Interesting short interview with Jack Bogle

[Eric50]

A couple of interesting comments for reflection on this Christmas eve. First, on our financial system:

 

"Our financial system has gone off the rails. It's something we think of as providing capital for new businesses, that will enable people to finance new companies or add to the capital of existing companies. We do that to the tune of about $200 billion a year in financing through Wall Street, or through the financial system. And yet we do some $40 trillion worth of trading every year. I'm selling my investment to you, and you're buying it from me, and it creates no value for society. Indeed, it subtracts value, because the guy in the middle gets his piece."

 

Second, on investment outlook for next year:

 

"If you're investing in stocks with the idea of a one-year outcome, you should not invest. You can lose a lot. If you invest in stocks with a five-year outlook, I would think it is highly debatable if you should do that. You have to think about more than just the probabilities of a market crash. You have to consider the consequences for your savings, and whether you'd be decimated."

 

http://www.businessinsider.com/bogle-time-for-speculators-to-pay-fair-tax-share-2011-12