No one is immune from the economy; everyone should be invested

John Bogle and Vanguard democratized capitalism

Top line in this morning’s WI State Journal is news that the indentured servants at Blaska Stately Manor may have to take in laundry, shovel snow, and hold cookie sales.

Pensions for those invested in the Wisconsin Retirement System (WRS) may decline 0.5%. The horror! Actually, that’s more of a trim than a shave — a $103 nick for the average Wisconsin government retiree. Per year. 

Even so, government exchequers should take notice. It is a nick that hits 203,000 annuitants. Do you know how many of those live in Madison and Dane County? I don’t either. But we’re guessing a lot of voters.

Which is why I told the Madison teachers union they should not complain about their 4.1% total compensation increase in their current contract. Retirees took a shave and a haircut, not a trim, after the 2000-09 Great Recession.

The WRS is taking this trim in response to Wall Street. Dow Jones Industrials are down 5.6% for the year. Which should tell you that the state retirement system lives on pure, unadulterated Capitalism. That the trim is small is due to the retirement system’s five-year smoothing process. The market could soar next year but the WRS payouts will not. Prudence and Patience.

Bogle heads buy and hold

Which leads us to Jack Bogle, who died this past week at the age of 89. He founded Vanguard mutual funds and helped America take stock in America.

His great insight in 1976 was the broad, stock market index fund. It simply followed the 500 largest stock companies as measured by Standard & Poor. (Always thought that an unfortunate name for a financial firm.) No high-priced gurus studying entrails and arcane computer models — just follow the market, up or down but mostly up because of the American economy and that capitalist thing. Buy and hold was Bogle’s philosophy.

He also set up Vanguard as a true mutual fund — not just funds held mutually but fund-holders who owned the company. Like a cooperative. Helped keep costs low, which was another of his trademarks. Like Henry Ford put an automobile within reach of the common man. Like Sam Walton of Walmart and Herb Kelleher of Southwest Airlines, more recently. 

That allowed individual investors to get into the market on their own, not dependent on their employers, for as little as $3,000.

economyDemocratized the markets

Which is what your Squire did when he left The Capital Times with his rollover in 1991 and he is glad he did. We chose Vanguard among all the providers after intensive study and a dart board.

Even state government encourages its employees to contribute more of their salary — beyond their required WRS retirement contribution — for additional exposure to stocks and bonds. Which we did, big time. We are glad we did.

So revered was Mr. Bogle that a cult of “Bogleheads” snapped up his books like hungry piranha, traveled to conferences at which he spoke like Greatful Deadheads. 

“Unlike anybody else in the financial industry, Bogle said what he was thinking, on the record, The way most investment firms threatened their clients was “shameful.” Most mutual funds’ annual expenses were “larcenous,.” The attempt to beat the market was “a fool’s game.”

We’ll close with Jason Zweig’s assessment in the Wall Street Journal of a man every free marketer should know and love:

American investors have lost the fiercest advocate they may have ever had.

Blaska’s Bottom Line: Forget free college, subsidized housing, or cheap bus passes. If we were forced to give away One Free Stuff: it would be ten grand in a Vanguard S&P 500 fund, unredeemable for 10 years, follow the fund’s reports, learn some economics and the discipline of delayed gratification.

Call it the Cure for Alexandria Ocasio-Cortez. 

Vanguard remembers Jack Bogle

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About David Blaska

Madison WI
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18 Responses to No one is immune from the economy; everyone should be invested

  1. Cornelius Gotchberg says:

    Speaking of leaving TCT, I walked away from a lucrative Distribution Facilitator gig (residential delivery by BIKIE) in 1969.

    Turns out afternoon routes were an impediment to star athletes making practice; heck, it even prevented guys like me.

    We subscribed to it until it graduated to the unqualified success of its much-coveted status as a Wednesday Insert in 2008.

    You’s know…free, and IMHO, overpriced…by several orders of magnitude.

    Anywho, generally when you’s want to stimulate demand of a good product, you’s choke supply. Oddly enough, that didn’t happen with TCT.

    Now? It’s rarely, if ever, perused by either myself or the lovely and long-suffering Mrs. Gotch, a career Lefty!

    Paulie Fanlund, Davey Zweifel, Johnnie Nichols, et al, should feel SO proud that they took the William T. Evjue/Madison Progressive Voice of The 77 Square Miles Surrounded By A Sea Of Reality from a viable entity to sending it careening wildly in the opposite direction of relevance.

    The kicker? In a City and County that’s positively inundated with Lefties.

    The Evjue Foundation has an absolutely marvelous record of charitable giving, pity its flagship publication is a bad freakin’ weeping wen of a joke.

    Oy! The suffocating ignominy!!

