Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
willthrill81
Posts: 19222
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by willthrill81 » Tue Jun 30, 2020 6:48 pm

Morningstar published an article written by John Rekenthaler yesterday titled "Jack Bogle Was Wrong About ETFs." Below is an excerpt from the intro.
Vanguard founder Jack Bogle rarely erred. He was spot-on when popularizing indexing; bringing institutional pricing to retail investments; avoiding trendy fund launches; and recognizing that positive press would eventually benefit Vanguard more than hiring an expensive salesforce. He was even correct when arguing that U.S. investors didn’t need to own overseas equities. (Perhaps he was merely lucky there, given that American stocks have performed so well, but right is right.)

However, one of his strongly held beliefs--that exchange-traded funds were poor investments--has failed the test of time. Per Jeff Cox of CNBC, Bogle once called ETF investors "fruitcakes, nut cases, and the lunatic fringe."
He argues that Bogle didn't like the perceived motivation for ETFs, namely, increased trading. Rekenthaler believes that Bogle was not worried as much about retail investors using ETFs poorly as much as he was concerned that ETFs would line the pockets of the exchanges at the expense of investors. He further argues that Bogle's concern didn't materialize, but Bogle simply refused to change his stance toward ETFs. Rekenthaler further argues that ETFs have actually come closer to Bogle's original vision of changing the mutual fund industry than could be achieved with mutual funds.

I know this topic has been beaten to death already, but I thought that this was an interesting article anyway.

Thoughts?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

typical.investor
Posts: 2041
Joined: Mon Jun 11, 2018 3:17 am

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by typical.investor » Tue Jun 30, 2020 6:51 pm

willthrill81 wrote:
Tue Jun 30, 2020 6:48 pm
I know this topic has been beaten to death already, but I thought that this was an interesting article anyway.

Thoughts?
Bogle simply never lived overseas for an extended period of time in today's regulatory environment. Had he, the conclusion would have been "ETFs are the cats meow" as they allow avoiding investing in individual stocks.

jason2459
Posts: 182
Joined: Wed May 06, 2020 7:59 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by jason2459 » Tue Jun 30, 2020 6:52 pm

A video I just watched recently with him talking about ETFs was that he was considering ETFs as being ok for buy and hold investing but still had concerns of still being used for frequent trading that he was against.

Edit here it is:
https://youtu.be/axupJeEkDlI

grok87
Posts: 9109
Joined: Tue Feb 27, 2007 9:00 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by grok87 » Tue Jun 30, 2020 6:55 pm

willthrill81 wrote:
Tue Jun 30, 2020 6:48 pm
Morningstar published an article written by John Rekenthaler yesterday titled "Jack Bogle Was Wrong About ETFs." Below is an excerpt from the intro.
Vanguard founder Jack Bogle rarely erred. He was spot-on when popularizing indexing; bringing institutional pricing to retail investments; avoiding trendy fund launches; and recognizing that positive press would eventually benefit Vanguard more than hiring an expensive salesforce. He was even correct when arguing that U.S. investors didn’t need to own overseas equities. (Perhaps he was merely lucky there, given that American stocks have performed so well, but right is right.)

However, one of his strongly held beliefs--that exchange-traded funds were poor investments--has failed the test of time. Per Jeff Cox of CNBC, Bogle once called ETF investors "fruitcakes, nut cases, and the lunatic fringe."
He argues that Bogle didn't like the perceived motivation for ETFs, namely, increased trading. Rekenthaler believes that Bogle was not worried as much about retail investors using ETFs poorly as much as he was concerned that ETFs would line the pockets of the exchanges at the expense of investors. He further argues that Bogle's concern didn't materialize, but Bogle simply refused to change his stance toward ETFs. Rekenthaler further argues that ETFs have actually come closer to Bogle's original vision of changing the mutual fund industry than could be achieved with mutual funds.

I know this topic has been beaten to death already, but I thought that this was an interesting article anyway.

Thoughts?
no mention in the article of bid/ask spreads and premium/discount to NAV. i stick with mutual funds where possible.
RIP Mr. Bogle.

whereskyle
Posts: 893
Joined: Wed Jan 29, 2020 10:29 am

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by whereskyle » Tue Jun 30, 2020 6:59 pm

willthrill81 wrote:
Tue Jun 30, 2020 6:48 pm
Morningstar published an article written by John Rekenthaler yesterday titled "Jack Bogle Was Wrong About ETFs." Below is an excerpt from the intro.
Vanguard founder Jack Bogle rarely erred. He was spot-on when popularizing indexing; bringing institutional pricing to retail investments; avoiding trendy fund launches; and recognizing that positive press would eventually benefit Vanguard more than hiring an expensive salesforce. He was even correct when arguing that U.S. investors didn’t need to own overseas equities. (Perhaps he was merely lucky there, given that American stocks have performed so well, but right is right.)

However, one of his strongly held beliefs--that exchange-traded funds were poor investments--has failed the test of time. Per Jeff Cox of CNBC, Bogle once called ETF investors "fruitcakes, nut cases, and the lunatic fringe."
He argues that Bogle didn't like the perceived motivation for ETFs, namely, increased trading. Rekenthaler believes that Bogle was not worried as much about retail investors using ETFs poorly as much as he was concerned that ETFs would line the pockets of the exchanges at the expense of investors. He further argues that Bogle's concern didn't materialize, but Bogle simply refused to change his stance toward ETFs. Rekenthaler further argues that ETFs have actually come closer to Bogle's original vision of changing the mutual fund industry than could be achieved with mutual funds.

