Super-capitalist John Bogle : Battle for the Soul of Capitalism

[papau]

http://www.onpointradio.org/shows/2005/10/20051017_b_main.asp

Legendary capitalist John Bogle
Aired: Monday, October 17, 2005 11-12PM ET


By host Tom Ashbrook:

John Bogle is a lifelong Republican and as big as they come in American investing circles. Thirty years ago, Bogle founded the Vanguard Group, which is today the second-largest mutual fund firm in America. He led that firm until 1999. The investment world must wish he had gone into a quiet retirement but he hasn't.

Super-capitalist John Bogle is raising a sky-high alarm that American capitalism is in trouble. The system, he charges, has been hijacked by overpaid money managers and corporate executives who are massively lining their own pockets leaving the rest of the country to eat dust. He's worried about the future of the country itself.

Hear a conversation with rebel capitalist John Bogle on highway robbery in the U.S. economy.



· John Bogle. He pioneered index funds, which revolutionized investing by giving people low-cost options to enter the market. He has been a consistent critic of the mutual fund industry. His new book is "The Battle for the Soul of Capitalism: How The Financial System Undermined Social Ideals, Damaged Trust in the Markets, Robbed Investors of Trillions -- And What To Do About It."

[xchrom]

1. i'm sure he's worried...

but i'm not sure he's worried about me.

however i can appreciate that someone who should be on the side of the current batch of repukes is rebelling.

[papau]

2. That caught mt eye/ear also - I'm glad to have him on board.

Perhaps his words would help in our "framing" the economic issues so as to influence the widest possible audience.

[Cassandra]

3. Here's more on Bogle at Dailykos.

The Class War Is Over (and you lost)
http://www.dailykos.com/storyonly/2005/10/18/13135/192

"Twenty years ago, most companies paid out fixed pension benefits. No employee ever got rich on these pensions, but they did provide the security of a clear schedule of payments. A generation of Americans retired on these secure benefits. But starting in 1980's, companies began to phase out fixed benefits in favor of IRAs, 401K plans, and other such instruments. The promise to the employee was that, while these new funds lacked the clear promise of the pension funds, they would deliver much more money in the end, thanks to the magic of the market and compound growth. Take for example an employee who invests $1000 at age 20. If the market keeps to the oft-cited rate of 8% growth, then by retirement at age 64, that $1000 investment will have grown to over $140,000. Not bad, huh? The trouble is, most company plans don't leave the door open for their employees to invest any way they want. Instead, they have to invest in mutual funds. These funds then come with management fees. Take the same example above, and insert a 2 1/2% fee. That still leaves the employee with a 5 1/2% return, which after 45 years turns his $1,000 investment into... around $30,000. So where did the other $110,000 go? Into the pockets of the investment manager. The worker put up 100% of the money and took 100% of the risk, but the "money manager" took more than two thirds of the cash. Welcome to the magic of compound costs. "

[eclipsenow.org]

4. Class wars during an oil crisis?

I'm sure he raises some good points... but where is the acknowledgement that the stockmarket could lose something to the order of 7 TRILLION dollars on the downside of Hubbert's peak? The science is in, the data is irrefutable (unless one happens to like having sand in one's ears) but it has not played out into the broader financial markets yet... business as usual is over.

The thing is, I just don't know what to do with my super? I'm in Sydney Australia, yet I bet 99% of my super is invested in companies somehow related to the cheap oil economy. The debts accrued by the "money manager" will look like the good old days after the oil crash has totally nuked my superinvestment.

Has it really come time to store gold under my bed? ;-)

[Kolesar]

7. "Principle Funds" has fees like 2.5% on most funds for a 401k

Even their index funds are ridiculous.

Now, one can invest up to $5000/year into an IRA. That may be a better idea even without the initial tax deduction.

[AX10]

5. kick

.

[cornfedyank]

6. does capitalism have a benign gene?

recessive.