This past week I have been running a series of posts asking prominent independent bloggers their thoughts on a number of topics. I hope you got something extra out these posts because despite their appearance they require a fair bit of work to put together. Since turnabout is fair play you can find my answers to the blogger questions as well.
1. This post argues that John Bogle, i.e. low-cost indexing, has already won. Has he? What comes next?
I have been writing about the transformative effective of ETFs on investing really since the outset of this blog. I spent a chapter in my book talking about ETFs. I think ETFs have been a key driver for the adoption of low-cost indexing. Prior to the launch of ETFs individual investors really needed to go to Vanguard to get index funds. Now anyone with a brokerage account has access to super-low cost ETFs. This is radically transforming how individual investors and maybe more importantly how advisors can invest.
2. I argue in this post that a mandatory savings program would be net-net beneficial to society. Agree, disagree?
Since I wrote the above post I have to agree with it. Some comments talked about the idea that Social Security was already a mandatory savings program thereby making the above discussion moot. The problem is that Social Security is no such thing. It is a “pay as you go program.” You need to look to Australia for a good example of a mandatory savings program that works.
3. If ETFs were the he last big financial innovation, what is the next one (including any relevant company names)?
Wish I had a great answer for this one. I do think that the ETF revolution by making beta essentially free has opened up a range of models that were previously uneconomical. I have talked for a long time about the trend towards online, algorithmic investment management. The recent performance of Wealthfront and Betterment show signs that this may become a viable business model.
Financial television as currently constituted is toxic for the long-term investor. There is a fundamental mismatch between the business goals of a cable channel and the need for sober, thoughtful analysis. It is hard to see how the two can meet. Online audio and video are much more hospitable places for that type of commentary. Online there is not the need to support the overhead and infrastructure of a financial news network.
5. Read any good books (financial or not) this past year?
I looked a number of books on the blog including Helaine Olen’s Pound Foolish, Wes Gray and Tobias Carlisle’s Quantitative Value, Jack Schwager’s Market Sense and Nonsense, Scott Patterson’s Dark Pools and Michael Mauboussin’s The Success Equation. There are important concepts in all of them however understanding the distinction between skill and luck will fundamentally change how you view the world, including investing.
It is hard to say that John Rekenthaler, VP for Research, at Morningstar is underfollowed. Then again he hasn’t written regularly for public consumption for a number of years now. Recently he began writing his Rekenthaler Report on a (nearly) daily basis and is well worth a read (and follow).
My other recommendation is The Brooklyn Investor. TBI is to-date writing anonymously. I may not know who he/she is, but I do know that when TBI writes an in-depth report on an (usually) value-type situation it is always worth a deep dive.
I hope our readers recognize that thoughtful answers to the above questions take time. So please give these bloggers a shout when you get a chance.
