Jack Bogle

[winston]

A Crisis is Imminent, Warns Vanguard's Jack Bogle by Dr. Mark Skousen


"If we do nothing, we're headed for a real crisis." - Jack Bogle

Jack Bogle is 81 years old, but he still doesn't pull any punches.

I visited him at his headquarters outside Philadelphia - and it didn't take long before he expressed some strong opinions about Wall Street...

"Enough"

For starters, Bogle is madder than hell about the recent troubles on Wall Street. Specifically, that includes excessive compensation at Goldman Sachs (NYSE: GS) and speculation from the likes of John Paulson, who's profited from contrived doom-and-gloom investments (for example, on the real estate collapse).

Citing Teddy Roosevelt, Bogle argues that "rank speculation" is bad. "If you're adding value in society, the sky's the limit. Bill Gates can earn all he wants, but when John Paulson makes $3 billion shorting the real estate markets, that's enough." (Bogle recently wrote a book called Enough.)

Bogle continues: "Wall Street doesn't lose. Speculation on Wall Street subtracts value from our society. It's a gamble, like Las Vegas, pitting one investor against another."

As such, Bogle sees little value in trading or speculating by hedge funds or day-traders. He said the $6 trillion in trading by Wall Streeters every decade is a "real waste of the nation's resources. It makes no useful contribution to society. When I came into this business in 1950, the turnover on the NYSE was 25%, now it's 250%."

And he was critical of Fidelity funds, a competitor, for hyping its returns and encouraging short-term trading.

I countered that speculators and traders offer a vital benefit to Main Street by raising much needed financial capital for new companies (IPOs). But Bogle, known as the "conscience of Wall Street," would have none of it. His only hero is the long-term investor (Vanguard's primary customer).

As founder of the Vanguard Group of funds, his investment company is famous for providing low-cost investing (the annual expense ratio of Vanguard funds is only 20 basis points). Established in 1975, the Vanguard S&P 500 Index Fund is also the largest mutual fund in the country, with a combined value of $150 billion. The Vanguard Group as a whole manages over $1.3 trillion.

But the fact that turnover has catapulted so much and the cost of doing business on Wall Street has fallen sharply is arguably something that Vanguard has contributed to. Because of the financial revolution, bid-ask spreads and commissions are at historic lows.

So how should you invest in this new era?

Keep it Simple... And Invest According to Your Age

Overall, Bogle is optimistic about America. And while he likes President Obama, he's worried about a looming financial crisis, due to excessive deficits and unfunded liabilities:

"He inherited most of this mess from Bush, but listen, if we do nothing, we're headed for a real crisis."

To solve the deficits, he urged "strong medicine" - for example, raising taxes, including a $1 gasoline tax, and reducing benefits.

From an investment standpoint, I asked Bogle about putting money into various asset classes, such as bonds, growth stocks, foreign investments, real estate and gold. Specifically, I mentioned David Swenson's strategy and Alex Green's Gone Fishin' Portfolio - both of which have proved very successful recently.

Bogle likes the idea of a simple mix of bonds and stocks. He suggested that the percentage of bond holdings should equal your age. For example, if you're 30, then 30% should be in bonds, 70% stocks. If you're 80, then 80% should be bonds, 20% in stocks.

But otherwise, he's skeptical about adding real estate, gold and other exotic investments to one's portfolio. "I don't like the idea of complex investing, other than simple stocks and bonds."

So if you're looking for the cheapest way to buy a broad-based index fund, consider the Vanguard S&P 500 Index Investor (VFINX) or the Vanguard Total World Index Investor (VTWSX).

Finally, I asked Bogle about his lasting legacy and lesson in life. He responded quickly: "Character counts. I think I've made the world a little bit better for investors." Indeed, he has.


Source: Investment U

[winston]

The Read of the Day: “Get out of the Casino” by Cullen Roche

Via Jack Bogle on Marketwatch:

“Get out of the casino, own Corporate America and hold it forever,” Bogle said during “The Big Interview” on MoneyLife with Chuck Jaffe.