I know this topic has been beaten to death already, but I thought that this was an interesting article anyway.

Thoughts?
Everytime I place a no-commission trade to buy VT or VTI at Fidelity, Fidelity takes a cent, don't they? That's what I expect, at least.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

User avatar
tvubpwcisla
Posts: 517
Joined: Sat Nov 09, 2019 10:09 am

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by tvubpwcisla » Tue Jun 30, 2020 7:04 pm

Thanks for sharing this! I don't think he was necessarily wrong regarding ETFs. In fact, I think even in his later days, he certainly softened up to them.
Stay invested my friends.

User avatar
1789
Posts: 1522
Joined: Fri Aug 16, 2019 3:31 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by 1789 » Tue Jun 30, 2020 7:19 pm

Bogle hated ETFs for two reasons (not the cost)

1) Spider and the rest of ETFs

Spider is the ultimate trading vehicle in ETF space. It was advertised as “Now you can trade SP500 index all day long, in real time”. Isn’t this TRUE still?

2) Most ETFs focused on very narrow segment of the market and he cautioned against the ultimate speculative behaviour when diverging from well diversified market indexes. Isn’t this TRUE still?

I don’t agree Mr Bogle on what he said in all subjects (for eg: not staying the course in 1999, even thou he wrote a book with same name in 2018)

But I agree to him on this subject!
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

Ferdinand2014
Posts: 1530
Joined: Mon Dec 17, 2018 6:49 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Ferdinand2014 » Tue Jun 30, 2020 8:34 pm

willthrill81 wrote:
Tue Jun 30, 2020 6:48 pm
Morningstar published an article written by John Rekenthaler yesterday titled "Jack Bogle Was Wrong About ETFs." Below is an excerpt from the intro.
Vanguard founder Jack Bogle rarely erred. He was spot-on when popularizing indexing; bringing institutional pricing to retail investments; avoiding trendy fund launches; and recognizing that positive press would eventually benefit Vanguard more than hiring an expensive salesforce. He was even correct when arguing that U.S. investors didn’t need to own overseas equities. (Perhaps he was merely lucky there, given that American stocks have performed so well, but right is right.)

However, one of his strongly held beliefs--that exchange-traded funds were poor investments--has failed the test of time. Per Jeff Cox of CNBC, Bogle once called ETF investors "fruitcakes, nut cases, and the lunatic fringe."
He argues that Bogle didn't like the perceived motivation for ETFs, namely, increased trading. Rekenthaler believes that Bogle was not worried as much about retail investors using ETFs poorly as much as he was concerned that ETFs would line the pockets of the exchanges at the expense of investors. He further argues that Bogle's concern didn't materialize, but Bogle simply refused to change his stance toward ETFs. Rekenthaler further argues that ETFs have actually come closer to Bogle's original vision of changing the mutual fund industry than could be achieved with mutual funds.

I know this topic has been beaten to death already, but I thought that this was an interesting article anyway.

Thoughts?
https://youtu.be/02pyUvf-gPc

He had no issue with traditional total market ETF’s. His concern was the behavioral aspect of day trading and narrow focus ETF’s that are being marketed. This article is fake news. Or at best poor journalism.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

theTRA
Posts: 30
Joined: Thu May 14, 2020 4:35 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by theTRA » Tue Jun 30, 2020 9:41 pm

willthrill81 wrote:
Tue Jun 30, 2020 6:48 pm
Morningstar published an article written by John Rekenthaler yesterday titled "Jack Bogle Was Wrong About ETFs." Below is an excerpt from the intro.
Vanguard founder Jack Bogle rarely erred. He was spot-on when popularizing indexing; bringing institutional pricing to retail investments; avoiding trendy fund launches; and recognizing that positive press would eventually benefit Vanguard more than hiring an expensive salesforce. He was even correct when arguing that U.S. investors didn’t need to own overseas equities. (Perhaps he was merely lucky there, given that American stocks have performed so well, but right is right.)

However, one of his strongly held beliefs--that exchange-traded funds were poor investments--has failed the test of time. Per Jeff Cox of CNBC, Bogle once called ETF investors "fruitcakes, nut cases, and the lunatic fringe."

Trendy fund launches? Expensive salesforce?

Hmm....I wonder for whom that jibe is intended.....I have no clue at all.... :P

Kookaburra
Posts: 168
Joined: Thu Apr 02, 2020 11:14 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Kookaburra » Tue Jun 30, 2020 10:24 pm

Bogleheads was correct on this one too. I have both MFs and ETFs and much prefer the former.

Spirit Rider
Posts: 13208
Joined: Fri Mar 02, 2007 2:39 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Spirit Rider » Tue Jun 30, 2020 11:02 pm

I do not believe Jack Bogle, Warren Buffet, Et Al. are infallible. I continue to believe that their advice on asset allocations and fund selections are not the be all end all for all individual investors. They should be recognized for the the tremendous value they brought to individual investors.

However, in this case, I couldn't agree more with Jack Bogle on ETFs. While they have advantages in select circumstances, a large number of people use them speculatively and mostly to their own detriment. 90% of journalists don't have a clue, 99% of financial journalists don't have half a clue and John Rekenthaler is totally clueless. Other than that, I have no opinion.

Wind_Reaver
Posts: 96
Joined: Mon Jan 05, 2009 3:15 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Wind_Reaver » Tue Jun 30, 2020 11:08 pm

A first-hand account of Jack Bogle's later view of ETFs, in his own words, can be found in the 03/11/2016 Masters in Business Podcast Interview with Jack Bogle (between 49:00 and 54:00 marks).

