|The Bogle collection
|"John C. Bogle was well-known for being the founder of The Vanguard Group and father of the index fund. What is sometimes not known as well is that he was a prolific educator and author - having written 10 books and countless articles, including 16 for CFA Institute. Below are the 12 he wrote for the Financial Analysts Journal."
|"In Berkshire Hathaway's 2005 annual report Warren Buffett offered the parable of the fictional Gotrocks family. Sole owners of corporate America, this huge clan sits back and collects the generous rewards of investing. Until fast-talking helpers arrive and persuade some family members to pay the helpers to try to earn more at the expense of other family members. But in total the family ends up with less. Why? Because the Gotrocks are now paying the helpers, thus diminishing the total return earned by all the businesses in their portfolio. Worse, the Gotrocks are now forced to pay taxes on the capital gains incurred as the helpers swap stocks back and forth. After several go-rounds with different helpers, the Gotrocks finally listen to an old, wise uncle who advises them to fire all the helpers and simply reap 100% of their investment gains themselves."
|John Bogle says U.S. government seems 'punch drunk'
|"John Bogle, who created the $106 billion Vanguard 500 Index Fund in 1976, said the U.S. government is 'punch drunk' with proposals to rescue the financial system."
|The arithmetic of mutual fund investing
|"Most of you are likely familiar with the EMH - the Efficient Market Hypothesis - that suggests that most stocks are fairly valued, most of the time. But the relentless rules of humble arithmetic remind us of something both more certain and more profound than the EMH. I call it the CMH - the Cost Matters Hypothesis - the iron rule that investors as a group must always lose to the stock market by the amount of the costs they incur."
|Creating sound governance
|"Yet corporate democracy is currently conspicuous by its absence from the governance scene. As the legendary Benjamin Graham put it, "in legal rights and machinery, the stockholders as a class are king . . . they can hire and fire managements and bend them completely to their will. But the assertion of their rights in practice is almost a complete washout. Unless prodded violently into action, they show neither intelligence nor alertness. They vote in sheep-like fashion for whatever management recommends, no matter how poor the record of accomplishment may be. . . The leading investment funds could contribute mightily to the improvement of corporate managements . . . but have shied away . . . missing a great opportunity for rendering service to the investing public." And so it remains today."
|The investors' advocate
|"Fifteen percent of the money in equity mutual fundsnearly $600 billionis invested in low-cost index funds. Investors have one man to thank for making that option available to them: Jack Bogle, founder of the Vanguard mutual fund group and creator of the first index fund in 1975."
|Consider the "Stewardship Quotient"
|"Happily, there are still funds and fund managers that have tried to hold the fort against the industry's new paradigm in which marketing has superceded management."
|A short history of the other MIT
|"But how much longer before public awareness begins to catch up with the sweet deal that the fund managers have cut themselves? The answer is that it has already begun to happen."
|How fund scandals will serve fund owners
|"It is the myriad conflicts between the interests of fund managers and the interests of fund owners that exist in this industry that bear so much of the responsibility for this staggering gap between the stock market's return and the returns earned by fund investors, and even the returns earned by the funds themselves. While the unacceptable, and partly illegal, market timing scandal has gained a great deal of well-deserved attention, it pales in significance when compared with the powerful impact of high costs on reducing fund returns, on the force of fund size in diminishing fund returns, and on the marketing focus that tempted too many investors to purchase funds that they now wish they had never bought."
|Bogle in exile
|"Jack Bogle, who turned 74 yesterday, is the Warren Buffett of the mutual fund industry, the People's Choice, the most trusted man in the fund business at a time when trust is at a low ebb. If investors still adore this man who invented the index fund and has championed low-cost investing for decades, the industry has turned its back on him."
|What went wrong in corporate America?
|"Tonight, I'd like to talk to you about what went wrong in our capitalistic system, about what's now beginning to go right, and about what you can do as a part-owner of corporate America. Whether you own a common stock or a share in a mutual fund, or participate in a private retirement plan, you have a personal interest in bringing about reform. Both as shareholders and as citizens, each of us must accept the responsibility to build a better corporate world."