Last week Vanguard founder Jack Bogle spoke out about the dangers of index funds, something he helped pioneer. Take a look back at this piece I posted on October 12, 2017 for more depth on the issue.
Let the good times roll? Great lyrics from the Cars but it’s a song I can’t get out of my head thinking about the money piling up by the truckload at Vanguard’s back door. We’re talking nearly $300 billion in the first nine months of this year alone. All of that money unloaded and stacked up with the rest of the $4.7 trillion at the firm. That’s a lot of confidence in one company. And maybe Vanguard deserves it thanks to the tireless work of founder Jack Bogle on the power of low cost index investing. But where is all that money going?
As I’ve stated in my piece on balanced funds, I believe high powered money, unfortunately, is crowding out the retirement investor like you. You are the investor I’m writing to, not the huge foundations, pensions, or trusts, that have their own armies of advisors who probably look at Vanguard as just a piece of their massive wealth preserving puzzle.
What happens when this crowd, the big money, decides to pack up and leave? The big fish can basically do what they want, but unfortunately their actions affect the smaller fish. That makes me uncomfortable. A better way might be to separate yourself from this crowd. I’d be happy to talk with you about how to do that. You can reach me at firstname.lastname@example.org.