The M* article reads like two separate topics mashed together, and a CNBC link should be an automatic penalty flag on the author. M* editorial decline still trending.

User avatar
Topic Author
willthrill81
Posts: 19222
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by willthrill81 » Tue Jun 30, 2020 11:17 pm

Spirit Rider wrote:
Tue Jun 30, 2020 11:02 pm
I do not believe Jack Bogle, Warren Buffet, Et Al. are infallible. I continue to believe that their advice on asset allocations and fund selections are not the be all end all for all individual investors. They should be recognized for the the tremendous value they brought to individual investors.
100% agreed.
Spirit Rider wrote:
Tue Jun 30, 2020 11:02 pm
However, in this case, I couldn't agree more with Jack Bogle on ETFs. While they have advantages in select circumstances, a large number of people use them speculatively and mostly to their own detriment. 90% of journalists don't have a clue, 99% of financial journalists don't have half a clue and John Rekenthaler is totally clueless. Other than that, I have no opinion.
I have mixed feelings about ETFs. Yes, many use them to trade haphazardly. But a far greater proportion of ETFs are based on indices than are mutual funds, most of which are still actively managed (i.e. the 'typical' ETF is probably better than the 'typical' mutual fund), though that's probably less 'good' than haphazard trading is 'bad'.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
mrspock
Posts: 1082
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by mrspock » Wed Jul 01, 2020 3:29 am

Was he? Tell that to the poor ETF bond holders who were at the mercy of the market during mid-March. And yes, yes I know the argument that the ETFs were pricing the assets correctly, but that doesn't put the $10k back in my account when I rebalanced vs. had I simply held the MF version of the same fund.

Dumped all my ETF based bond funds after that, I won't be on the losing end of that trade again.


Image

typical.investor
Posts: 2041
Joined: Mon Jun 11, 2018 3:17 am

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by typical.investor » Wed Jul 01, 2020 3:37 am

mrspock wrote:
Wed Jul 01, 2020 3:29 am
Was he? Tell that to the poor ETF bond holders who were at the mercy of the market during mid-March. And yes, yes I know the argument that the ETFs were pricing the assets correctly, but that doesn't put the $10k back in my account when I rebalanced vs. had I simply held the MF version of the same fund.

Dumped all my ETF based bond funds after that, I won't be on the losing end of that trade again.


Image
What price did you buy stocks at?

I had several good ETF trades in that period where the bond funds I sold were lower at the end of the day, and the stock fund I bought were higher.

Anyway, what stocks did you buy? And what was the price when you bought them?

You were buying ETFs right?

If you are switching between ETF and mutual funds, the timing of receiving money is an issue.

User avatar
mrspock
Posts: 1082
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by mrspock » Wed Jul 01, 2020 3:49 am

typical.investor wrote:
Wed Jul 01, 2020 3:37 am
...

What price did you buy stocks at?

I had several good ETF trades in that period where the bond funds I sold were lower at the end of the day, and the stock fund I bought were higher.

Anyway, what stocks did you buy? And what was the price when you bought them?

You were buying ETFs right?

If you are switching between ETF and mutual funds, the timing of receiving money is an issue.
Yes, I bought a total market ETF with very little spread between the NAV and the price. When I converted to MF's on the bond side, I waited until the smoke cleared and the NAV spreads were back to normal again.

Don't even get me started on the ETF stock funds either.... during a 7 figure tax loss harvest move, things were so volatile my trade ticket was swinging 10's of thousands of dollars in seconds. It was insane. I risked either not buying enough or buying too much of the target ETF. In the MF world, you'd just say "sell FOO, buy BAR" and to the dollar it would be done after the market closed, no drama, no stress. I got burned on that one too, as the market shifted maybe $7-10k between when I sold the original ETF and bought the new one. I realize it could easily go the other way, but I don't want to play that game, I want just a dollar for dollar harvest, no drama, no games.

Clearly Rekenthaler has never bothered to trade ETFs "at scale" before. This stuff is trivial at smaller dollar amounts, but when you get into the hundreds of thousands to millions, the inefficiencies of the market & poor mechanics of ETF trading can burn you bad.

andrige
Posts: 44
Joined: Thu May 07, 2020 3:45 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by andrige » Wed Jul 01, 2020 6:18 am

willthrill81 wrote:
Tue Jun 30, 2020 6:48 pm
Morningstar published an article written by John Rekenthaler yesterday titled "Jack Bogle Was Wrong About ETFs." Below is an excerpt from the intro.
Vanguard founder Jack Bogle rarely erred. He was spot-on when popularizing indexing; bringing institutional pricing to retail investments; avoiding trendy fund launches; and recognizing that positive press would eventually benefit Vanguard more than hiring an expensive salesforce. He was even correct when arguing that U.S. investors didn’t need to own overseas equities. (Perhaps he was merely lucky there, given that American stocks have performed so well, but right is right.)

However, one of his strongly held beliefs--that exchange-traded funds were poor investments--has failed the test of time. Per Jeff Cox of CNBC, Bogle once called ETF investors "fruitcakes, nut cases, and the lunatic fringe."
He argues that Bogle didn't like the perceived motivation for ETFs, namely, increased trading. Rekenthaler believes that Bogle was not worried as much about retail investors using ETFs poorly as much as he was concerned that ETFs would line the pockets of the exchanges at the expense of investors. He further argues that Bogle's concern didn't materialize, but Bogle simply refused to change his stance toward ETFs. Rekenthaler further argues that ETFs have actually come closer to Bogle's original vision of changing the mutual fund industry than could be achieved with mutual funds.

