John Bogle Money Track Interview: Index Funds, Low Fees, Wall Street Critique

John Bogle introduction: 'I've never considered myself a businessman I'm more of a idealist missionary and just so happens the things that I believe so strongly and the investment philosophy and the human values have to be the right ones...they are enduring they are probably eternity.' Founded Vanguard 1975, created 'whole new type of investment the index fund that made it much simpler and less expensive for Americans to buy stocks and bonds.' Known as 'champion of the small investor' because 'fees that the financial services industry charges ordinary investors are just too high and those costs especially over time eat away at the returns.'

Bogle's Wall Street critique: 'Too much overreaching too much greed too much lack of awareness of risk too much financial engineering making numbers look better than they are...any aspect of professional behavior and professional conduct and the ethics that go with the role of professional have been reduced greatly if not abandoned in many cases in favor of business business business.' Core problem: 'If they have to blow themselves up with their own dynamite that suits me just fine...I don't like a lot of innocent victims out there that did nothing to create this mess and are paying an extreme financial and personal price it is not fair and it is not right.' Ben Stein adds: 'They blew up the rest of us with their dynamite...losses based upon Wall Street's miscalculations and mistakes and just plain theft...literally have ruined the retirement prospects of an entire generation and wrecked the peace of mind of a very large part of the world.'

Bogle on reforming capitalism: 'You need new rules we need to reform capitalism and my own personal view is put the clients first don't charge those excessive fees participate in corporate governance and force those corporations out there to operate in the interest of their shareholders focus on the long term we'll call that investing and not on the short term we'll call that speculation.' Despite crisis, sees glass half full: 'We have to hope that we'll be able to grow our way out of some of the problems...with a little fiscal discipline and a little intelligent planning and good leadership and a terrific generation coming along I don't think it's impossible.' For capitalism to work and markets function 'there has to be rules.'

Jack Gallagher explains index funds: 'Father of index fund investing which simply put means instead of trying to invest to beat the market averages like the Standard and Poor's 500 index or the Dow Jones instead of buying and selling stocks or mutual funds you just want to instead be the market in other words you want to capture the exact same returns as the overall stock market.' Alternative explanation: 'Instead of betting on one horse in the race you're buying the whole race.' Benefits: 'You save on fees you keep your costs way down and then by buying the entire market you get something else that's so important instant diversification among a lot of different stocks.' Bogle: 'Investing is simple but it's not easy...what is simple about investing is if you believe what I believe and that is owning not a stock but the stock market and holding it forever.'

Bogle's asset allocation framework: 'The first thing and the unchanging rule and the simple rule is think about asset allocation how much in stocks for growth with a lot of risk that comes with it how much in bonds with income and a fair amount of safety that comes with them and balance off those things.' His rule of thumb used for 25-35 years: 'Have your bond position equal your age.' At age 80: 'I'm approximately 77 or 78 or maybe 80 percent in bonds and 20 percent in stocks.' Notes in early 90s when 'stock market was ridiculously high...I was about 65 percent in bonds roughly my age then' so didn't feel badly about recent market decline.