“John C. Bogle counted himself among the 1 percent of wealthiest Americans a couple decades ago. You might not guess that today, when you hear the 82-year-old founder of mutual fund company Vanguard rail against economic inequality.
He can sound almost like an Occupy Wall Street protester: “Our markets have gone crazy, and there is 200 times as much speculation as there is investing,” he says.
It has been 15 years since the low-cost investing pioneer stepped down as CEO of Vanguard. It was Bogle who launched the first index mutual fund in 1976. Vanguard Group has since grown into the largest fund company, managing nearly $1.7 trillion in U.S. fund assets.
Bogle remains wealthy, but his income is a fraction of what he earned when he ran Vanguard. He’s paid a modest retainer to run Vanguard’s Bogle Financial Markets Research Center, a think tank in Valley Forge, Pa.
He resists a label that applies to most people his age: “I’m so far from retired, it’s almost an embarrassment. I’m here in the office every day.” He’s also writing his 10th book, “The Clash of Cultures: Investment vs. Speculation.” And he continues to deliver speeches.
Bogle says he’s paying close attention to tax policies he considers unfair, including one that’s favorable to the fund industry and investors with taxable accounts. The top rate for dividends and long-term capital gains is historically low at 15 percent, as a result of the extension of Bush era tax cuts that Congress and President Barack Obama agreed to a year ago. In contrast, top earners pay 35 percent on regular income. He doesn’t like that disparity.
Here are excerpts from a recent interview with Bogle: “
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I have been a fan of the low fees index funds for many years and Vanguard in particular. A core holding was a recommendation for a balanced portfolio in my formal investment advisory exam submission more than a decade ago. With the index fund the attraction is the low level of compliance and tax reporting compared to holding the individual stock. You then weight the balance of your target equities holdings with a few large tradeable positions for a low management cost. Since late 2005 I have felt that the index risk was too high relative to cash. I keep the few large tradeable positions and I wait on the sidelines ready to buy a large index position when valuations return to my risk profile. Summary big fan of Vanguard but hold no position and timing is critical.