Jack Bogle: What the Business of Investing Is All About

you've said or or strongly implied in your most recent book enough that that storing up wealth and prestige and and reputation and and and money is really not what should be what investing business and the business of investing should be about what should it be about should be about giving honest-to-god down-to-earth human beings a chance to accomplish their own financial goals and you know people have laughed in my book common sense on mutual funds the last chapter is calling human beings and somebody actually had the temerity to ask me why on earth would you have a book a chapter about human beings in a book on investing what can one say I mean what what planet is this poor soul living on that's what it's all about for me and how can how can the industry better serve human beings well in mister can better serves human beings by cutting away back on marketing and moving way up in management cutting way back on salesmanship and moving way up on stewardship cutting way back on speculation the way we invest and who and what we weigh up on investment that's this thing from speculation cutting cost cutting portfolio turnover cutting back on innovation all those things will make this a better industry and they fly in the face of course of the contemporary ways people think of a running companies but the point is that managing other people's money is very different from trying to sell it other people you know products and services and how can individual investors help themselves educate yourself that it's a simple business that the issue is not how to pick stocks but how much to have in stocks and understand there's gonna stock in a bond ownership versus loaner ship that's what we call it understand the incredibly important role of cost and all this learn how to run a compound interest table take an 8% return and compounded for 50 years and then compounded a six and a half percent or five and a half percent I should say for 50 years that's the eight and a half percent market return in this in this example the 8% market return less two and a half percent of costs and costs can easily run to that level and it turns out the investor who's aware of that and cuts back on cost is greatly advantaged because under the existing system an 8% market and a five and a half percent return to you you end up after 50 years with maybe 25 percent of the capital and Wall Street ends up with the other 75 the managers and the brokers and you know you put up a hundred percent of the capital and you took a hundred percent of the risk why should someone that put up none of the capital and does none of the risk get 75 percent of the return and if you think about things that way in kind of this global sense that's really all the education you need well Jack thank you for much for being here today and you've been very generous with your time good to be with you then

Channel: Morningstar, Inc.

Views: 15,576

Keywords: Morningstar, com, Stocks, Funds, ETFs, Options, Bonds, Mutual, Jack, Bogle, Vanguard, John, Philosophy, Philanthropy

Id: wx6bHQtNZSA

Length: 3min 6sec (186 seconds)

Published: Fri Apr 09 2010