I know this topic has been beaten to death already, but I thought that this was an interesting article anyway.

Thoughts?
Bogle completely had a point about the use of ETFs. There are now more indexes than stocks. The trading volume of some ETFs is absolutely insane which means many people are using them purely for speculation. Investing companies are releasing their sector views so that people can try to outperform the market by betting on sector ETFs. These factors were Bogle's problem with the ETFs. He had no problem with buying and holding one, but he thought the mechanisms of ETFs did not promote these behaviors.

User avatar
Forester
Posts: 1293
Joined: Sat Jan 19, 2019 2:50 pm
Location: UK

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Forester » Wed Jul 01, 2020 8:08 am

I think Bogle is right in terms of investor behaviour. ETFs are easy to trade. An index fund simultaneously as a long term buy & hold investment but also as an ETF, is an odd marriage. The flexibility and ability to rebalance a portfolio within a few minutes is a nice luxury however :|

livesoft
Posts: 72090
Joined: Thu Mar 01, 2007 8:00 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by livesoft » Wed Jul 01, 2020 8:26 am

mrspock wrote:
Wed Jul 01, 2020 3:29 am
Was he? Tell that to the poor ETF bond holders who were at the mercy of the market during mid-March. And yes, yes I know the argument that the ETFs were pricing the assets correctly, but that doesn't put the $10k back in my account when I rebalanced vs. had I simply held the MF version of the same fund.

Dumped all my ETF based bond funds after that, I won't be on the losing end of that trade again.
Since that is all so obvious, will you be on the winning end of that trade in the future? That is, anybody who held those so-called "cash reserves" (or TIAA Real Estate!) should have jumped in at that time and bought bond ETFs!!
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
nisiprius
Advisory Board
Posts: 41105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by nisiprius » Wed Jul 01, 2020 8:37 am

Yawn.

I'm trying to keep my nose out of my granddaughter's boyfriend's investments via Robinhood, but I'm pretty sure it isn't broad index mutual funds.

I'd be happy if it were only ETFs.

I hope it's only individual stocks.

Whatever the behavioral dangers of ETFs, they pale into insignificance next to the dangers I think Robinhood is presenting.
Last edited by nisiprius on Wed Jul 01, 2020 8:41 am, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Jack FFR1846
Posts: 12076
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Jack FFR1846 » Wed Jul 01, 2020 8:41 am

mrspock wrote:
Wed Jul 01, 2020 3:49 am
typical.investor wrote:
Wed Jul 01, 2020 3:37 am
...

What price did you buy stocks at?

I had several good ETF trades in that period where the bond funds I sold were lower at the end of the day, and the stock fund I bought were higher.

Anyway, what stocks did you buy? And what was the price when you bought them?

You were buying ETFs right?

If you are switching between ETF and mutual funds, the timing of receiving money is an issue.
Yes, I bought a total market ETF with very little spread between the NAV and the price. When I converted to MF's on the bond side, I waited until the smoke cleared and the NAV spreads were back to normal again.

Don't even get me started on the ETF stock funds either.... during a 7 figure tax loss harvest move, things were so volatile my trade ticket was swinging 10's of thousands of dollars in seconds. It was insane. I risked either not buying enough or buying too much of the target ETF. In the MF world, you'd just say "sell FOO, buy BAR" and to the dollar it would be done after the market closed, no drama, no stress. I got burned on that one too, as the market shifted maybe $7-10k between when I sold the original ETF and bought the new one. I realize it could easily go the other way, but I don't want to play that game, I want just a dollar for dollar harvest, no drama, no games.

Clearly Rekenthaler has never bothered to trade ETFs "at scale" before. This stuff is trivial at smaller dollar amounts, but when you get into the hundreds of thousands to millions, the inefficiencies of the market & poor mechanics of ETF trading can burn you bad.
I get that a "sell to buy" is much easier and cleaner with MFs. One click and then go do something else. With ETFs, I sell at a limit price so I know what I'll get and am protected. Then once sold (and unsettled), I buy with a limit. Sure...the market might go up and I don't buy. I get to decide if I want to buy at a higher price, buy something else or just sit on the cash.

At least with ETFs, I know what I'll get when I sell (limit) and know I won't overpay when I buy (limit). I don't get that control with mutual funds.

All that said, I use both MFs and ETFs. Jack was concerned about behavior using ETFs because the same bad, costly behavior that one can exhibit with stocks can be exhibited with ETFs. But that doesn't mean that one can't buy and hold ETFs long term. In my humble opinion, Jack was right about the potential to exhibit bad behavior. But he wasn't right about the utility of buying ETFs instead of MFs. Especially when the ETF is cheaper to own.
Bogle: Smart Beta is stupid

User avatar
nedsaid
Posts: 13473
Joined: Fri Nov 23, 2012 12:33 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by nedsaid » Wed Jul 01, 2020 8:44 am

nisiprius wrote:
Wed Jul 01, 2020 8:37 am
Yawn.

I'm trying to keep my nose out of my granddaughter's boyfriend's investments via Robinhood, but I'm pretty sure it isn't broad index mutual funds.

I'd be happy if only it were ETFs.

I hope it's only individual stocks.

Whatever the behavioral dangers of ETFs, they pale into insignificance next to the dangers I think Robinhood is presenting.
1970 - "Thank goodness he is only smoking cigarettes."