    The Gotch

    Like

  2. Mark Porter says:

    Unfortunate last comment about Alexandria, Dave. As you’re well aware, your fellow conservatives, especially those elected in congress, are equally bad at math. Witness the ongoing results of their continued blind faith in supply-side economics, Kansas and now federally. As the federal deficit continues to sky-rocket, perhaps you could reign in your devotees?

    Like

    • Tom Paine says:

      Mark, you claim that “fellow conservatives, especially those elected in congress, are equally bad at math.”

      Grow up. Think slowly………..and if you can, clearly.

      AOC’s program of Medicare for everyone is projected to cost 32 TRILLION/yr.
      What about the cost of her other programs? Since you are so skilled at math, provide a reply where you total the debt AOC projects. I dare you to provide a number.

      Then, we shall compare that number to the historical % change in national debt under every president since 1941. FYI, math estimates can be off their mark, I agree. But there is a distinct difference in errors of 50%, or 10,000%. Tell us again how the errors are “equally bad.”

      Finally, let us return to the origins of SS and Medicare. Were EITHER of them EVER economically sustainable? No, and they are even less so, now. However, don’t get me wrong, as a SS recipient and Medicare beneficiary, I love stealing income today from the dumb and dumber AOC generations (and those to follow). They deserve the government she will provide. Robert Mugabe has shown the way.

      Like

      • Mark Porter says:

        Gosh Tom, so we’re debating worser, eh? Economically sustainable is a budgetary decision, just like the trillions we spend on war. I suspect we might agree that most of our elected representatives aren’t terribly good at budgeting, but or at least balancing it. But I’m glad you’re getting yours at least. On the rest I think we’ll have to disagree but I do appreciate the personal attack. 🙂

        Like

        • Tom Paine says:

          Debating “worser”?
          No, I took exception to your original post. I’ll stand by my remarks and again challenge you to aggregate the increases in spending that AOC mindlessly has advocated.
          FWIW on Repub budgets, I did not support tax cuts that WERE unlinked to spending cuts. I do not believe in extending Medicare or SS benefits to illegals who have never contributed to the programs. Illegal immigration is welfare for foreigners. I reject that.

          SS and Medicare are not sustainable because I opposed reforms. Most citizens are too financially illiterate to see the problems and encourage sustainable reforms. When reforms have been proposed, the Democrats have demagoged reformers — Ryan pushing his mother over the cliff, etc. So, “Yes,” I would vote for AOC — so that she can discover her level of ignorance by implimenting grade school solutions.

          Great to be over 65. You really think there is a positive future for the nation without a revolution in principles and culture that are the antithesis of the Left? If so, take another toke.

          Like

  3. old baldy says:

    Somewhat off topic (but certainly less so than herr gotch on a good day), but why no condemnation of the R’s with this blatant affront to free speech??

    https://madison.com/ct/news/local/govt-and-politics/federal-judge-finds-wisconsin-republican-lawmakers-violated-free-speech-rights/article_744b93e5-90a4-5357-b1cb-89580714b22a.html

    Like

    • Sprocket says:

      While idiotic, this should provide endless lolz when enough precedent is established that twitter is forced to allow trolls and shit-posters to ply their trade all over leftie twitter accounts.

      Like

    • Cornelius Gotchberg says:

      Awww, isn’t that tres cute; at least someone (@hankdog/old baldy) is perusing the reader bereft/circulation-challenged Crap Times.

      S’matter, couldn’t link to BuzzFeed?

      The Gotch

      Like

      • old baldy says:

        cg:

        The decision is in all the media around the state. CT was one of many. Grow up, eh?

        Like

        • Cornelius Gotchberg says:

          @hankdog/old baldy;

          Look, I realize that career Lefties (most, not all) are a monumentally confused lot.

          C’mon, would the lucid pursue an ideology that’s failed everywhere it’s been tried? I don’t think so.

          But you’d think that, despite their many shortcomings, they’d at least make a half @$$ed effort to stay consistent.

          Then Hopey Changey CoS Rahm Emanuel: “When you think about the First Amendment…you think it’s highly overrated.”

          It gets worse.

          Let’s toss it over to needle-necked University of Utah Lefty Sean Taylor:

          “I don’t think that (the Constitution) is, ah, like a relevant document now.”

          Different when the Earth Shoe’s on the other foot, am I right?

          Ah Lefty; so MUCH hypocrisy, so little time!

          The Gotch

          Like

        • old baldy says:

          Q: “Am I right?”, says gootch.

          A: No. Never. Ever.

          Like

        • Cornelius Gotchberg says:

          @hankdog/old baldy;

          “A: No. Never. Ever.”

          A Lefty Lie from the Magical Lefty Thinking school of imbecility (alien to a fact-based Universe) which is so easily disproved it’s laughable.

