PHILADELPHIA (TheStreet) -- About 250 avid fans of John Bogle -- Vanguard's founder and retired CEO -- gathered at the Bogleheads' annual meeting outside Philadelphia on Thursday to listen to "Saint Jack" talk about how to invest, what the market's gyrations mean and how to establish their own financial freedom.
Bogle seemed delighted to be there, describing his work as "striving to build a better world for investors -- not just Vanguard investors -- who deserve a fair shake." He gave an informal talk and a formal presentation, delivered confidently and met with frequent laughs from his mainly gray-haired fans.
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"We all know the world is going to hell in a hand basket, but we don't know what to do about it," Bogle said wryly. In fact, he had many ideas about how investors should manage their money and what they should do in these volatile times.
On Dangers in the Market
There are some serious problems in the investing world now, Bogle said. Geopolitical risks like Middle Eastern terrorism, a slowing economy in China and weakness in Europe all look ominous.
Bogle added that excessive executive compensation, slipshod accounting practices and undisclosed political contributions are dangers in the U.S. market. He also sees "excessive rent-seeking, even rent-gouging," by many in the financial system. In his view, some investing issues are "white and black, right and wrong" and there's no compromise. One of those issues is management fees, which Bogle wants to limit. And he called for a new fiduciary standard for all who are in charge of other people's money.
Corporate profits drive market growth, Bogle explained. In a chart, he showed how U.S. corporate profits were hitting a high of 10.5% on average, the most since 1930. But 6% to 8% profits were much more typical. Bogle explained that these profit figures could possibly mask trouble in companies, such as underfunded pensions, accounting tricks or bad treatment of workers. There's a risk that corporate profits may revert down to historical levels.
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