2018- "Thank goodness he is smoking a joint and not a cigarette."

2020- "Thank goodness he is only trading ETF's."
A fool and his money are good for business.

User avatar
David Jay
Posts: 8674
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by David Jay » Wed Jul 01, 2020 8:44 am

nisiprius wrote:
Wed Jul 01, 2020 8:37 am
Yawn.

I'm trying to keep my nose out of my granddaughter's boyfriend's investments via Robinhood, but I'm pretty sure it isn't broad index mutual funds.

I'd be happy if it were only ETFs.

I hope it's only individual stocks.

Whatever the behavioral dangers of ETFs, they pale into insignificance next to the dangers I think Robinhood is presenting.
Probably Bitcoin and USO :(
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

whereskyle
Posts: 893
Joined: Wed Jan 29, 2020 10:29 am

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by whereskyle » Wed Jul 01, 2020 8:46 am

As a younger investor inspired by Bogle, dipping my toes into the ETF space definitely triggered in me day-trading tendencies that Jack was exactly right to warn against. "Should I buy in the morning or at the end of the day?" "Shucks, I bought and now it's going down, I'll buy some more since it's cheaper now." Watching the market all day, feeling panicked, et cetera. I have come to appreciate most about mutual funds that I don't need to trade during the day, and I'll happily pay the extra basis point or two to have Vanguard do the buying for me. I think mutual funds lend themselves better to Jack's buy-and-hold advice, and I think watching ETFs all day is the surest way to find yourself picking individual stocks and abandoning a longer-term mindset.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

User avatar
ClevrChico
Posts: 1684
Joined: Tue Apr 03, 2012 8:24 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by ClevrChico » Wed Jul 01, 2020 8:52 am

I still believe Jack Bogle was right. I primarily use admiral funds, along with limited use of ETF's for brokerage bonuses. I think it would be easy for a novice investor to make non-optimal trades with ETF's or attempt to market time.

User avatar
nedsaid
Posts: 13473
Joined: Fri Nov 23, 2012 12:33 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by nedsaid » Wed Jul 01, 2020 8:52 am

grok87 wrote:
Tue Jun 30, 2020 6:55 pm

no mention in the article of bid/ask spreads and premium/discount to NAV. i stick with mutual funds where possible.
There was a problem in March 2020. Weird things were happening during a 3 week period in March and this affected bid/ask spreads and premium/discount to NAV. Caution is needed when trading ETFs during times of extreme market turbulence. You can see this checking the graphs at etf.com for various ETFs. The Vanguard Total Bond Market ETF (BND) fared well but you could see bid/ask spreads and premium/discount widen and narrow even if not by much. This is an issue.

Mutual funds have the issue of unwanted capital gains during bear markets, panic sellers create capital gains distributions for shareholders who choose to stay put. A big problem for active funds much less for index funds. Mutual funds have their issues too.

One big reason to ride out market turbulence which affects all investments. During the 2008-2009 financial crisis and bear market, Uncle Sam had to put guarantees on money market funds.
A fool and his money are good for business.

User avatar
Topic Author
willthrill81
Posts: 19222
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by willthrill81 » Wed Jul 01, 2020 10:54 am

Years ago, I heard Meb Faber suggest that it would be interesting if a broker created a stock mutual fund whose shares could not be sold in fewer than say five years after purchase without stiff penalties, the incursion of which would be distributed to the other mutual fund holders. In other words, it would strongly incentivize buy-and-hold and reward those who did by punishing those who didn't.

I get the feeling that at least a few BHs would be interested in such a fund. It would put up further roadblocks to the frequent trading that many are so opposed to.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
1789
Posts: 1522
Joined: Fri Aug 16, 2019 3:31 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by 1789 » Wed Jul 01, 2020 10:56 am

nisiprius wrote:
Wed Jul 01, 2020 8:37 am
Yawn.

I'm trying to keep my nose out of my granddaughter's boyfriend's investments via Robinhood, but I'm pretty sure it isn't broad index mutual funds.

I'd be happy if it were only ETFs.

I hope it's only individual stocks.

Whatever the behavioral dangers of ETFs, they pale into insignificance next to the dangers I think Robinhood is presenting.
You have probably seen this

https://www.forbes.com/sites/sergeikleb ... 2818b21638
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

User avatar
1789
Posts: 1522
Joined: Fri Aug 16, 2019 3:31 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by 1789 » Wed Jul 01, 2020 10:59 am

willthrill81 wrote:
Wed Jul 01, 2020 10:54 am
Years ago, I heard Meb Faber suggest that it would be interesting if a broker created a stock mutual fund whose shares could not be sold in fewer than say five years after purchase without stiff penalties, the incursion of which would be distributed to the other mutual fund holders. In other words, it would strongly incentivize buy-and-hold and reward those who did by punishing those who didn't.

I get the feeling that at least a few BHs would be interested in such a fund. It would put up further roadblocks to the frequent trading that many are so opposed to.
Seems like a good idea. I would sign on for buying a US TSM and holding it without looking for 5 years. Sure.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

User avatar
mrspock
Posts: 1082
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by mrspock » Wed Jul 01, 2020 11:27 am

livesoft wrote:
Wed Jul 01, 2020 8:26 am
mrspock wrote:
Wed Jul 01, 2020 3:29 am
Was he? Tell that to the poor ETF bond holders who were at the mercy of the market during mid-March. And yes, yes I know the argument that the ETFs were pricing the assets correctly, but that doesn't put the $10k back in my account when I rebalanced vs. had I simply held the MF version of the same fund.