“No trading, no nothing. You don’t need to trade; you don’t need to worry about the market. To protect yourself from the bumps the stock market will scare you with – even though it shouldn’t scare you because there have been bumps in the market since the beginning of time – have a bond position to go along with your stock position, and have your bond position [the proportion of your assets in bonds] … have something to do with your age.”

First of all, Jack Bogle is a savior for many small investors who have been herded over the cliff by the Myth of Warren Buffett. He’s a genius and a great advocate for this type of investing approach, but I do think it’s humorous how, at the bottom of the market, everyone was saying buy and hold is dead.

Early 2009 was actually one of the few times where I went out on a limb and defended buy and hold, but I still find it inappropriate to tout buy and hold strategies as some sort of holy grail.

There are no holy grails in the investment world. There are no free lunches. There is no “one size fits all” approach that is going to always work. It just doesn’t exist. And the next time the world seems like it’s about to end and the market is plunging you’ll read about how certain strategies protected investors from the losses and all that….So goes the cycle of fear and greed….

http://pragcap.com/the-read-of-the-day- ... the-casino

[winston]

Investing legend Jack Bogle shares his top tip — and it’s something anyone can do By Kathleen Elkins

One expert-recommended strategy for investing isn't as complicated as you might think.

In fact, it's simple enough for even beginning investors to execute: Invest in low-cost index funds. This subset of mutual funds includes those that are broadly diversified, hold many stocks, and operate with minimal expenses.

That's what John "Jack" Bogle, founder and retired CEO of The Vanguard Group, recently recommended while sharing his model portfolio with NPR.

"Simplicity underlies the best investment strategies," he tells NPR. "Basic arithmetic works."

Rather than hand-picking stocks and trying to beat the market — which is extremely difficult to do — he says investors should stick to the less glamorous, yet reliable, basics.

It's not too surprising that Bogle recommends this investing strategy, as he created the very first index fund in 1976.

Investing in low-cost index funds works for two main reasons, he says: They're broadly diversified, which eliminates individual stock risk, and they're low cost. You basically "own all of corporate America," he tells NPR, and over time, that combination will outperform most actively managed mutual funds.

It's important to note that not all index funds are necessarily low-cost — and cost is everything, Bogle says.

While there are options out there that carry expense ratios (the industry term for these fees) as low as .10%, others have expense ratios as high as .80%. What may seem like an insignificant difference can add up in an astonishing way, Bogle notes.

"If investors could rely on only a single factor to select future superior performers and to avoid future inferior performers, it would be fund costs," he writes in his book, "The Little Book of Common Sense Investing." "The record could hardly be clearer: The more the managers and brokers take, the less the investors make."

Examples of low-cost fund examples include: Fidelity Spartan 500 Index (FUSEX), with an expense ratio of .10%, and Vanguard Total Stock Market Index (VTSMX), with an expense ratio of .17%.

You can find a fund's expense ratio, the minimum investment required, and other helpful information about index funds by searching them on in the "quote" field on Morningstar.

Source: Business Insider

[winston]

Jack Bogle tells you the secret to becoming a winning investor

By Chuck Jaffe

Source: Market Watch

http://www.marketwatch.com/story/jack-b ... yptr=yahoo

[winston]

How To Use Jack Bogle's Rules For Investment Success

by John P. Reese

In his 2012 book The Clash of the Cultures: Investment vs. Speculation (John Wiley & Sons), Vanguard founder John "Jack" Bogle outlined his rules for investment success, which included the following:
1. Remember Reversion to the Mean
2. Time is Your Friend, Impulse Is Your Enemy
3. Forget the Needle, Buy the Haystack
4. There's No Escaping Risk

Warren Buffett: "If you're emotional about investing, you're not going to do well. You may have all these feelings about the stock, but the stock has no feelings about you."

Finding a winning "superstock" is exceedingly difficult to do, and the odds are stacked against any investor who tries.

"Own the entire market," said Bogle, adding, "Don't do anything once you get the haystack. No more looking for needles."

Source: Forbes

https://www.forbes.com/sites/investor/2 ... 4af2ee1c0e