John Bogle is still as "no-nonsense" as ever at 83. We have the pleasure of hosting the investing legend and Vanguard founder at this month's 2012 Retirement Income Symposium in Boston on Oct. 4 and 5. He's out with a new book, "The Clash of the Cultures," his 10th book overall and seventh in 10 years. In a recent interview celebrating the book's release, he said it would probably be his last. Don't bet on it.
The index investing pioneer is just as passionate as ever about the need to put clients first, sounding off about the "hot, new products" that help the financial services industry reap high fees, while doing little for, and often harming, the investors they're supposed to protect. For that reason he's looked upon as the conscience of the industry, even criticizing the firm he founded when he feels it's gone astray. You might disagree with his stance on the benefits of active versus passive investing, but it's tough to disagree with much else.
Bogle sat down with Investment Advisor for a review of his book and a preview of his session in Boston.
ETFs were supposed to address many of the complaints about mutual funds, especially in the wake of the market timing scandal of 2003, but you are very hard on them in the book. Why?
I don't think that's a fair representation of what I say in the book. I like certain ETFs; the S&P 500 products, for instance, or the Total International stock index. But products like the three-times leverage or commodities products that are clearly speculative—it's not so much the products, but rather how they are used. Buy-and-hold is good, but trading them is a loser's game. You can trade the S&P 500 all day long, but what kind of a nut would want to do something like that? A new Vanguard study finds that ETF owners are less likely to be buy-and-hold investors.
In the book, you argue for restructuring both public and private retirement systems. How?