Dumped all my ETF based bond funds after that, I won't be on the losing end of that trade again.
Since that is all so obvious, will you be on the winning end of that trade in the future? That is, anybody who held those so-called "cash reserves" (or TIAA Real Estate!) should have jumped in at that time and bought bond ETFs!!
Quite simply, in a similarly volatile environment where liquidity is at issue — yes. There is an excellent article in the WSJ about why/how the normal arbitrage between the NAV and bid broke down in bond ETFs, I’d recommend you read it if interested.

From the article:
Bond ETFs have al­ways been sus­cep­ti­ble to mov­ing out of step with their un­der­ly­ing in­vest­ments be­cause bonds trade more in­fre­quently, mak­ing it dif­fi­cult for bond pric­ing ser­vices to cal­cu­late their lat­est val­ues.
The beauty of investing is if you disagree, your are free to construct your own portfolio as you see fit — ETFs all around, I’ll do as I see fit.

User avatar
firebirdparts
Posts: 1583
Joined: Thu Jun 13, 2019 4:21 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by firebirdparts » Wed Jul 01, 2020 11:42 am

There is so much extra work involved to make a fund tradeable, I am amazed really that it’s grown so much. I guess the AP makes money by market making so it’s all worth it, but if the fund owns 2000 stocks it’s hard to see how it would be worth it.
A fool and your money are soon partners

grok87
Posts: 9109
Joined: Tue Feb 27, 2007 9:00 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by grok87 » Wed Jul 01, 2020 1:53 pm

nedsaid wrote:
Wed Jul 01, 2020 8:52 am
grok87 wrote:
Tue Jun 30, 2020 6:55 pm

no mention in the article of bid/ask spreads and premium/discount to NAV. i stick with mutual funds where possible.
There was a problem in March 2020. Weird things were happening during a 3 week period in March and this affected bid/ask spreads and premium/discount to NAV. Caution is needed when trading ETFs during times of extreme market turbulence. You can see this checking the graphs at etf.com for various ETFs. The Vanguard Total Bond Market ETF (BND) fared well but you could see bid/ask spreads and premium/discount widen and narrow even if not by much. This is an issue.

Mutual funds have the issue of unwanted capital gains during bear markets, panic sellers create capital gains distributions for shareholders who choose to stay put. A big problem for active funds much less for index funds. Mutual funds have their issues too.

One big reason to ride out market turbulence which affects all investments. During the 2008-2009 financial crisis and bear market, Uncle Sam had to put guarantees on money market funds.
they also just put guarantees on money market funds for the current crisis!
I think this is pretty funny because they actually made a bunch of changes to money markets post 2008-2009 crisis which were aimed at preventing another backstop. having to backstop funds again just 11 years later is pretty funny!
RIP Mr. Bogle.

Northern Flicker
Posts: 5864
Joined: Fri Apr 10, 2015 12:29 am

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Northern Flicker » Wed Jul 01, 2020 2:00 pm

ETFs are a godsend for buy-and-hold investors who prefer to own mutual funds. The existence of ETFs keeps the day traders and market timers out of the mutual funds so that they can pay their own trading costs.

I believe Jack Bogle once said this as well.
Risk is not a guarantor of return.

Spirit Rider
Posts: 13208
Joined: Fri Mar 02, 2007 2:39 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Spirit Rider » Wed Jul 01, 2020 4:16 pm

1789 wrote:
Wed Jul 01, 2020 10:59 am
willthrill81 wrote:
Wed Jul 01, 2020 10:54 am
Years ago, I heard Meb Faber suggest that it would be interesting if a broker created a stock mutual fund whose shares could not be sold in fewer than say five years after purchase without stiff penalties, the incursion of which would be distributed to the other mutual fund holders. In other words, it would strongly incentivize buy-and-hold and reward those who did by punishing those who didn't.

I get the feeling that at least a few BHs would be interested in such a fund. It would put up further roadblocks to the frequent trading that many are so opposed to.
Seems like a good idea. I would sign on for buying a US TSM and holding it without looking for 5 years. Sure.
There were little known provisions in the Taxpayer Relief Act of 1997 to incentivise a 5-year holding period.
  • Effective January 1, 2001, the 10% LTCG rate >= 1 year, would drop to 8 percent if held >= 5 years. The 8% rate was in effect until 5/6/2003 when it went to 5% and 1/1/2008 when it went to 0%. Both under the EGTRRA of 2001 (Bush Tax Cuts).
  • Effective January 1, 2006, the 20% LTCG rate >= 1 year, would drop to 18 percent if held >= 5 years. The 18% rate never went into effect, because the 15% rate became effective 5/6/2003 under the EGTRRA of 2001 (Bush Tax Cuts).
It would have been interesting to see if this would have helped incentivise buy and hold. The cynic in me tends to think not.

ChrisBenn
Posts: 329
Joined: Mon Aug 05, 2019 7:56 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by ChrisBenn » Wed Jul 01, 2020 4:21 pm

mrspock wrote:
Wed Jul 01, 2020 3:29 am
Was he? Tell that to the poor ETF bond holders who were at the mercy of the market during mid-March. And yes, yes I know the argument that the ETFs were pricing the assets correctly, but that doesn't put the $10k back in my account when I rebalanced vs. had I simply held the MF version of the same fund.

Dumped all my ETF based bond funds after that, I won't be on the losing end of that trade again.


