Jack Bogle's Latest (Greatest?) Speech - An Oral History

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Jack Bogle's Latest (Greatest?) Speech - An Oral History

Postby Mel Lindauer » Wed May 22, 2013 11:33 am

Hi Everyone:

I had posted this previously, but it was part of the two "lost days" after the forum shutdown, so here goes again. IMO, this is like an oral history of the mutual fund industry and it's being told by the history maker himself, Jack Bogle.


“BIG MONEY IN BOSTON” . . .
The Commercialization of the “Mutual” Fund Industry
Remarks by John C. Bogle, Founder and Former Chairman, The Vanguard Group1
Before The Boston Security Analysts Society, Inc.
May 17, 2013

http://johncbogle.com/wordpress/2013/05 ... in-boston/
Best Regards - Mel | | Semper Fi
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Re: Jack Bogle's Latest (Greatest?) Speech - An Oral History

Postby William4u » Wed May 22, 2013 11:44 am

Great speech. Thanks for posting. Here is one of my favorite parts...

What’s the problem? It’s summarized in Matthew 6:24: “No man can serve two masters.”
Yet when a management firms is owned by a giant conglomerate (or even by public owners), the
conflict of interest is palpable. When a conglomerate buys (or builds internally) a fund
management company, the acquirer’s goal is to earn the highest possible return on that capital.
That’s American way! The idea: maximize fees by gathering assets and creating new products,
and resist reductions in fee rates that would enable fund shareholders to benefit from the
economies of scale.

But fund shareholders, of course, would benefit from lower fee rates, which would
increase their returns, dollar for dollar. Think of it this way: the officers and directors of financial
conglomerates have a fiduciary duty to increase the returns earned by their corporate
shareholders; they also have a fiduciary duty to increase returns to their mutual fund
shareholders.
As Matthew suggested, this obvious conflict in serving two masters will cause
them “to love the one and hate the other,” and I think this audience knows which master gets the
love. There can be only one resolution to the conflict: a federal policy that prohibits the
ownership of fund managers by holding companies.
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Re: Jack Bogle's Latest (Greatest?) Speech - An Oral History

Postby Grt2bOutdoors » Wed May 22, 2013 11:51 am

Mel Lindauer wrote:Hi Everyone:

I had posted this previously, but it was part of the two "lost days" after the forum shutdown, so here goes again. IMO, this is like an oral history of the mutual fund industry and it's being told by the history maker himself, Jack Bogle.


“BIG MONEY IN BOSTON” . . .
The Commercialization of the “Mutual” Fund Industry
Remarks by John C. Bogle, Founder and Former Chairman, The Vanguard Group1
Before The Boston Security Analysts Society, Inc.
May 17, 2013

http://johncbogle.com/wordpress/2013/05 ... in-boston/


Any chance Jack will publish a book of his speeches similar to Warren Buffett with his annual report letters?
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Re: Jack Bogle's Latest (Greatest?) Speech - An Oral History

Postby abuss368 » Wed May 22, 2013 11:54 am

Hi Mel,

Thanks for posting. Another awesome speech by our mentor Jack Bogle!

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + REITs
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Re: Jack Bogle's Latest (Greatest?) Speech - An Oral History

Postby IlliniDave » Wed May 22, 2013 12:16 pm

William4u wrote:Great speech. Thanks for posting. Here is one of my favorite parts...

What’s the problem? It’s summarized in Matthew 6:24: “No man can serve two masters.”
Yet when a management firms is owned by a giant conglomerate (or even by public owners), the
conflict of interest is palpable. When a conglomerate buys (or builds internally) a fund
management company, the acquirer’s goal is to earn the highest possible return on that capital.
That’s American way! The idea: maximize fees by gathering assets and creating new products,
and resist reductions in fee rates that would enable fund shareholders to benefit from the
economies of scale.

But fund shareholders, of course, would benefit from lower fee rates, which would
increase their returns, dollar for dollar. Think of it this way: the officers and directors of financial
conglomerates have a fiduciary duty to increase the returns earned by their corporate
shareholders; they also have a fiduciary duty to increase returns to their mutual fund
shareholders.
As Matthew suggested, this obvious conflict in serving two masters will cause
them “to love the one and hate the other,” and I think this audience knows which master gets the
love. There can be only one resolution to the conflict: a federal policy that prohibits the
ownership of fund managers by holding companies.


I agree. The speech largely parallels the thrust of his most recent book and the most glaring issue to me is the issue of publicly-held fund management companies.Even private fund managers have the inherent conflict of interest, just less of a short-term outlook. Luckily a slow awakening is occurring and people are increasingly voting with their feet.

But, advertising works. If I ever decide to hold any individual stocks, I'd consider starting with financial management companies. :D
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Re: Jack Bogle's Latest (Greatest?) Speech - An Oral History

Postby Rager1 » Wed May 22, 2013 3:47 pm

Grt2bOutdoors wrote:
Any chance Jack will publish a book of his speeches similar to Warren Buffett with his annual report letters?


Here's a link to at least some of Jack's speeches going back to 1977.

http://johncbogle.com/wordpress/bogle-speeches/

Ed
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