I added a new post on the WSJ Bogle opinion piece.
This opinion piece from a legendary mutual fund founder says you can no longer trust money managers, including mutual fund managers, since they are all part of an institutional-cabal in-bed with corporate managements too. The inside-the-industry founder and author says this institutional-cabal is attracting investment dollars and exploiting underlying companies and investors for personal conflict-of-interest gains.
I agree with this highly-regarded industry-insider on these points. But the obvious conclusion is the reverse of what he suggests. Active investors should escalate rather than decrease their trend to take self-directed control of more of their investments, rather than trusting â who the author says are untrustworthy â mutual fund managers and other investment managers.
Here is where I also strongly disagree with the author and mutual fund founder.
Mr. Bogle calls on financial reform and higher taxes â huge government intervention â to fix these long-embedded problems. I donât think government intervention on this massive a scale is appropriate and I donât think it would work. Plus there would be many unintended consequences.
During this fragile recovery for investors, this is not a time to punish self-directed investors â who have a right to distrust managers - with higher capital gains taxes and a speculator and market-maker killing financial-transaction tax. Such a tax would leave investors with no choice but to trust non-trustworthy managers in the eyes of Mr. Bogle. By the way, I disagree and think that many managers are highly-reputable and trustworthy too.
This article also should be read with a grain of salt. Mr. Bogle has a full court effort underway in the media to attack self-direct trading, in my view because that huge trend has taken lots of revenue away from his mutual fund empire. Mutual funds have taken it on the chin with weak performance and the recession is hurting them even more. Is Mr. Bogleâs media campaign really a marketing campaign in disguise?
If mutual funds can be trusted to deliver excellent performance in the marketplace â and he just said they can not be â then why does Mr. Bogle argue for tax increases on self-directed investors, to un-level the playing field even more with his mutual fund investor clients?
Mutual fund clients already have embedded tax advantages over self-directed investors and that should be enough of a tax-edge. To compete better, how about earning trust improving performance?
With the meltdown on Wall Street, government attacks on Wall Street, and now this mutual fund-insider airing dirty laundry behind the scenes, is it any wonder why more and more investors donât want to take control of their self-directed investments and trade out of risk more frequently?
Say no to higher taxes on investors of all stripes and no to an industry killing financial-transaction tax. All that would be left are buy and hold mutual funds and the marketplace and investors demand much more.
This opinion piece from a legendary mutual fund founder says you can no longer trust money managers, including mutual fund managers, since they are all part of an institutional-cabal in-bed with corporate managements too. The inside-the-industry founder and author says this institutional-cabal is attracting investment dollars and exploiting underlying companies and investors for personal conflict-of-interest gains.
I agree with this highly-regarded industry-insider on these points. But the obvious conclusion is the reverse of what he suggests. Active investors should escalate rather than decrease their trend to take self-directed control of more of their investments, rather than trusting â who the author says are untrustworthy â mutual fund managers and other investment managers.
Here is where I also strongly disagree with the author and mutual fund founder.
Mr. Bogle calls on financial reform and higher taxes â huge government intervention â to fix these long-embedded problems. I donât think government intervention on this massive a scale is appropriate and I donât think it would work. Plus there would be many unintended consequences.
During this fragile recovery for investors, this is not a time to punish self-directed investors â who have a right to distrust managers - with higher capital gains taxes and a speculator and market-maker killing financial-transaction tax. Such a tax would leave investors with no choice but to trust non-trustworthy managers in the eyes of Mr. Bogle. By the way, I disagree and think that many managers are highly-reputable and trustworthy too.
This article also should be read with a grain of salt. Mr. Bogle has a full court effort underway in the media to attack self-direct trading, in my view because that huge trend has taken lots of revenue away from his mutual fund empire. Mutual funds have taken it on the chin with weak performance and the recession is hurting them even more. Is Mr. Bogleâs media campaign really a marketing campaign in disguise?
If mutual funds can be trusted to deliver excellent performance in the marketplace â and he just said they can not be â then why does Mr. Bogle argue for tax increases on self-directed investors, to un-level the playing field even more with his mutual fund investor clients?
Mutual fund clients already have embedded tax advantages over self-directed investors and that should be enough of a tax-edge. To compete better, how about earning trust improving performance?
With the meltdown on Wall Street, government attacks on Wall Street, and now this mutual fund-insider airing dirty laundry behind the scenes, is it any wonder why more and more investors donât want to take control of their self-directed investments and trade out of risk more frequently?
Say no to higher taxes on investors of all stripes and no to an industry killing financial-transaction tax. All that would be left are buy and hold mutual funds and the marketplace and investors demand much more.
