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Index Fund Giant Battles the Establishment May 21, 2015 11:00 AM | Tagged as Bogle

WSJ May 4, 2015: “Bogle vs. Grant in the Great Fund Debate” by Jason Zweig

The referenced article is about a debate between John Bogle, the father of the index fund industry, against James Grant, the editor of a publication for fund managers. Although Zweig proclaimed the contest a draw, the text of his piece seems to indicate otherwise.

As some Biz Bucks victims will recall, The Biz Bucks Guy informs some (longer) classes about the existence of index funds. While not providing investment advice, he explains the theory of why indexing makes sense for some people…for example, those who have a long term strategy and don’t want to have their investments “own” them, meaning they must constantly watch how the markets are treating them.

The debate was timely. Index funds now own about a third of total stock fund assets, up from 20% a decade ago.

Bogle pointed out the irrefutable evidence that indexers get 99.4% of the assumed 8% increase in stocks. Actively managed funds return about 72% of this increase.

Bogle also pointed out that at the break at the conference he was surrounded by fund managers who thanked him for his help in keeping their OWN portfolios healthy. These fund managers were indexing, and not using the very funds they managed!!

For those who want to know more about indexing, the Vanguard Company, which Bogle founded, is one source. Of course, as Grant argued, if stock picking is your passion and hobby, indexing is not for you.

[Although opinion is included, The Biz Bucks Blog is primarily written to former students of Biz Bucks training courses to encourage their daily reading of the three opinion pages of the WSJ. This blog refreshes principles of Biz Bucks courses and improves business acumen on topics not discussed in Biz Bucks training. To reiterate, this blog does not provide investment advice to anyone.]

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