Friday, February 24, 2006

Vanguard founder Jack Bogle feels like Dr. Frankenstein

Jack Bogle, the founder of Vanguard, made some provocative comments in his speech today to the Boston Security Analysts Society.

Bogle doesn't like how, as he sees it, investment management has shifted from being a profession to being a business focused on profits. This has been accompanied by a shift in ownership from private to public to ownership by conglomerate. He cited the Columbia Management operation, which has sucked in perhaps a dozen investment management firms, as an example of conglomerate ownership.

As a result, he said:
  • "Investment management process is redefined as manufacturing."
  • "Ethical standards are compromised."
  • "Salesmanship replaces stewardship."
An audience member asked what form of ownership Bogle would advise for Putnam Investments. "Be wise. Mutualize," said Bogle. Marsh & McLennan has fed at that trough for many years. Now it's time to let the shareholders feed, he said.

On the topic of 12 b-1 fees, Bogle said, "I have been known as one of the founders of the 12b-1 fee. I feel like Dr. Frankenstein."

Labels: ,

Tuesday, February 21, 2006

"The Hidden Drawback of Indexing"

Have you ever had to defend your use of actively managed funds over index funds?

Then you may enjoy, "The Hidden Drawback of Indexing" by Morningstar's Gregg Wolper. Wolper discusses how index funds may land you in trouble as they pile more and more heavily into stocks that are becoming a bigger part of the index.


Sunday, February 19, 2006

New York Times: "In Long-Term American Treasury Securities They Trust"

Floyd Norris' "In Long-Term American Treasury Securities They Trust" (sorry, but this article is subscriber-only access) has some interesting statistics on foreign purchases of U.S. securities.

Foreign investors' purchases of American long-term securities were up 14% in 2005. According to Norris, "
The gain last year showed increasing foreign trust in American corporations. While United States government and agency securities got most of the money, the increase largely came from a greater willingness to buy corporate bonds and stocks."

Another interesting fact: "
in 2005 central banks played only a minor role in buying Treasuries."


Monday, February 13, 2006

"The Changing Career Outlook for Equity Research Analysts"

"The Changing Career Outlook for Equity Research Analysts" is the topic of my article recently published on the Boston Security Analysts Society website.

If you know someone who's considering a career as an analyst, they may find it interesting.