Image
On the flip side there were all those "poor bond MF holders" who were making their contributions and paid an above market premium to buy into the bond fund (where they would have paid actual market price if they had the etf - and received many more shares).

I get wanting to get an above market price - I would be more than happy to -- but also realize that someone has to subsidize that above market price, and that is all the other holders of the fund. If you redeemed 100k of bonds for rebalancing, but those bonds could only be sold on the open market for 90k, that other 10k had to come from somewhere. If the funds had enough cash on hand and low enough of a demand they might have skated by, but if the fed hadn't stepped in it def. could have got awkward.

Basically regulations for the MF valuation could require them to prentend the value is, say 1 billion, but when liquidated at current market prices they might only be able to get 900 million. What happens to the people left over after 900 million is withdrawn, and there should be 100 million left - but the fund is, in fact, broke?

(of course @ Vanguard ETF holders probably would have also ended up subsidizing those MF above market withdrawls).

I would prefer the case of things trading as close to actual market price as possible, as otherwise I worry about the ultimate health of the fund. If I can be the only one who gets an advantage, sure -- but that's not the case.

User avatar
mrspock
Posts: 1082
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by mrspock » Wed Jul 01, 2020 5:12 pm

ChrisBenn wrote:
Wed Jul 01, 2020 4:21 pm
On the flip side there were all those "poor bond MF holders" who were making their contributions and paid an above market premium to buy into the bond fund (where they would have paid actual market price if they had the etf - and received many more shares).

I get wanting to get an above market price - I would be more than happy to -- but also realize that someone has to subsidize that above market price, and that is all the other holders of the fund. If you redeemed 100k of bonds for rebalancing, but those bonds could only be sold on the open market for 90k, that other 10k had to come from somewhere. If the funds had enough cash on hand and low enough of a demand they might have skated by, but if the fed hadn't stepped in it def. could have got awkward.

Basically regulations for the MF valuation could require them to prentend the value is, say 1 billion, but when liquidated at current market prices they might only be able to get 900 million. What happens to the people left over after 900 million is withdrawn, and there should be 100 million left - but the fund is, in fact, broke?

(of course @ Vanguard ETF holders probably would have also ended up subsidizing those MF above market withdrawls).

I would prefer the case of things trading as close to actual market price as possible, as otherwise I worry about the ultimate health of the fund. If I can be the only one who gets an advantage, sure -- but that's not the case.
I agree 100%, but I'm not in the business of subsidizing my fellow MF based bond fund holders during times of liquidity crunches, which is precisely what I did on that day (you are all welcome :P ). I also am not a buyer of bonds when such periods are likely to exist (i.e. crashes/corrections), I'm a seller.

Aside, Larry Swedroe does a good job of explaining the "liquidity risk" of bonds/bond funds in his bond book (The Only Bond Strategy You'll Ever Need), March was a very good demonstration of this.

User avatar
Svensk Anga
Posts: 703
Joined: Sun Dec 23, 2012 5:16 pm

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Svensk Anga » Wed Jul 01, 2020 5:33 pm

One positive for ETFs that is missing above is that they make it much easier for an advisor to assemble a low cost portfolio across several (or numerous) asset classes. Before, they were stuck with whatever mutual funds were available on their custodian’s platform. The advisor was then stuck deciding on a custodian beneficial for the client or one beneficial for the operation of the advisor’s business. Guess which weighs heavier in the advisor’s selection process. VG has stated that the advisor channel is a substantial part of their ETF growth. Assuming that advisor controlled assets are more likely to stay the course, I think this is a decent advantage for the use of ETFs for those who elect to use an advisor. This excludes most Bogleheads of course.

User avatar
abuss368
Posts: 20122
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by abuss368 » Wed Jul 01, 2020 6:08 pm

Interesting. I recall Jack Bogle mentioning that for anyone who selected ETFs and held them (did not trade) that was acceptable.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

Dottie57
Posts: 8675
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Dottie57 » Wed Jul 01, 2020 6:09 pm

grok87 wrote:
Tue Jun 30, 2020 6:55 pm
willthrill81 wrote:
Tue Jun 30, 2020 6:48 pm
Morningstar published an article written by John Rekenthaler yesterday titled "Jack Bogle Was Wrong About ETFs." Below is an excerpt from the intro.
Vanguard founder Jack Bogle rarely erred. He was spot-on when popularizing indexing; bringing institutional pricing to retail investments; avoiding trendy fund launches; and recognizing that positive press would eventually benefit Vanguard more than hiring an expensive salesforce. He was even correct when arguing that U.S. investors didn’t need to own overseas equities. (Perhaps he was merely lucky there, given that American stocks have performed so well, but right is right.)

However, one of his strongly held beliefs--that exchange-traded funds were poor investments--has failed the test of time. Per Jeff Cox of CNBC, Bogle once called ETF investors "fruitcakes, nut cases, and the lunatic fringe."
He argues that Bogle didn't like the perceived motivation for ETFs, namely, increased trading. Rekenthaler believes that Bogle was not worried as much about retail investors using ETFs poorly as much as he was concerned that ETFs would line the pockets of the exchanges at the expense of investors. He further argues that Bogle's concern didn't materialize, but Bogle simply refused to change his stance toward ETFs. Rekenthaler further argues that ETFs have actually come closer to Bogle's original vision of changing the mutual fund industry than could be achieved with mutual funds.

I know this topic has been beaten to death already, but I thought that this was an interesting article anyway.

