By John C. Bogle
Steered examining through Warren Buffet in his March 2013 Letter to Shareholders
How hypothesis has come to dominate investment--a hard-hitting glance from the author of the 1st index fund.
Over the process his sixty-year profession within the mutual fund undefined, leading edge staff founder John C. Bogle has witnessed a huge shift within the tradition of the monetary quarter. The prudent, value-adding tradition of long term funding has been crowded out by way of an competitive, value-destroying tradition of temporary hypothesis. Mr. Bogle has now not been basically an eye-witness to those alterations, yet one of many monetary sector's such a lot lively members. within the conflict of the Cultures, he urges a go back to the commonsense rules of long term investing.
Provocative and refreshingly candid, this ebook discusses Mr. Bogle's perspectives at the altering tradition within the mutual fund undefined, how hypothesis has invaded our nationwide retirement method, the failure of our institutional cash managers to successfully perform company governance, and the necessity for a federal ordinary of fiduciary duty.
Mr. Bogle recounts the background of the index mutual fund, how he created it, and the way exchange-traded index cash have altered its unique notion of long term making an investment. He additionally offers a first-hand historical past of Wellington Fund, a real-world case examine at the good fortune of funding and the failure of hypothesis. The e-book concludes with ten uncomplicated ideas that may support traders meet their monetary ambitions. the following, he provides a standard experience approach that "may now not be the simplest process ever devised. however the variety of recommendations which are worse is infinite."
The conflict of the Cultures: funding vs. hypothesis completes the trilogy of best-selling books, starting with Bogle on making an investment: the 1st 50 Years (2001) and Don't anticipate It! (2011)
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Additional info for The Clash of the Cultures: Investment vs. Speculation
Example text
Project high long-term earnings growth, offer regular guidance to the financial community as to your short-term progress, and, whether by fair means or foul, never fall short of the expectations you’ve established. Ultimately, these ambitious goals are doomed to failure for our corporations as a group. Yes, some firms will dazzle us with their performance (think Apple computer; so far so good). But ultimately our corporations as a group are destined to grow at roughly the pace of our nation’s GDP.
In their classic book The Modern Corporation and Private Property, Berle and Means described the increasingly dominant role of large publicly held corporations in the United States. Their principal conclusions: The position of ownership has changed from that of an active to that of a passive agent. The owner now holds a piece of paper representing a set of rights and expectations with respect to an enterprise, but [he] has little control. The owner is practically powerless to affect the underlying property through his own efforts.
Of course, that would mean that individual investors must demand much better, clearer, and more pointed disclosures. We need a campaign to educate investors about the hard realities of investing. Investors need to understand not only the magic of compounding long-term returns, but the tyranny of compounding costs; costs that ultimately overwhelm that magic. ) Investors need to know about sensible asset allocation and the value of diversification; they need to understand the huge gap that exists between the illusion of nominal returns and the reality of real (after-inflation) returns; they need to recognize that shortterm trading—like casino gambling—is ultimately a loser’s game, and they need to understand the demonstrated costs of the behavioral flaws that plague so many market participants.