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I'm reading through John Bogle's great book "Enough" today and came across this passage below. He gave a speech to Georgetown students considering going into the financial services industry. His main point is to warn them about the dangers of that industry, but he also endorses international stock funds in the process. I've added the full chapter below (emphasis mine). You can skip to the bolded part if you don't want to read the whole thing.
This is significant because many US-only investors point to Bogle in an appeal to authority. My goal here is not to post a "gotcha" moment or start a fight, but instead to highlight some nuance in a topic that can devolve into very black-and-white thinking. Bogle has been on record saying up to 20% international is the limit, but here is a more full throated endorsement of international funds.
A Prophetic Forecast
At the very peak of the boom in the financial sector, in a commencement speech at Georgetown University in May 2007, here’s what I had to say on this subject:
One, if you enter the financial field, do so with your eyes wide open, recognizing that any endeavor that extracts value from its clients may, in times more troubled than these, find that it has been hoist by its own petard. It is said on Wall Street, correctly, that money has no conscience, but don’t allow that truism to let you ignore your own conscience, nor to alter your own conduct and character.
**Two, when you begin to invest so that you will have enough for your own retirement many decades hence, do so in a way that minimizes the extraction by the financial community of the returns generated by business. This is, yes, a sort of self-serving recommendation to invest in low-cost U.S. and global stock market index funds (the Vanguard model), but doing so is the only way to guarantee your fair share of whatever returns our financial markets are generous enough to provide.**
Three, no matter what career you choose, do your best to hold high its traditional professional values, now swiftly eroding, in which serving the client is always the highest priority. And don’t ignore the greater good of your community, your nation, and your world. As William Penn pointed out, “We pass through this world but once, so do now any good you can do, and show now any kindness you can show, for we shall not pass this way again.”
As it turns out, the warning I set forth in that speech—the need to recognize “that any endeavor that extracts value from its clients may, in times more troubled than these, find that it has been hoist by its own petard”—proved not only eerily prophetic, but surprisingly timely. The industry has been blown up by its own dynamite.
Sure enough, in July 2007, just two months after my speech, the financial sector—led, as it were, by Citigroup and investment banks Merrill Lynch and Bear Stearns—began to crumble, as the risky, reckless, complex, and costly debt instruments that its firms created began to come home to roost. Enormous write-downs in balance sheet valuations followed. By mid-2008, those write-downs in the aggregate totaled an astonishing $975 billion, with more to come.