Vanguard Founder John Bogle: ‘Stop Looking For The Next Apple — Buy Widely And Hold For Life’

John C. Bogle, retired founder of mutual fund company Vanguard. (AP/Newman Communications Inc.)

Investment giant John Bogle says over his 60 plus years in finance, the industry has gone from investing to speculating, and the change is hurting our economy, and our society. It’s also bad for investors, especially ordinary Americans.

Bogle crunched the numbers for Here and Now’s Robin Young to show that active buying and selling of stocks leads to high costs and fees that over a lifetime eat up two thirds of what people earn from their investments. Bogle says the old advice, “buy and hold for life” is still best because the numbers show it works.

Bogle pioneered the index fund, an investment fund which buys a wide range of stocks and holds them for the long haul. The idea was ridiculed by the investment industry which called it, “Bogle’s Folly,” and called Bogle, a life-long Republican, a “communist.” But Vanguard became one of the worlds largest investment companies and re-shaped the mutual fund industry.

Now with his latest book, “The Clash of the Cultures: Investment vs. Speculation,” Bogle is also arguing for new laws to regulate finance, curb speculation, and enforce a real code of professional ethics for all financial managers.

Wall Street Journal: On Mutual Funds, Cheaper Is Better
Wall Street Journal: How the Index Fund Was Born
US News: John Bogle’s Dim View of the Asset-Management Industry
USA Today: Financial ‘Train Wreck’ Looms
New York Times: A Mutual Fund Master, Too Worried to Rest
CBS News: John Bogle’s 10 rules of investing

Guest:

John Bogle, founder of the Vanguard Group of mutual funds, and author of, “The Clash of the Cultures: Investment vs. Speculation.”

We welcome comments from all of our listeners. Post below. Please stay on topic and be civil. Comments may be moderated by us, but you are solely responsible for the content of your comments.

J Frog

Lots of respect for John Bogle…but you would think, if his theory of managers not mattering were true…that my Detroit Lions would have won the Superbowl by now. Still a long way away. (sigh)
- Peter Membrino
  
  The problem with trying to pick good managers is that those managers have to not only beat the market, but beat the market after costs and taxes. So if the market returns 14% this year, tack on a couple percentage for costs and taxes, and you’ll see just how difficult it is to actually beat the market. If you look over a ten year period, the total market index fund will beat 80% of actively managed funds
Rlupodimare

Flimflam! The only people that make money from Mr. Bogles Vanguard investment plans are people like Mr. Bogle whom sale and manage their plans. The Vanguard plan options to chose from are as endless as the stars in the cosmos there like tying to figure out were the hidden pea is under three shells in this case one trillion shells like the stars in the cosmos. I know, I invested and lost money in many of the Vanguard plans. When I retired my plans made no money and I remained at the bottom of the fiscal cliff! The most amusing part of the this interview was Mr. Bogle’s statement of wanting to see some sort of Government regulation in the his business, which may mean Mr. Bogle is not a true Republican? So why is Vanguard so successful?: Americans like illusions! Proof: Look at the John Bohener/Mitch Mc Connel/Eric Cantor/Grover Norquist fiscal mythical cliff plans for the middle class! I’m going to Vegas and placing all my money on red; perhaps this way I can climb up the fiscal cliff.
http://www.dpsinfo.com LaurieMann

I worked for a forward-thinking company back in the ’80s who encouraged employees to open 401k accounts and trained us properly to invest. As a result, we have pretty decent, diversified investments that we’re using for retirement. I’m not a passive trader – I do shift mutual fund money around from time to time and I buy and sell some stock every year or so. But, we did not panic in 2008, and when we’d bought a house in 2006, it was in an area that wasn’t overvalued. So we’re doing OK. Hope to retire in about 10 years. I would never ever turn the responsibility for our money over to anyone.
- Bag O’Arse
  
  TIL that no providing pensions = being “forward-thinking”
Vicvw

I think Bogle is correct there is too much speculation and not enough investing. This computer driven trading makes up half the daily volume and it turns the market into a scam against the small investor. In my opinion much of the financial news regarding individual stock is phony much like the “Paola” scandal in the music industry. These people who run these scams are politically connected so there’s not much chance we will see an expose and correction. A four year window for long term capital gains might help. WW