Foreword By Arthur Levitt ix
Acknowledgments xiii
About This Book xv
Chapter 1 The Clash of the Cultures 1
Chapter 2 The Double-Agency Society and the Happy Conspiracy 29
Chapter 3 The Silence of the Funds: Why Mutual Funds Must Speak Out on the Governance of Our Nation’s Corporations 65
Chapter 4 The “Mutual” Fund Culture—Stewardship Gives Way to Salesmanship 103
Chapter 5 Are Fund Managers True Fiduciaries?: The “Stewardship Quotient” 139
Chapter 6 The Index Fund: The Rise of the Fortress of Long-Term Investing and Its Challenge
from Short-Term Speculation 167
Chapter 7 America’s Retirement System: Too Much Speculation, Too Little Investment 213
Chapter 8 The Rise, the Fall, and the Renaissance of Wellington Fund: A Case Study—Investment
Wins, Speculation Loses 251
Chapter 9 Ten Simple Rules for Investors and a Warning for Speculators 297
Appendix I: Performance Ranking of Major Mutual Fund Managers–March 2012 323
Appendix II: Annual Performance of Common Stock Funds versus S&P 500, 1945–1975 325
Appendix III: Growth in Index Funds—Number and Assets, 1976–2012 327
Appendix IV: Wellington Fund Record, 1929–2012 329
Appendix V: Wellington Fund Equity Ratio and Risk Exposure (Beta), 1929–2012 333
Appendix VI: Wellington Fund Performance versus Average Balanced Fund, 1929–2012 335
Appendix VII: Wellington Fund Expense Ratios, 1966–2011 337
Index 339
“The Clash of the Cultures: Investment vs. Speculation” is a must read for investors who want to understand the forces that are working against them and what they can do about it to maximize their investment returns. It should come as no surprise to those who know Jack and his philosophy that the final words of his final book are: ‘Stay the course!’ —Forbes
“The Clash of the Cultures: Investment vs. Speculation is . . . an enjoyable read that ends with 10 lessons for investors that, while simple, are deeply valuable to the general public. . . Clash of the Cultures is a great summary of the breadth of Bogle's 60-plus years in the investment field. He offers observations on the shocking change in the culture of finance that he has witnessed first-hand. Among the most important of the shifts is that short-term speculation has crowded out long-term investment. Though this has been great for the financial sector, it has come at the expense of the public.” —CBS MoneyWatch
“Bogle, as the Godfather of index investing, has ideas that are timeless and based on simple math, and at the same time exhibit uncommon sense and a routinely overlooked view of how investors are consistently overcharged by the financial services industry. Fortunately, his wisdom is widely available to everyone. Much of that wisdom has been assembled in Bogle's most recent book The Clash of the Cultures: Investment vs. Speculation (Wiley, 2012). While most of the insights are time-honored themes in the Bogle canon, they are very useful for individual investors.” —Reuters
“Bogle's latest book tackles what looks like an artificial distinction. His Clash of the Cultures title conjures thoughts of world war and social strife. But he's talking about ‘investment vs. speculation’. . . As in his previous books, Bogle is a master of the clear point and the pithy quote - from the investment writings of John Maynard Keynes and Benjamin Graham, pension adviser Keith Ambachtsheer and Bogle's old mentor the late Walter L. Morgan, as well as the Gospels of Luke and John.”—Philadelphia Inquirer
“You know what to expect when opening a book by John Bogle, founder of the Vanguard mutual fund group and inventor of index funds: a lament about the fall from grace of the US mutual fund industry, and a restatement of his strong conviction that COSTS MATTER!!! Mr Bogle’s new book,The Clash of the Cultures , Investment vs Speculation, does not disappoint on either count, but it is also very much in tune with the zeitgeist in its focus on stewardship and fiduciary duty. It lambasts US mutual fund managers for neglecting to act as responsible owners of the companies they invest in on behalf of the savers whose money they look after, and for their own governance failures.”—The Financial Times
“[The Clash of the Cultures] echoes many familiar . . . themes worth repeating, because they are too often ignored. Investors spend so much time chasing hot asset classes and hot fund managers that they end up buying high and selling low, all the while incurring transaction costs. In Mr Bogle’s words, ‘investors need to understand not only the magic of compounding long-term returns, but the tyranny of compounding costs.’ . . . The American pension-fund industry has been particularly bad at understanding these long-run fundamentals. Many schemes assume, on the basis of past performance, a return of 7.5-8%, a figure that is highly implausible given the current low yields. . . Meanwhile, many employees in the private sector have been switched into defined-contribution schemes. . . But employees are not saving enough, are not allocating their portfolios efficiently and are incurring too many costs. It is hard to disagree with Mr Bogle that the ‘system of retirement security is imperilled, heading for a serious train wreck.’ But will anybody listen to him, when they haven’t in the past?” —The Economist
“John Bogle’s latest book, as much a piece of history as is it a playbook for how to repair financial markets scarred by two bear markets in 10 years and a loss of confidence, is one of those books on finance that ought not be left unread. The Clash of the Cultures is the latest and perhaps best book by the founder of Vanguard Group. . . Plus, for those not familiar with Bogle’s prose, the man can turn a phrase, which makes the book all the more enjoyable.”—IndexUniverse
