Comments on: Interesting Quotes From John Bogle

By: Walt

Walt — Sat, 13 Dec 2008 01:48:47 +0000

Do you still think a Dow of 20,000 nine years from now is too low?

By: The Simple Dollar » The Simple Dollar Weekly Roundup: Christmas Gift Edition

Wed, 26 Dec 2007 14:29:12 +0000

[...] Interesting Quotes From John Bogle A nice little collection of interesting thoughts. I think his thought on the subprime mess is spot-on: if you trust unreliable people, you’ll get burned. (@ all financial matters) [...]

By: junger

junger — Fri, 21 Dec 2007 20:55:35 +0000

I always thought that Bogle’s bonds-to-age rule of thumb didn’t seem right. Why should I, at 25, at the beginning of my investment lifetime, drop a quarter of my funds into bonds?

It just doesn’t seem to make sense.

By: jim

jim — Thu, 20 Dec 2007 23:57:15 +0000

I think people got complacent and stop doing their due diligence, now it’s coming back to haunt them and it’s their fault. It’s like when you invest in a company and then find out they were padding the books (*cough* enron *cough*), maybe you should’ve dug a little deeper. (not to say that it’s feasible for an individual to do it but certainly larger companies should’ve done their homework)

By: Kirk

Kirk — Thu, 20 Dec 2007 23:44:10 +0000

The rating agencies have an enormous conflict of interest since the investment bank selling the security is the party that pays the rating agencies to rate the instrument.

The only one that is independent is Weiss Ratings. They aren’t paid by the issuing investment bank. So if you are looking to evaluate a bond or insurance company (when buying insurance such as life or disability), use Weiss if possible.

By: JLP

JLP — Thu, 20 Dec 2007 23:03:38 +0000

Bobby,

Nearly every article I have read about the subprime crisis states that the investors in these “investments” didn’t know what they were worth. That’s the reason for all these huge write offs that banks and brokerage firms have been taking lately.

By: Aaron Smith

Aaron Smith — Thu, 20 Dec 2007 22:56:46 +0000

The ratings services are very tough to control and regulate in today’s environment it seems. Bogle’s comment about the barber is a great one that is very true. Don’t count on them being totally truthful.

By: Bobby

Bobby — Thu, 20 Dec 2007 22:49:16 +0000

Couple of questions I hope you can clear up for me…

JLP, you said “However, I don’t think the financial institutions had any idea what their portfolios were worth!”

Q1: If the financial institution owns the portfolio, how would they not know what it is worth?

Q2: Don’t the rating services evaluate a companies’ portfolio so other lenders know how to evaluate said portfolio?

By: Ernesto

Ernesto — Thu, 20 Dec 2007 21:22:22 +0000

Nice article.

People are standing around wondering why all these financial institutions were investing in mortgage backed securities a few years ago. Let’s hop the way back machine to 2002-2004 and think about it. The stock market was still shakey, the prime rate was pegged at 1-2% and money market investments were paying, well, next to nothing. Banks were considering charging people to maintain a savings account. Back in the day, mortgage backed securities looked pretty good. And as an added bonus, the rating companies said everything was peachey.

Why continue to invest in US stocks? Considering all the options, it’s still the best choice. As long as you believe the US will continue to grow and thrive, which I do.