PHILADELPHIA (TheStreet) -- Even at 86, Vanguard founder Jack Bogle seems less retired than ever.
At the annual conference outside Philadelphia that draws legions of fans known as Bogleheads, the inventor of the index fund had lots to say about the markets, investing and politics.
He presented a slew of charts and had a firm grasp of his numbers, then gave a good-tempered "fireside chat."
After warning his audience he wouldn't say anything new -- "Don't expect anything amazing" -- Bogle proceeded to speak very frankly on his problems with exchange-traded funds, international investing and GOP front-runner Donald Trump.
Bogle vigorously defended the index fund, which was designed to buy stocks in proportion to their market capitalization, not according to what a manager thinks will do well. But he cautioned that index mutual funds were much safer than ETFs, which also track stock indexes. Unlike mutual funds, ETFs can be bought and sold like stocks all day long, which encourages investors to speculate instead of investing for the long term.
His rapt audience, the Bogleheads do-it-yourself investing group, took notes and some later lined up to greet Bogle and take photos.
Here are the highlights of his remarks.
ETFs Can Be Dangerous
Exchange-traded funds are overrated and in some cases flat-out dangerous, Bogle said.
"ETFs have become the new way to speculate," he declared, even though many ETFs are in fact index-based. But Bogle said that ETFs often focus on narrow sub-sectors. "There's a lot of niche-seeking," he noted, with new ETFs debuting what seems like every day. "There's a lot of junk out there."
When he ran Vanguard, Bogle even rejected the idea of ETFs when they were proposed in the early 1990s. Eventually, State Street (STT) - Get Report debuted its ETFs, a whole new type of security that basically allowed mutual funds to be continually traded on exchanges during the trading day. (Vanguard did eventually follow with a large number of ETF asset classes for its funds.)
"A lot of people will say that shows how stupid I am," Bogle remarked about his decision to pass on ETFs, but "I have no regrets about it."
"Exchange-trade funds are fine, just so long as you don't trade them," Bogle said. If you buy them, hold them for the Warren Buffett-endorsed term: forever.
International Investing Is Overrated
Bogle is "not on board with international investing," he said flatly. "I don't do international. I never have."
Many investors disagree with him, but he's firmly convinced that most investors don't need international investments. If they want international funds, he doesn't recommend putting more than 20% of an equity portfolio in those stocks. He doesn't see international bonds as appealing at all.
"If you invest in the S&P 500 (SPY) - Get Report , you own an international portfolio," Bogle said. Around 50% of your revenue comes from outside the U.S. under those conditions, he remarked, and that's plenty. He also pointed out that the correlation between U.S. and international company performance has been converging, so there is less of a diversification benefit than there used to be.
The U.S. is the most innovative and entrepreneurial country in the world, Bogle remarked, and investing there should be good enough for U.S. investors. Investing in the U.S. also lets investors avoid currency risk and other risks in international countries. Plus domestic investing is cheaper. And the U.S. has the strongest financial institutions and shareholder protections in the world, Bogle said.
Then Bogle played the Warren Buffett card. When Buffett decided to leave his wife's inheritance in the S&P 500-benchmarkedVanguard 500 Index Fund (VFINX) - Get Report (VFIAX) - Get Report (VOO) - Get Report , he effectively decided to opt for a purely domestic investment for his wife.
'Saint Jack' vs. The Donald
Donald Trump and Bogle don't agree on one big point, Bogle said.
Bogle tries to impress on investors that average results are exactly what they should seek -- market returns that have very low transaction costs and don't risk underperformance or a lack of diversification.
Enough. That's the title of Bogle's book urging readers to change their perspective and think about financial and personal success in light of what's enough, not in terms of trying to get more, more, more.
Never Enough, by contrast, is the title of a new biography of Donald Trump by Michael D'Antonio. Trump's philosophy is exactly that, according to D'Antonio -- the quest for more. More money, more visibility and now, in politics, more supporters.
"That gives you the idea that Donald Trump and I are kind of antithetical," Bogle said. Bogle did confess earlier that the ideas to start a new mutual fund company and to pioneer the index fund were a bit "egotistical," but he also said they were "sound economics." And he doesn't mind being attacked for those ideas.
Bogle lives his philosophy of "enough." He is still giving talks to small-guy investors like the Bogleheads to emphasize "knowledge, conviction, passion." With more than $3 trillion now invested at Vanguard, the largest mutual fund company by far, Bogle could clearly have earned astronomical sums if he had organized Vanguard to be run for profit instead of setting up funds to be owned by the shareholders themselves.
But starting a company that holds more than $3 trillion in assets hasn't fazed him. When David Swensen, the renowned money manager at Yale, sent him a bottle of Chateau Lafite Rothschild, he expressed shock at its price tag -- $600. "This is madness!" he commented. Excess isn't his style.
"It's all about human beings," Bogle said.