          The Gotch

          Like

  4. Tom Paine says:

    C – on your investing essay, Dave. What follows is a primer on a few basics you don’t understand.

    1. If all one should do is follow the broad market averages, and if one can’t time the market, then why does SWIB have an active manager structure and why do annuitants pay them egregious amounts? Second, in years when SWIB assets declined, were the salaries of the stock managers ever reduced for poor performance? [ ans: Not to my knowledge. Manager pay at SWIB is NOT, and has never, been aligned with the interests of the annuitants. ]

    2. Since you endorse following macro market data averages, then why should teachers or administrators EVER receive pay-remuneration changes that EXCEED the cost of living?

    3. If you believe in the principle of capitalism, then you must accept that different businessmen see opportunities in different ways. If they did not differ, every businessman would be a baker, a Steve Jobs, or an Elon Musk (who actually risks public capital in many of this ventures.)

    IF you believe in capitalism and individualism, THEN why can’t retirees take their entire pension assets from SWIB without penalty or discount, if they believe SWIB invests poorly? When I retired, I wanted out of the state-socialist SWIB for many reasons, chief among them was their penchant for buying bonds issued by Argentina, Nigeria, and other 3rd world nations. My only effective veto power over SWIB investment decisions was to withdraw. Great idea, but SWIB – ETF mandated a 50% TAX for freedom. ‘effing Justice, I say. It is not capitalist as you claim. It is communist, state-capitalism.

    4. SWIB is not, and never has been, transparent to annuitants about its trading/investing history.
    Worse, annuitants only have indirect — if any — input about SWIB investments annuitants’ funds. SWIB, to my knowledge, does not now, nor has it ever, had an emergency strategy to minimize losses from major economic dislocations. In 2008-09, SWIB stood like deer in the headlights and rode their losses down, month by month, instead of liquidating stock positions. Result, over 25 BILLION in losses. Why did SWIB fail to apply “investment expertise” to minimize losses?

    5. ETF, WRS, and Teacher Retirement board elections follow the communist model. Consider:
    Those who are running for office have no contact information if voters want more information. Worse, if, as a voting member, you would like to contact office candidates, the STATE prevents you from getting an email address or a phone number of a prospective candidate. AND, POST-ELECTION, the state still prevents annuitants from obtaining contact information for public representatives. It is like electing a member to Congress, but being blocked from learning any and all contact information. System is like communism in Russia. One vote for your choice of party members. Meaningful democracy? BS.

    Like

  5. Cornelius Gotchberg says:

    Regarding the talented, if uncommonly imbecilic, Alexandria Ocasio-Cortez, a source with an unmatched reputation for aport observations, Snopes.com, has determined that, and I quote: “…it’s reasonable to assume that (AOC) is more intelligent than your average salamander.”

    You’s know, sometimes this stuff just kinda writes itself!

    The Gotch

    Like

    • richard lesiak says:

      MORE FAKE NEWS FROM THE FAILING SNOPES.COM. Now tell Miller to put extra cheisee on those hambergers.

      Like

      • Cornelius Gotchberg says:

        Refusing to acknowledge the hysterically bespawling idiocy** of the talented Alexandria Ocasio-Cortez (the NEW face of the democrat Party) affords The Gotch’s Razor a clear opportunity to strike again!

        **“We Need To Invent Technology That Hasn’t Even Been Invented Yet”

        Timeless wisdom, am I right?

        The Gotch

        Like

  6. Bob Dorn says:

    Dave, you’ve kind-of lucked out in the hockey stick from 1991 to 2000, back and forth until 2013 and up some more. If you look at a chart of the market (S&P 500) from the 1930’s onward, and especially from the 80’s onward, it looks like it’s in rarefied air. Eventually (don’t know how, don’t know when), the market is going to come back down to deliver max pain to everyone. Just like my house in Madison shouldn’t be worth close to 400K like it is, a day is going to come when deflation will affect other things than TVs and mobile phones.

    Like

  7. Tom Paine says:

    Yo, Anon Bob………

    Iffen ya Bee correct, as you claim, Why is it that so few blacks want to return to Africa where their ancestors were NOT exploited by white boys?

    Are da folks in Africa wishin’ they had been victims of the da white boys several centuries ago?
    Since they aren’t and since they weren’t victims of white exploitation as slaves why ya think Africa remains a cesspool of poverty, misery, and corrupt governments?

    What, they didn’t salute Robert Mugabe enough?

    Why are there so few who openly subscribe to the ideology of Marcus Garvey?

    Why are so many PoC trying to break into this country, bastion of white privilege, oppression, and toxic Trumpsters?

    The National Inquirer wants to know.

    Like

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