Book description
How speculation has come to dominate investment—a hard-hitting look from the creator of the first index fund.
Over the course of his sixty-year career in the mutual fund industry, Vanguard Group founder John C. Bogle has witnessed a massive shift in the culture of the financial sector. The prudent, value-adding culture of long-term investment has been crowded out by an aggressive, value-destroying culture of short-term speculation. Mr. Bogle has not been merely an eye-witness to these changes, but one of the financial sector's most active participants. In The Clash of the Cultures, he urges a return to the 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, the failure of our institutional money managers to effectively participate in corporate governance, and the need for a federal standard of fiduciary duty.
Mr. Bogle recounts the history of the index mutual fund, how he created it, and how exchange-traded index funds have altered its original concept of long-term investing. He also presents a first-hand history of Wellington Fund, a real-world case study on the success of investment and the failure of speculation. The book concludes with ten simple rules that will help investors meet their financial goals. Here, he presents a common sense strategy that "may not be the best strategy ever devised. But the number of strategies that are worse is infinite."
The Clash of the Cultures: Investment vs. Speculation completes the trilogy of best-selling books, beginning with Bogle on Investing: The First 50 Years (2001) and Don't Count on It! (2011)
Table of contents
- Cover
- Contents
- Title
- Copyright
- Dedication
- Foreword
- Acknowledgments
- About This Book
-
Chapter 1: The Clash of the Cultures
- The Rise of Speculation
- High-Frequency Trading
- Mission Aborted
- Futures and Derivatives
- The Wall Street Casino
- How Speculation Overwhelmed Investment
- The Decline in Unit Transaction Costs
- Hedge Fund Managers and Other Speculators
- We Can’t Say We Weren’t Warned
- The Wisdom of John Maynard Keynes
- Speculation Will Crowd Out Investment
- Fixing the Social Contract
- Compensation Issues
- Creating Value versus Subtracting Value
- Restoring Balance in Our Investment Sector
- Tax Policies and Financial Transactions
- Develop Limits on Leverage, Transparency for Derivatives, and Stricter Punishments for Financial Crimes
- The Rules of the Game
- The Goal: Stewardship Capitalism
-
Chapter 2: The Double-Agency Society and the Happy Conspiracy
- The Development of the Double-Agency Society
- Examining the Conflict
- Agency Costs and Managerial Behavior
- The Ownership Revolution
- Changing Leadership
- Renters and Owners
- The Creation of Corporate Value
- Time Horizons and the Sources of Investment Return
- “Short-Termism” and Managed Earnings
- The Failure of the Gatekeepers
- Conclusion
-
Chapter 3: The Silence of the Funds
- Why Mutual Funds Are Passive Participants in Corporate Governance
- The Picture Begins to Change
- Reporting Proxy Votes
- Mobilizing Institutional Investors
- The Rights and Responsibilities of Ownership
- Acting Like Owners
- “The Proof of the Pudding”
- Executive Compensation
- How Did It Happen?
- The Ratchet Effect
- What’s to Be Done?
- Consider the Cost of Capital
- Slight Progress on Reform
- Corporate Political Contributions
- “The Procedures of Corporate Democracy”
- Chapter 4: The “Mutual” Fund Culture—Stewardship Gives Way to Salesmanship
- Chapter 5: Are Fund Managers True Fiduciaries?
- Chapter 6: The Index Fund
- Chapter 7: America’s Retirement System
- Chapter 8: The Rise, the Fall, and the Renaissance of Wellington Fund
- Chapter 9: Ten Simple Rules for Investors and a Warning for Speculators
- Appendix I: Performance Ranking of Major Mutual Fund Managers–March 2012
- Appendix II: Annual Performance of Common Stock Funds versus S&P 500, 1945–1975
- Appendix III: Growth in Index Funds—Number and Assets, 1976–2012
- Appendix IV: Wellington Fund Record, 1929–2012
- Appendix V: Wellington Fund Equity Ratio and Risk Exposure (Beta), 1929–2012
- Appendix VI: Wellington Fund Performance versus Average Balanced Fund, 1929–2012
- Appendix VII: Wellington Fund Expense Ratios, 1966–2011
- Index
Product information
- Title: The Clash of the Cultures: Investment vs. Speculation
- Author(s):
- Release date: August 2012
- Publisher(s): Wiley
- ISBN: 9781118122778
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