Foreword By Arthur Levitt ix
Acknowledgments xiii
About This Book xv
Chapter 1 The Clash of the Cultures 1
Chapter 2 The Double-Agency Society and the Happy Conspiracy 29
Chapter 3 The Silence of the Funds: Why Mutual Funds Must Speak Out on the Governance of Our Nation’s Corporations 65
Chapter 4 The “Mutual” Fund Culture—Stewardship Gives Way to Salesmanship 103
Chapter 5 Are Fund Managers True Fiduciaries?: The “Stewardship Quotient” 139
Chapter 6 The Index Fund: The Rise of the Fortress of Long-Term Investing and Its Challenge from Short-Term Speculation 167
Chapter 7 America’s Retirement System: Too Much Speculation, Too Little Investment 213
Chapter 8 The Rise, the Fall, and the Renaissance of Wellington Fund: A Case Study—Investment Wins, Speculation Loses 251
Chapter 9 Ten Simple Rules for Investors and a Warning for Speculators 297
Appendix I: Performance Ranking of Major Mutual Fund Managers–March 2012 323
Appendix II: Annual Performance of Common Stock Funds versus S&P 500, 1945–1975 325
Appendix III: Growth in Index Funds—Number and Assets, 1976–2012 327
Appendix IV: Wellington Fund Record, 1929–2012 329
Appendix V: Wellington Fund Equity Ratio and Risk Exposure (Beta), 1929–2012 333
Appendix VI: Wellington Fund Performance versus Average Balanced Fund, 1929–2012 335
Appendix VII: Wellington Fund Expense Ratios, 1966–2011 337
Index 339
JOHN C. BOGLE is the founder of the Vanguard Group of mutual funds and President of its Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as chairman and chief executive officer until 1996 and senior chairman until 2000. In 1999, Fortune magazine named Mr. Bogle as one of the four “Investment Giants” of the twentieth century. In 2004, Time magazine named him one of “the world’s 100 most powerful and influential people,” and Institutional Investor presented him with its Lifetime Achievement Award. In 2010, Forbes magazine described him as the person who “has done more good for investors than any other financier of the past century.” In January 2012, some of the nation’s most respected financial leaders celebrated his distinguished career at the John C. Bogle Legacy Forum, held at New York’s Museum of American Finance.
“The Clash of the Cultures: Investment vs. Speculation”
is a must read for investors who want to understand the
forces that are working against them and what they can do about it
to maximize their investment returns. It should come as no surprise
to those who know Jack and his philosophy that the final words of
his final book are: ‘Stay the course!’—Forbes
“The Clash of the Cultures: Investment vs. Speculation is . . . an
enjoyable read that ends with 10 lessons for investors that, while
simple, are deeply valuable to the general public. . . Clash of the
Cultures is a great summary of the breadth of Bogle's 60-plus years
in the investment field. He offers observations on the shocking
change in the culture of finance that he has witnessed first-hand.
Among the most important of the shifts is that short-term
speculation has crowded out long-term investment. Though this has
been great for the financial sector, it has come at the expense of
the public.” —CBS MoneyWatch “Bogle, as the Godfather of index
investing, has ideas that are timeless and based on simple math,
and at the same time exhibit uncommon sense and a routinely
overlooked view of how investors are consistently overcharged by
the financial services industry. Fortunately, his wisdom is widely
available to everyone. Much of that wisdom has been assembled in
Bogle's most recent book The Clash of the Cultures: Investment vs.
Speculation (Wiley, 2012). While most of the insights are
time-honored themes in the Bogle canon, they are very useful for
individual investors.” —Reuters “Bogle's latest book tackles what
looks like an artificial distinction. His Clash of the Cultures
title conjures thoughts of world war and social strife. But he's
talking about ‘investment vs. speculation’. . . As in his
previous books, Bogle is a master of the clear point and the pithy
quote - from the investment writings of John Maynard Keynes and
Benjamin Graham, pension adviser Keith Ambachtsheer and Bogle's old
mentor the late Walter L. Morgan, as well as the Gospels of Luke
and John.”—Philadelphia Inquirer
“You know what to expect when opening a book by John Bogle, founder
of the Vanguard mutual fund group and inventor of index funds: a
lament about the fall from grace of the US mutual fund industry,
and a restatement of his strong conviction that COSTS
MATTER!!! Mr Bogle’s new book, The Clash of the Cultures ,
Investment vs Speculation, does not disappoint on either count, but
it is also very much in tune with the zeitgeist in its focus on
stewardship and fiduciary duty. It lambasts US mutual fund
managers for neglecting to act as responsible owners of the
companies they invest in on behalf of the savers whose money they
look after, and for their own governance failures.”—The Financial
Times
“[The Clash of the Cultures] echoes many familiar . . . themes
worth repeating, because they are too often ignored. Investors
spend so much time chasing hot asset classes and hot fund managers
that they end up buying high and selling low, all the while
incurring transaction costs. In Mr Bogle’s words, ‘investors need
to understand not only the magic of compounding long-term returns,
but the tyranny of compounding costs.’ . . . The American
pension-fund industry has been particularly bad at understanding
these long-run fundamentals. Many schemes assume, on the basis of
past performance, a return of 7.5-8%, a figure that is highly
implausible given the current low yields. . . Meanwhile, many
employees in the private sector have been switched into
defined-contribution schemes. . . But employees are not
saving enough, are not allocating their portfolios efficiently and
are incurring too many costs. It is hard to disagree with Mr Bogle
that the ‘system of retirement security is imperilled, heading for
a serious train wreck.’ But will anybody listen to him, when they
haven’t in the past?” —The Economist
“John Bogle’s latest book, as much a piece of history as is it a
playbook for how to repair financial markets scarred by two bear
markets in 10 years and a loss of confidence, is one of those books
on finance that ought not be left unread. The Clash of the Cultures
is the latest and perhaps best book by the founder of Vanguard
Group. . . Plus, for those not familiar with Bogle’s prose, the man
can turn a phrase, which makes the book all the more
enjoyable.”—IndexUniverse
“If the Occupy Wall Street movement is serious about helping people
with real financial issues, then its leaders should read John
Bogle’s book and embrace his ideas for change.”—Rick Ferri,
Forbes.com “John Bogle’s story is an oft-told tale, yet even Bogle
junkies will learn some fascinating new facts from The Clash of the
Cultures. Bogle takes of the cudgels on behalf of investors, who he
believes have been poorly served by most of the industry. Bogle
brings invaluable historical perspective to current issues ranging
from high-frequency trading to the looming crisis in the U.S.
retirement system to the use of mutual fund investors’ money to
promote the growth of assets under management. Every thoughtful
investor can benefit from his wisdom, served up with refreshing
modesty by a giant in a field notorious for outsized egos.”
—Financial Analysts Journal
“The book is a gem. Well-researched and carefully argued, there's
simply no way to argue with Bogle's premises -- that the little guy
always loses, that the more you churn the more you lose, that most
people's retirements are dramatically underfunded, that management
looks out for itself and not the stockholders, and that greed is
driving the bus. . . Read Bogle, not just to learn about how to
protect your investments and understand what really happens on Wall
Street. But more than that, read The Clash Of The
Cultures and declare yourself into the three percent who have
ideas and aren't afraid to use them.” —The Huffington Post
Ask a Question About this Product More... |