Speaking of being a BogleHead, I just finished listening to an interview of Bogle on NPR’s Motley Fool radio show, available online here. Thanks to reader Jonathan for sending it to me. John (Jack) Bogle, if you don’t know, is the founder of The Vanguard Group, and is known as the father of index funds.
My favorite part was where the Motley Fool asks him about picking individual stocks. Remember, Motley Fool makes their money by selling their stock picks. You can just feel Bogle trying not to rip them. He holds back and just says “the odds are against you”. Hah. To satisfy the stock-picking urge that many of us suffer from, he recommends a “funny money” account, much like my play money portfolio.
The main reason for the interview was to promote his new book The Battle for the Soul of Capitalism, which suggests that corporations are controlled by their managers, not the shareholders as it was intended. This because we have become a nation of share-renters, not share-owners. The average mutual fund today holds a share of stock for only 1 year, as opposed to 6 years in the 1950s. In other words, we don’t really care what’s under the hood, we just want it to run fast while we have it. When’s the last time you changed the oil on a rental car? Of course, the interveiwer points out that mutual funds themselves also serve to disconnect shareholders from the actual companies they are buying. Interesting stuff.
The whole clip is about 15 minutes long, if you’ve got the time I’d recommend listening to it.