I would always advise young people to follow their star - not my star. They have to live their own life. If they decide they want to go into the investment business, do it, but make it a better business than it is today.
John C. BogleRead
Entrepreneurs or international conglomerateurs, or large financial institutions buy or create mutual fund management companies to create a return on their own capital. It's capitalism at work, where the rewards tend to go to the managers rather than the investors.
Interpretation
What this quote means
The quote discusses how mutual fund companies are formed primarily to generate returns for their managers, highlighting the dynamics of capitalism.
John C. Bogle's quote critiques the capitalist system, particularly within the context of mutual funds, by emphasizing that large financial entities often create these companies to secure returns primarily for themselves, the managers, rather than the investors. This commentary reflects a broader observation about how the structure of capitalism can lead to misaligned incentives, where those managing capital may benefit disproportionately compared to those who actually invest their money.
Themes
CapitalismMutual FundsInvestingManagersReturns
In practice
Example use cases
This quote can be used in a financial seminar to illustrate the importance of understanding where returns are coming from in mutual funds.
More from John C. Bogle
All quotes →When our financial system - essentially our money managers, marketers of investment products and stockbrokers - put up zero percent of the capital and assume zero percent of the risk yet receive fully 80% of the return, something has gone terribly wrong in our financial system.
John C. BogleRead
Net return is simply the gross return of your investment portfolio less the costs you incur. Keep your investment expenses low, for the tyranny of compounding costs can devastate the miracle of compounding returns.
John C. BogleRead
Investing is a virtuous habit best started as early as possible.
John C. BogleRead
Wise investors won't try to outsmart the market.
John C. BogleRead
The Vanguard Experiment was designed to prove that mutual funds could operate independently, and do so in a manner that would directly benefit their shareholders.
John C. BogleRead
Similar quotes
Everyone recognizes that's a joke because obviously the number and shape of the pieces doesn't affect the size of the pizza. And similarly, the stocks, bonds, warrants, etc., issued don't affect the aggregate value of the firm.
Merton MillerRead
I think a very good system in a world with a lot of passive investors is one in which there are at least a few entrepreneurial investors, prepared to say what they think, prepared to propose a change in management, change in strategy, change in cost structure, capital structure.
Bill AckmanRead
You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.
Peter LynchRead
Any man who is a bear on the future of this country will go broke.
J. P. MorganRead
Nobody can predict interest rates, the future direction of the economy or the stock market. Dismiss all such forecasts and concentrate on what's actually happening to the companies in which you've invested
Peter LynchRead
You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again.
Matt TaibbiRead