The Clash of the Cultures
Investment vs. Speculation
Published on 5. July 2012
384 pages
978-1-118-22474-8 (ISBN)
Description
Recommended Reading by Warren Buffet in his March 2013 Letterto Shareholders
How speculation has come to dominate investment--ahard-hitting look from the creator of the first index fund.
Over the course of his sixty-year career in the mutual fundindustry, Vanguard Group founder John C. Bogle has witnessed amassive shift in the culture of the financial sector. The prudent,value-adding culture of long-term investment has been crowded outby an aggressive, value-destroying culture of short-termspeculation. Mr. Bogle has not been merely an eye-witness to thesechanges, but one of the financial sector's most activeparticipants. In The Clash of the Cultures, he urges a return tothe common sense principles of long-term investing.
Provocative and refreshingly candid, this book discusses Mr.Bogle's views on the changing culture in the mutual fund industry,how speculation has invaded our national retirement system, thefailure of our institutional money managers to effectivelyparticipate in corporate governance, and the need for a federalstandard of fiduciary duty.
Mr. Bogle recounts the history of the index mutual fund, how hecreated it, and how exchange-traded index funds have altered itsoriginal concept of long-term investing. He also presents afirst-hand history of Wellington Fund, a real-world case study onthe success of investment and the failure of speculation. The bookconcludes with ten simple rules that will help investors meet theirfinancial goals. Here, he presents a common sense strategy that"may not be the best strategy ever devised. But the number ofstrategies that are worse is infinite."
The Clash of the Cultures: Investment vs. Speculationcompletes the trilogy of best-selling books, beginning withBogle on Investing: The First 50 Years (2001) and Don'tCount on It! (2011)
How speculation has come to dominate investment--ahard-hitting look from the creator of the first index fund.
Over the course of his sixty-year career in the mutual fundindustry, Vanguard Group founder John C. Bogle has witnessed amassive shift in the culture of the financial sector. The prudent,value-adding culture of long-term investment has been crowded outby an aggressive, value-destroying culture of short-termspeculation. Mr. Bogle has not been merely an eye-witness to thesechanges, but one of the financial sector's most activeparticipants. In The Clash of the Cultures, he urges a return tothe common sense principles of long-term investing.
Provocative and refreshingly candid, this book discusses Mr.Bogle's views on the changing culture in the mutual fund industry,how speculation has invaded our national retirement system, thefailure of our institutional money managers to effectivelyparticipate in corporate governance, and the need for a federalstandard of fiduciary duty.
Mr. Bogle recounts the history of the index mutual fund, how hecreated it, and how exchange-traded index funds have altered itsoriginal concept of long-term investing. He also presents afirst-hand history of Wellington Fund, a real-world case study onthe success of investment and the failure of speculation. The bookconcludes with ten simple rules that will help investors meet theirfinancial goals. Here, he presents a common sense strategy that"may not be the best strategy ever devised. But the number ofstrategies that are worse is infinite."
The Clash of the Cultures: Investment vs. Speculationcompletes the trilogy of best-selling books, beginning withBogle on Investing: The First 50 Years (2001) and Don'tCount on It! (2011)
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Persons
John C. Bogle is the founder of the Vanguard Group ofmutual funds and President of its Bogle Financial Markets ResearchCenter. He created Vanguard in 1974 and served as chairman andchief executive officer until 1996 and senior chairman until 2000.In 1999, Fortune magazine named Mr. Bogle as one of the four"Investment Giants" of the twentieth century. In 2004, Timemagazine named him one of "the world's 100 most powerful andinfluential people," and Institutional Investor presentedhim with its Lifetime Achievement Award. In 2010, Forbesmagazine described him as the person who "has done more good forinvestors than any other financier of the past century." In January2012, some of the nation's most respected financial leaderscelebrated his distinguished career at the John C. Bogle LegacyForum, held at New York's Museum of American Finance.
Content
Foreword By Arthur Levitt ix
Acknowledgments xiii
About This Book xv
Chapter 1 The Clash of the Cultures 1
Chapter 2 The Double-Agency Society and the Happy Conspiracy29
Chapter 3 The Silence of the Funds: Why Mutual Funds Must SpeakOut on the Governance of Our Nation's Corporations 65
Chapter 4 The "Mutual" FundCulture--Stewardship Gives Way to Salesmanship 103
Chapter 5 Are Fund Managers True Fiduciaries?: The"Stewardship Quotient" 139
Chapter 6 The Index Fund: The Rise of the Fortress of Long-TermInvesting and Its Challenge
from Short-Term Speculation 167
Chapter 7 America's Retirement System: Too MuchSpeculation, Too Little Investment 213
Chapter 8 The Rise, the Fall, and the Renaissance of WellingtonFund: A Case Study--Investment
Wins, Speculation Loses 251
Chapter 9 Ten Simple Rules for Investors and a Warning forSpeculators 297
Appendix I: Performance Ranking of Major Mutual FundManagers-March 2012 323
Appendix II: Annual Performance of Common Stock Funds versusS&P 500, 1945-1975 325
Appendix III: Growth in Index Funds--Number and Assets,1976-2012 327
Appendix IV: Wellington Fund Record, 1929-2012 329
Appendix V: Wellington Fund Equity Ratio and Risk Exposure(Beta), 1929-2012 333
Appendix VI: Wellington Fund Performance versus Average BalancedFund, 1929-2012 335
Appendix VII: Wellington Fund Expense Ratios, 1966-2011337
Index 339
Acknowledgments xiii
About This Book xv
Chapter 1 The Clash of the Cultures 1
Chapter 2 The Double-Agency Society and the Happy Conspiracy29
Chapter 3 The Silence of the Funds: Why Mutual Funds Must SpeakOut on the Governance of Our Nation's Corporations 65
Chapter 4 The "Mutual" FundCulture--Stewardship Gives Way to Salesmanship 103
Chapter 5 Are Fund Managers True Fiduciaries?: The"Stewardship Quotient" 139
Chapter 6 The Index Fund: The Rise of the Fortress of Long-TermInvesting and Its Challenge
from Short-Term Speculation 167
Chapter 7 America's Retirement System: Too MuchSpeculation, Too Little Investment 213
Chapter 8 The Rise, the Fall, and the Renaissance of WellingtonFund: A Case Study--Investment
Wins, Speculation Loses 251
Chapter 9 Ten Simple Rules for Investors and a Warning forSpeculators 297
Appendix I: Performance Ranking of Major Mutual FundManagers-March 2012 323
Appendix II: Annual Performance of Common Stock Funds versusS&P 500, 1945-1975 325
Appendix III: Growth in Index Funds--Number and Assets,1976-2012 327
Appendix IV: Wellington Fund Record, 1929-2012 329
Appendix V: Wellington Fund Equity Ratio and Risk Exposure(Beta), 1929-2012 333
Appendix VI: Wellington Fund Performance versus Average BalancedFund, 1929-2012 335
Appendix VII: Wellington Fund Expense Ratios, 1966-2011337
Index 339
