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The Battle for the Soul of Capitalism Paperback – November 27, 2006
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There is no one better qualified to tell us about the failures of the American financial system and the grotesque abuses that have taken place in recent years than John Bogle, who as founder and former chief executive of the Vanguard mutual funds group has seen firsthand the innermost workings of the financial industry. A zealous advocate for the small investor for more than fifty years, Bogle has championed the restoration of integrity in industry practices. As an astute observer and commentator, he knows that a trustworthy business and financial complex is essential to America’s continuing leadership in the world and to social and economic progress at home.
This book tells not just a story about what went wrong but, more important, the story of why we lost our way and of how we can right our course. Bogle argues for a return to a governance structure in which owners’ capital that has been put at risk is used in their interests rather than in the interests of corporate and financial managers. Given that ownership is now consolidated in the hands of relatively few large mutual and pension funds, the specific reforms Bogle details in this book are essential as well as practical. Every investor, analyst, Wall-Streeter, policy maker, and businessperson should read this deeply informed book.
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About the Author
John C. Bogle is founder and former CEO of Vanguard mutual funds. In 2004, Time magazine named him one of the most influential people in the world. In 1999, Fortune magazine named him one of the four investment giants of the twentieth century.
- Publisher : Yale University Press (November 27, 2006)
- Language : English
- Paperback : 260 pages
- ISBN-10 : 0300119712
- ISBN-13 : 978-0300119718
- Item Weight : 1 pounds
- Dimensions : 9.22 x 6.1 x 0.75 inches
- Best Sellers Rank: #1,308,600 in Books (See Top 100 in Books)
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This book describes how stock (mutual fund and corporate) managers are not "honest, competent and fair-minded...[or] doing the right thing." (p. 89) And just how the "managers' interest [are placed] ahead of the owners' interest." (p. 90) The recurrent theme is that corporate America has moved from owners' capitalism to managers' capitalism.
Bogle describes "the pervasive...'happy conspiracy' among corporate managers, CEOs, CFOs, directors, auditors, lawyers, Wall Street investment brokers, sell-side security analysts, buy-side portfolio managers, and indeed investors themselves--individual and institutional alike." (p. 98)
"More than one-fifth of...growth returns...during the past two decades has been siphoned off by fund managers.... More than three-fourths of the cumulative financial wealth produced...over an investment lifetime will be consumed by fund managers, leaving less than 25 percent for the investors. Yet it is the [95 million] investors ['individuals of modest means--often via retirement plans'] who put up 100 percent of the capital and assume 100 percent of the risk." (p.xxii)
Not only does the author write about the "Captains of Industry" (or robber barons)--Rockefeller, J.P. Morgan and Carnegie--he deals with the current "casino mentality of so many institutional investors..." (p. 98) Yes, you will read of "the conspiracy between corporate money managers and institutional money managers. [We have] a gambler's market instead of an investor's market," declares Bogle. (p. 118)
Bogle explains why "institutional investors [should] move away from their present obsession with short-term earnings of dubious validity and towards a new obsession focused on the creation of intrinsic value over the long term." (p. 114)
Finally, Bogle does not let we individual investors off easy, either, by explaining "the failure of investment America to exercise its ownership rights over corporate America.
As stated earlier, Bogle has solutions which you will read about in the second half of the book.
This book could only have been written by John Bogle, the man that has saved the common investor billions of dollars annually by refusing to operate in a status quo manner. This book eloquently explains what went wrong, why it went wrong, and most importantly, what we can do to fix it. I was steaming mad as I again realized how our trusted fiduciaries violated their duties of loyalty and prudence. The big question for me is will I stay mad enough to actually do something about it?
I highly recommend this book. It may be the first major shot in a long battle for capitalists to take back control of our own capital.
Mr. Bogle discusses capitalism from the virtuous potential described by Adam Smith and the Founding Fathers, to the "giant scam" the investment business has become. Four years before President Obama called for a fiduciary standard for broker-dealers, Mr. Bogle argues why the fiduciary standard is a necessity.
If you have any question whether or not acting with honor and integrity, and serving the best interests of your clients ultimately leads to business success, then this book ought to be at the top of your list.