If you read just one thing today make it this Bloomberg piece on Jack Bogle. Michael Regan and Robert Dieterich ask if there will ever be anyone like Bogle again? They do some good profiles on various asset managers including some of my favorites like Cliff Asness and Rob Arnott. They also touched on something I didn’t know – Bogle’s son runs an active stock picking mutual fund! I guess the apple fell off the tree and turned into an orange.
Anyhow, my personal view is that financial services is becoming increasingly free. Bogle started a revolution in focusing on costs and that torch is being carried by lots of different very well intentioned and intelligent people. We might not see one single person make such a sweeping impact, but that doesn’t mean that there aren’t lots of Jack Bogles around.
I also really liked this quote by Mark Wiedman of Blackrock:
“When we talk about active versus indexing, we are obscuring the basic point that God did not hand out benchmarks on the tablets of Sinai. God didn’t give us indexes. Those are creatures of man’s mind.”
If there’s one weakness in Bogle’s message it’s that he’s distracted people from some of the necessarily active components of portfolio construction. I think smart portfolio management is necessarily strategic so some degree. That doesn’t mean it has to be high fee, but the idea of “passive” indexing is often portrayed in an unrealistic light. But given his incredibly positive impact on the industry I guess we can give him a pass on that….
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