joseph N. DiStefano presents a detailed summary of the debate. It\u2019s a largely accurate and amusing, if hardly conclusive, story.<\/li>\n<li><strong><a href=\"http:\/\/blogs.wsj.com\/moneybeat\/2015\/04\/30\/11-picks-from-warren-buffetts-bookshelf\/\" target=\"_blank\">\u201cThe Warren Buffett Bookshelf.&#8221;<\/a><\/strong> <em>The Wall Street Journal<\/em> cites 11 of Mr. Buffett\u2019s favorite books, by Benjamin Graham, Phillip A. Fisher, John Brooks, John Maynard Keynes, and yes, John C. Bogle, whose <em>The<\/em> <em><a href=\"http:\/\/www.amazon.com\/gp\/product\/0470102101\/ref=s9_simh_gw_p14_d0_i3?pf_rd_m=ATVPDKIKX0DER&#038;pf_rd_s=desktop-1&#038;pf_rd_r=1KAYHE7MG6KMNKRN4CD5&#038;pf_rd_t=36701&#038;pf_rd_p=2079475242&#038;pf_rd_i=desktop\" target=\"_blank\">Little Book of Common Sense Investing<\/a><\/em> was the only book recommended in Mr. Buffett\u2019s recently released annual report of Berkshire Hathaway.<\/li>\n<li>Two interviews by Olivier Ludwig of ETF.com\u2014<strong><a href=\"http:\/\/www.etf.com\/sections\/features-and-news\/john-bogle-broker-behavior-costs-investors\" target=\"_blank\">\u201cBroker Behavior Costs Investors\u201d<\/a><\/strong> and <strong><a href=\"http:\/\/www.etf.com\/sections\/features-and-news\/bogle-investors-are-now-driving-ethics\" target=\"_blank\">\u201cInvestors Are Now Driving Ethics\u201d<\/a><\/strong>\u2014focus on the issue of fiduciary duty, and conclude with the now-familiar phrase, \u201cIf you simply own the (broad stock) market in a cheap index fund, it is guaranteed to give you your fair share of the market returns.\u201d<\/li>\n<li><strong><a href=\"http:\/\/blogs.wsj.com\/moneybeat\/2015\/04\/10\/why-hair-trigger-stock-traders-lose-the-race\/\" target=\"_blank\">\u201cWhy Hair-Trigger Stock Traders Lose the Race.\u201d<\/a><\/strong> <em>The Wall Street Journal<\/em>, April 10, 2015, Jason Zweig. Jason illustrates the rapid trading in ETFs, (turnover 1244% last year), and warns that, \u201cin the long run, he who trades the least will end up with the most.\u201d (He fails to note the huge increase in ETF trading volume: for the hundred largest ETFs last year, $16 trillion, almost as large as the $18 trillion volume for the 100 largest common stocks.)<\/li>\n<li>May 1, 2015, Jason Zweig wrote a story about the end of fixed commission on stock trades, on May 1, 1975 (\u201cMay Day\u201d). <strong><a href=\"http:\/\/blogs.wsj.com\/totalreturn\/2015\/05\/01\/remembering-how-may-day-remade-wall-street\/\" target=\"_blank\">\u201cRemembering How May Day Remade Wall Street.\u201d<\/a><\/strong> It includes a comment from me about the self-interest. (I was a vigorous and unpopular proponent of the change). Jason also notes our own May Day, one of the anniversaries we celebrate. Together, these articles should add to your understanding of present tradition and past history.<\/li>\n<li><strong>\u201c. . . Just buy an index fund.\u201d<\/strong> The caption of a cartoon published by <em><a href=\"http:\/\/www.grantspub.com\/\" target=\"_blank\">Grant\u2019s Interest Rate Observer<\/a><\/em> on May 1, 2015, humorously (I guess!) citing the conclusion of Warren Buffett and Charlie Munger at the recent Berkshire Hathaway Annual Meeting . . . and a fine way to conclude this note.<\/li>\n<\/ul>\n<p>Best,<\/p>\n<p><strong>Jack<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>To: Vanguard Veterans and Principals From: John C. Bogle Date: May 12, 2015 Re: Recent Vanguard News Items \u00a0 The media attention on our structure and strategies goes on unabated\u2014or maybe has even increased in intensity. I attach some of the major items for the period ended May 8, 2015. \u00a0 \u201cFinancial Pros Choose Indexing [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[15,5],"tags":[],"class_list":["post-1059","post","type-post","status-publish","format-standard","hentry","category-memos-to-principals-and-veterans","category-press-clippings"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts\/1059","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/comments?post=1059"}],"version-history":[{"count":2,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts\/1059\/revisions"}],"predecessor-version":[{"id":1061,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts\/1059\/revisions\/1061"}],"wp:attachment":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/media?parent=1059"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/categories?post=1059"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/tags?post=1059"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}