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Warren Buffett’s annual Berkshire Hathaway letter is seen as a financial goldmine by many investors. In this year’s letter, in addition to dispensing financial insights, Buffett gives a tip of the hat to an accomplished financial advisor.
Many investors would cite Warren Buffett as an example of an altruistic financial innovator. According to the Oracle of Omaha, though, John Bogle, the founder of Vanguard, is the MVP of financial experts in the United States.
Buffett writes that Bogle has done more for American investors than anyone else, according to Business Insider. Buffett explains that, rather than seek the high fees many fund managers receive, Bogle urged investors to put their money in index funds where they could achieve superior results by avoiding unnecessary fees. Bogle’s Vanguard Group pioneered index fund investing and helped investors achieve superior returns.
The fees that Bogle refused to charge could easily have made him a billionaire. Instead, he has become moderately wealthy while protecting the earnings of millions of Americans. It certainly seems that John Bogle is a fund manager who puts investors’ needs first.
Bogle’s index fund idea was initially contrarian, but it has become accepted wisdom by conservative investors. Index funds have revolutionized investing, allowing ordinary investors to diversify their holdings across sectors and across the entire market.
For an individual seeking to altruistically serve humanity, becoming a fund manager might not be an obvious choice. Clearly, though, a fund manager with integrity can make a positive difference in millions of lives.
In the wake of the subprime mortgage meltdown, in which the integrity of the financial system has been questioned, money managers at all levels could learn a lesson from John Bogle. There is nothing inherently greedy or anti-social about working in the finance industry. As in any industry, ethical people can use their positions to make the world a better place.
Many people view Warren Buffet as a saint. Admittedly, it’s actually kind of hard not to like the guy. Sure, he is one of the wealthiest people in the world. He controls billions of dollars. However, he just seems so downright folksy and charming. He has lived in the same house since the 1950s. He has pledged to give away nearly all of his fortune. He has even stated people like him should be taxed more! What’s not to like?
Unfortunately, there are at least a couple of things about Warren Buffet that should give a critical thinker pause. First, Warren Buffet is not wealthy because of his loyalty to social causes or philanthropic projects. Rather, he is wealthy because of his pure devotion to business. This means Warren Buffet is a nice guy as long as his business needs are satisfied. However, if there is a business goal Buffet wants to achieve, you’d better not be standing in his way!
Evidence for this can be seen in his silence on two huge topics during his annual letter to shareholders in 2017. Buffet discussed lots of folksy things. However, he made two glaring omissions. First, he failed to fully discuss Wells Fargo Bank. He also failed to fully discuss the Kraft Heinz Company. Buffet is heavily invested in both companies, and both companies have raised the public’s ire. Wells Fargo Bank is being sued for signing up people for thousands of accounts that were never approved by customers. Meanwhile, Kraft Heinz was gutted by a private equity firm. This gutting put thousands of men and women out of work in order to send profits soaring.
Buffet surely failed to heavily discuss these two companies in his annual letter in order to prevent the companies from receiving any more bad press. However, this just goes to show that Buffet succeeds at being so approachable and folksy simply by studiously avoiding the airing of his dirty laundry. People should never forget that Buffet has his own share of dirty business laundry. He just happens to be extremely adept at keeping it off the radar.