Words of Wisdom from Jack Bogle

Never one to mince words, the grandfather of index fund investing had no shortage of quotable moments at the recent Morningstar Investment Conference

Jason Stipp 14 June, 2013 | 7:00AM

Attendees tune in to the conversation between Jack Bogle and Morningstar's Don Phillips Thursday morning at the Morningstar Investment Conference in Chicago.

Vanguard founder Jack Bogle expounded on a number of topics—from money market funds to the retirement system to the state of the fund industry—on Thursday morning at the 25th annual Morningstar Investment Conference. Never one to mince words, the grandfather of index fund investing had no shortage of quotable moments: 

On retirement: “We’re headed for three train wrecks.”
Echoing language he’s used before to describe the current US retirement system, Bogle cited three areas of concern: underfunded Social Security (it can be fixed, he said; all that’s required is some political will); dramatically underfunded state and corporate pensions (they know their expected returns are unrealistic, but they all say they’ll hire good managers), and over-reliance on defined-contribution plans that aren’t strict enough to ensure success.

On government bonds: “70% of the [Barclays Aggregate] bond index in Treasuries is too much.”
Echoing his sentiments from a recent Morningstar.com video interview, Bogle argued that the index’s stake in Treasuries and agencies is disproportionately high. Should it be 0%? No, he said. But neither should it be 70%.

On the Role of Social Security: “It’s probably the best fixed-income position you’ll ever have.”
With its steady payments and cost-of-living adjustments, Social Security is a key piece of retirees’ portfolios. But Bogle said we need to look at Social Security in the whole portfolio picture. If your investment portfolio is entirely fixed income, and Social Security is also playing that role in your holistic financial picture, is it too much fixed income?

On occasions that he disagrees with Vanguard: “It doesn’t happen.”
Rather, Bogle asserted, Vanguard disagrees with me.  “They’re in a tough place,” he added. “Here’s this old guy who keeps saying what he thinks. Would he just shut the ….”

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About Author

Jason Stipp  is Editor of Morningstar.com, the sister site of Morningstar.co.uk.

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