Monday, November 24, 2008

Bogle Is 'Not that Bearish'

Is there any steadier-at-the-tiller mind in the world of finance and investing than Jack Bogle's? I'm hard-pressed to name one.

Bogle has been the author of several pieces in Directors & Boards, which merit but minor mention among his voluminous output of books, articles, papers and speeches over his long and distinguished career. He is out with a new book, titled Enough [John Wiley & Sons] that I am anxious to read. 

I caught up with Bogle again on Nov. 20 when he did a special live radio broadcast from Philadelphia's Union League Club with the city's talk radio maestro Michael Smerconish. He fielded questions for an hour both from Smerconish and the 500-strong audience listening raptly for some guidance in navigating the choppy market from this wise elder statesman.

Here are a few sound bites from that broadcast:

• "Mutual fund portfolios will experience a 350% turnover this year" — more than a 10-fold increase over the average 30% turnover that was the norm in Bogle's early years of investing.

• "The market is now selling at 1.6x book value — the last time it was at that level was in 1986." It was at 8x book in 2001, Bogle noted.

• In answer to a question from the audience as to whether "Hank Paulson is an idiot?" Bogle replied, "No, something worse than that ... he is an investment banker." After a big laugh from the crowd, Bogle explained that being an investment banker gives him a skewed view of the world, one that may not be helpful in coming up with the right solutions for the current crisis.

• A damning verdict for the financial services industry: "Any business that subtracts value from its clients is going to be hoist by its own petard."

• He says he's "not that bearish" on the market. This "serious recession" will take about "1 and 1/2 to 2 years to get through, but the market will anticipate that and will start its recovery ahead of time." 

• What's needed when we get through this period is "to go back to a society based on long-term investing and not the folly of short-term speculation." 

• Rejecting the title of economic guru — "There are no economic gurus" — he answered the question of "Who do you trust?" with a forthright "The American electorate."

Put this book on your holiday shopping list. And, by the way, if you're passing through Philadelphia on a business trip or pleasure jaunt, tune in to Michael Smerconish's show, broadcast from 6 a.m to 9 a.m. Monday to Friday on 1210AM WPHT. It starts my day with a heady brew of current events analysis and lively guests — such as the inestimable Jack Bogle, whom I will call an economic guru whether he likes it or not.