The Clash of the Cultures

The Clash of the Cultures : Investment vs. Speculation

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Recommended Reading by Warren Buffet in his March 2013 Letter to Shareholders 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)
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Product details

  • Hardback | 384 pages
  • 168 x 232 x 32mm | 640g
  • New York, United States
  • English
  • 1. Auflage
  • 1118122771
  • 9781118122778
  • 26,754

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Praise for The Clash of the Cultures

Jack Bogle is brilliant and persuasive, and his ability to get to the heart of complex issues is one of his greatest gifts. . . . I have come to appreciate his unique ability to speak to investors in a language that is accessible, lyrical and yet also bracing. He points out with clarity the inherent conflicts present throughout our financial markets, most notably between the investor's interests and those of many financial professionals. . . . The entire financial services industry should be glad that Bogle is merely an expert witness, and not the judge and jury as well.--From the Foreword by ARTHUR LEVITT

A calm yet impassioned call to financial arms. A trading and speculation culture has taken over on Wall Street, pushing aside the traditions that underpin sensible investing. John Bogle speaks with great credibility and deep experience--explaining in meticulous detail exactly how powerful insiders gain and you lose. Listen to him carefully and act to protect your family's financial future.--SIMON JOHNSON, Professor, MIT Sloan School of Management, coauthor, White House Burning

The Clash of the Cultures argues convincingly the merits of investing over speculating. Bogle's 'Stewardship Quotient' methodology helps to identify fiduciaries that value stewardship over salesmanship, an all too often mutual fund industry failure. Finally, I like his '10 Simple Rules for Investment Success, ' which are logical but seldom followed. Well done!--ROBERT L. RODRIGUEZ, CFA, Managing Partner and CEO, First Pacific Advisors

This is vintage Bogle--a hard-hitting, no-holds-barred jeremiad showing how the culture of speculation has too often superseded the culture of long-term investing. Jack's fans will benefit particularly from his 10 simple rules comprising an optimal investment strategy for the years ahead.--Professor BURTON MALKIEL, bestselling author of A Random Walk Down Wall Street, Tenth Edition
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Back cover copy

During the course of his sixty-one year career, mutual fund pioneer and Vanguard Group founder John C. Bogle has seen enormous expansion and remarkable change in the financial sector of the U.S. economy. In his tenth book, The Clash of the Cultures: Investment vs. Speculation, he brings his considerable wisdom and experience to bear on the most troubling developments of the recent era--the crowding out of long-term investment by short-term speculation.

During Bogle's career in the investment profession, he's witnessed a change in the very nature of our financial system, and not for the better. Our aggressive culture of destructive and costly speculation has come to dominate the earlier prudent culture of investment. To the detriment of our society, the idea of stewardship has gotten lost in the shuffle, replaced by salesmanship and innovations that have ill-served investors.

Far more than being a mere eyewitness to the last six decades of financial history, Bogle has been one of its most active participants. The many first-hand experiences he recounts include the creation of the first index fund and the creation of the first exchange-traded fund; and his critical role in the rise, the fall, and the renaissance of Wellington Fund, a real-world case study of the clash between investment and speculation. He sheds new light on the dramatic change in the culture of the mutual fund industry, the multiple ways in which speculation has invaded our retirement system, and the need for a federal standard of fiduciary duty.

Insightful and instructive, the book paints an alarming picture of how the financial world has moved away from a culture focused on value-adding long-term investment towards a value-destroying culture of rampant speculation--and the inevitable clash of these two cultures brought about by this transformation. Bogle concludes his book by outlining ten simple investment rules to help investors avoid the many hazards of investing and, by focusing on simplicity and economy, to meet their investment goals.
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Table of contents

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
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Review Text

'The book is a gem. Well-researched and carefully argued, there's simply no way to argue with Bogle's premises' (Best Financial News, 24th October 2012)
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Review quote

The book is a gem. Well-researched and carefully argued, there s simply no way to argue with Bogle s premises (Best Financial News, 24th October 2012)
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About John C. Bogle

John C. Bogle is the founder of the Vanguard Group of mutual funds and President of its Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as chairman and chief executive officer until 1996 and senior chairman until 2000. In 1999, Fortune magazine named Mr. Bogle as one of the four "Investment Giants" of the twentieth century. In 2004, Time magazine named him one of "the world's 100 most powerful and influential people," and Institutional Investor presented him with its Lifetime Achievement Award. In 2010, Forbes magazine described him as the person who "has done more good for investors than any other financier of the past century." In January 2012, some of the nation's most respected financial leaders celebrated his distinguished career at the John C. Bogle Legacy Forum, held at New York's Museum of American Finance.
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Rating details

498 ratings
3.88 out of 5 stars
5 31% (153)
4 37% (185)
3 23% (117)
2 7% (33)
1 2% (10)
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