{"id":5098,"date":"2013-04-24T19:28:40","date_gmt":"2013-04-25T01:28:40","guid":{"rendered":"http:\/\/www.zmetro.com\/?p=5098"},"modified":"2013-04-24T19:28:40","modified_gmt":"2013-04-25T01:28:40","slug":"john-bogle-the-%e2%80%9ctrain-wreck%e2%80%9d-awaiting-american-retirement","status":"publish","type":"post","link":"http:\/\/www.zmetro.com\/?p=5098","title":{"rendered":"John Bogle: The \u201cTrain Wreck\u201d Awaiting American Retirement"},"content":{"rendered":"<p><a href=\"http:\/\/www.pbs.org\/wgbh\/pages\/frontline\/business-economy-financial-crisis\/retirement-gamble\/john-bogle-the-train-wreck-awaiting-american-retirement\/\">Frontline<\/a>: <\/p>\n<blockquote><p><I>I\u2019d like to cover some history, since you\u2019ve covered some history yourself. You\u2019ve seen a lot of things go by. Let\u2019s just start with the mutual fund industry. Why do we have mutual funds in the first place? Who came up with the idea, and why?<\/p>\n<p>\u2026 The first actual mutual fund, Mass[achusetts] Investors Trust, was started in 1924. What makes the industry go is the common sense behind it: I would say, number one, diversification \u2014 very underrated benefit; number two, efficiency; and number three, for those days, relatively low cost; and number four \u2014 I always put this last \u2014 management, because management cannot add value, but people somehow feel more comfortable with management looking over their investments.<\/p>\n<p>In those days, by the way, the typical mutual fund was very much like an index fund. They were managed, but they tracked the market for years and years. \u2026<\/p>\n<p>\u2026 The first mutual funds were essentially index funds that allowed an investor that didn\u2019t have a lot of money to buy into a fund and therefore diversify, because these were baskets of mini-stocks.<\/p>\n<p>Right. And it was fairly efficient, and it was fairly long term, and it\u2019s focused, the original mutual fund. So they weren\u2019t doing all the trading like they\u2019re doing today. They bought, basically, a basket of blue-chip stocks. \u2026<\/p>\n<p>It began also as a business of trusteeship. Many of the original mutual funds had nothing to do with the marketing of their shares. Firms were out there that sold mutual fund shares and made a commission on it, but they did the buying and selling. We didn\u2019t even think about marketing.<\/p>\n<p>You started a fund, middle-of-the-road fund. They all were in those days, in the late \u201920s and early \u201930s and into the \u201940s and really up to the \u201950s. And so they were run by trustees who felt a certain sense, I think, of fiduciary duty to their investors. Marketing was not in the middle of the picture. Marketing [was] peripheral, even if the manager controlled the marketer.<\/i><\/p><\/blockquote>\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Frontline: I\u2019d like to cover some history, since you\u2019ve covered some history yourself. You\u2019ve seen a lot of things go by. Let\u2019s just start with the mutual fund industry. Why do we have mutual funds in the first place? Who came up with the idea, and why? \u2026 The first actual mutual fund, Mass[achusetts] Investors [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"http:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/posts\/5098"}],"collection":[{"href":"http:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5098"}],"version-history":[{"count":0,"href":"http:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/posts\/5098\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5098"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}