Thursday, October 25, 2012

Michael Levin: Why Is Everyone on Wall Street So Rich? You Have No Idea

John C. Bogle is mad as hell and won't take it anymore, or at least as mad as hell as a dignified,

Bible- and Churchill-quoting octogenarian can be. Born just months before the stock market crash of 1929, and the godfather of the mutual fund industry, Bogle is deeply unhappy about how speculators have hijacked the financial markets and kicked investors to Wall Street's famously unforgiving curb.

Bogle writes about this clash of cultures between investors and speculators in a new book titled, fittingly enough, The Clash of the Cultures: Investment vs. Speculation (John Wiley & Sons, $29.95). He demonstrates, in sprightly if mournful tones, that the average share of stock was traded once every seven years when his career started back in 1951 and is now traded every four months. Wall Street is supposed to be about allocating wealth to businesses so they can create jobs and do all those things Romney keeps talking about. Instead, it's just a big casino, and it doesn't even have Celine Dion or a buffet.

The book is a gem. Well-researched and carefully argued, there's simply no way to argue with Bogle's premises -- that the little guy always loses, that the more you churn the more you lose, that most people's retirements are dramatically underfunded, that management looks out for itself and not the stockholders, and that greed is driving the bus. The book ends with a compelling pitch for Bogle's own Wellington Fund, demonstrating that the author is clearly a salesman to the last.

But you have to ask this question: If Bogle were 33 instead of 83, would he have written this book? Or would he instead have written a series of tweets collapsing the same material that takes 363 pages into a few hundred syllables?

The broader question is this: If you have something to say today, why bother writing a book? Why not just post a blog piece somewhere, or tweet something, or stick something on your Facebook page? Or even just have somebody hold up an iPhone and make a video you can upload to YouTube?

I doubt Bogle tweets. He's the kind of person who takes deep pleasure in a well-crafted sentence or argument. He shows his work, as my sons' fourth grade math teachers demand. To use his own terms, the reader is fully invested in his beliefs and there is no room for speculation. In short, he is the master of a dying art.

His book also reveals a second, deeper culture clash in our society today: the gulf between people who have ideas and people who have no idea. About 97% of the population basically made a commitment, around the time they reached their early 20s, never to learn another thing as long as they lived. By that point, they knew how to drive, how to use an ATM, how to date, and how to hold a basic job. But the idea of actually cracking a book that wasn't on a final was foreign. Learning stuff you don't need to know? What a bore. What a colossal waste of time.

That leaves around three percent of society, the people who love learning for its own sake, the intellectual and cultural and financial elite, the people who would actually pick up a Bogle book and read it cover to cover. The problem is that these folks (you among them, of course) are, sad to say, not just a slender minority but a dying breed.

Bogle epitomizes clear thinking and organized writing, the intelligent marshaling of facts, opinion, and personal experience into a sustained work of prose that transforms the way readers think. The problem is that fewer and fewer people have the attention spans, the time, or the interest to follow an author down a long passageway and actually learn something.

The barbarians aren't just at the gates of Wall Street, Mr. Bogle. They're everywhere.

When I lived in Boston 25 years ago, there was an older European gentleman who worked as a clerk in Filene's Basement. Once I found a sport jacket that almost fit and I asked him if he knew a tailor who could turn my bargain into sartorial splendor.

"They're all dead," he sighed.

Real readers, and real writers, are going the way of those long-departed tailors.

Read Bogle, not just to learn about how to protect your investments and understand what really happens on Wall Street. But more than that, read The Clash Of The Cultures and declare yourself into the three percent who have ideas and aren't afraid to use them.

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