Thoughts?
no mention in the article of bid/ask spreads and premium/discount to NAV. i stick with mutual funds where possible.
This.

User avatar
Rowan Oak
Posts: 593
Joined: Mon May 09, 2016 2:11 pm
Location: Yoknapatawpha

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by Rowan Oak » Wed Jul 01, 2020 6:41 pm

abuss368 wrote:
Wed Jul 01, 2020 6:08 pm
Interesting. I recall Jack Bogle mentioning that for anyone who selected ETFs and held them (did not trade) that was acceptable.
Yes, I heard him say this a number of times.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

User avatar
mrspock
Posts: 1082
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by mrspock » Wed Jul 01, 2020 6:44 pm

Rowan Oak wrote:
Wed Jul 01, 2020 6:41 pm
abuss368 wrote:
Wed Jul 01, 2020 6:08 pm
Interesting. I recall Jack Bogle mentioning that for anyone who selected ETFs and held them (did not trade) that was acceptable.
Yes, I heard him say this a number of times.
And as usual... he was right again. It’s as if the guy knew a thing or two about investing :D . With brains like that he should have started a large fund company, it would have changed the world... oh wait.... nm.

User avatar
abuss368
Posts: 20122
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by abuss368 » Wed Jul 01, 2020 6:57 pm

mrspock wrote:
Wed Jul 01, 2020 6:44 pm
Rowan Oak wrote:
Wed Jul 01, 2020 6:41 pm
abuss368 wrote:
Wed Jul 01, 2020 6:08 pm
Interesting. I recall Jack Bogle mentioning that for anyone who selected ETFs and held them (did not trade) that was acceptable.
Yes, I heard him say this a number of times.
And as usual... he was right again. It’s as if the guy knew a thing or two about investing :D . With brains like that he should have started a large fund company, it would have changed the world... oh wait.... nm.
That was good!
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

retired@50
Posts: 3049
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by retired@50 » Wed Jul 01, 2020 7:17 pm

mrspock wrote:
Wed Jul 01, 2020 5:12 pm

Aside, Larry Swedroe does a good job of explaining the "liquidity risk" of bonds/bond funds in his bond book (The Only Bond Strategy You'll Ever Need), March was a very good demonstration of this.
Author William J. Bernstein doesn't like bond ETFs either, (wouldn't own one). He said so in his book "Rational Expectations".

Regards,
This is one person's opinion. Nothing more.

pkcrafter
Posts: 14099
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by pkcrafter » Wed Jul 01, 2020 7:27 pm

A video I just watched recently with him talking about ETFs was that he was considering ETFs as being ok for buy and hold investing but still had concerns of still being used for frequent trading that he was against.
This is correct. ETFs are OK IF an investor can hold, but Mr. B knew that undisciplined investors often sold ASAP on some occasions as a knee-jerk reaction to some news story. The no ETFs recommendation was/is based on behavior. :thumbsup


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

User avatar
Taylor Larimore
Advisory Board
Posts: 29548
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Jack Bogle on ETFs

Post by Taylor Larimore » Wed Jul 01, 2020 7:30 pm

Bogleheads:

In his second edition of Common Sense on Mutual Funds Mr. Bogle wrote extensively about ETFs. This is his summation:
"Yes, it is possible, and reasonable, to buy an ETF that represents the S&P 500 or the total U.S. stock market, to hold it as a long-term investment, and to own it at low cost. Leaving aside the brokerage commissions involved in investing in such an ETF (which are de minimis for a long-term investor), how could I possibly object to that? And I don't. In fact, I endorse such a strategy."
Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Offering the promise of earning excess returns, a whole host of ETFs have sprung up to entice investors and speculators alike."
"Simplicity is the master key to financial success." -- Jack Bogle

User avatar
abuss368
Posts: 20122
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Rekenthaler (Morningstar): Jack Bogle was Wrong about ETFs

Post by abuss368 » Wed Jul 01, 2020 8:19 pm

Spirit Rider wrote:
Tue Jun 30, 2020 11:02 pm
I do not believe Jack Bogle, Warren Buffet, Et Al. are infallible. I continue to believe that their advice on asset allocations and fund selections are not the be all end all for all individual investors. They should be recognized for the the tremendous value they brought to individual investors.

However, in this case, I couldn't agree more with Jack Bogle on ETFs. While they have advantages in select circumstances, a large number of people use them speculatively and mostly to their own detriment. 90% of journalists don't have a clue, 99% of financial journalists don't have half a clue and John Rekenthaler is totally clueless. Other than that, I have no opinion.
Well said. Investors for generations will benefits from Mr. Bogle's wisdom and leadership to make sure the little guy earns his fair share of returns.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

User avatar
abuss368
Posts: 20122
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Jack Bogle on ETFs

Post by abuss368 » Wed Jul 01, 2020 8:54 pm

Taylor Larimore wrote:
Wed Jul 01, 2020 7:30 pm
Bogleheads:

In his second edition of Common Sense on Mutual Funds Mr. Bogle wrote extensively about ETFs. This is his summation:
"Yes, it is possible, and reasonable, to buy an ETF that represents the S&P 500 or the total U.S. stock market, to hold it as a long-term investment, and to own it at low cost. Leaving aside the brokerage commissions involved in investing in such an ETF (which are de minimis for a long-term investor), how could I possibly object to that? And I don't. In fact, I endorse such a strategy."
Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Offering the promise of earning excess returns, a whole host of ETFs have sprung up to entice investors and speculators alike."
Thank you for that reminder Taylor.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

Post Reply