Summary of John C. Bogle's The Clash of the Cultures , livre ebook

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30 pages

English

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Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 The financial sector has become far too complex to be able to predict short-term fluctuations in stock prices with any accuracy. The prices of common stocks are evanescent and illusory.
#2 The extent of this step-up in speculation can be measured by the dollar value of trading volume as a percentage of market capitalization. When I entered the business in 1951, stock turnover was about 15 percent. In recent years, we have traded about 4. 25 trillion shares of stock daily, which is about 2 trillion shares in dollar terms.
#3 The increase in stock market trading volume has led to an increase in stock market efficiency, but it has also led to the increase in systemic risk in equities, higher cross-sectional trading volatility, and higher correlations among stocks.
#4 The primary market, which is supposed to provide fresh capital to business, has actually done the opposite. The secondary market, which is supposed to provide capital formation, has actually done the biggest damage to the economy.

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Publié par	Everest Media LLC
Date de parution	28 mars 2022
Nombre de lectures	0
EAN13	9781669372448
Langue	English
Poids de l'ouvrage	1 Mo

Informations légales : prix de location à la page 0,0150€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

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Insights on John C. Bogle & Arthur Levitt's The Clash of the Cultures
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4 Insights from Chapter 5
Insights from Chapter 1

#1

The financial sector has become far too complex to be able to predict short-term fluctuations in stock prices with any accuracy. The prices of common stocks are evanescent and illusory.

#2

The extent of this step-up in speculation can be measured by the dollar value of trading volume as a percentage of market capitalization. When I entered the business in 1951, stock turnover was about 15 percent. In recent years, we have traded about 4. 25 trillion shares of stock daily, which is about 2 trillion shares in dollar terms.

#3

The increase in stock market trading volume has led to an increase in stock market efficiency, but it has also led to the increase in systemic risk in equities, higher cross-sectional trading volatility, and higher correlations among stocks.

#4

The primary market, which is supposed to provide fresh capital to business, has actually done the opposite. The secondary market, which is supposed to provide capital formation, has actually done the biggest damage to the economy.

#5

The issuance of corporate debt is another function of the economic mission of finance. However, too much of this debt was based on fraudulent lending and phony figures that were willingly accepted by rating agencies.

#6

The financial markets have been rocked by a huge wave of speculation. This speculation is not limited to individual stocks. Trading in derivatives, whose values are derived from the prices of the underlying securities, has skyrocketed.

#7

The main economic functions of the equity markets are to link savers to business profits and to encourage the efficient allocation of capital. However, the regulatory framework has increasingly favored liquidity and trading activity over long-term ownership.

#8

The more we pay, the less we get. And if we pay nothing, we get everything, the market return. The reality of the investment business is that as a group, we investors don’t get what we pay for, which is the returns earned by our corporations.

#9

Wall Street is a casino, and has been for a long time. It provides the liquidity on which long-term investors and short-term speculators depend. Wall Street also facilitates the capital formation that long-term investors need, but which short-term investors rely on as well.

#10

The rise of the investor/agent has been driven by changes in the elements of investing. The old ownership society, in which individuals held 92 percent of U. S. stocks in 1950, has been replaced by a new agency society in which institutions, now holding 70 percent of stocks, predominate.

#11

The rise in institutional ownership and the reduction in transaction costs helped fuel the rise of speculation. Wall Street’s total commission revenues doubled in the past decade, even though commission rates were reduced.

#12

The culture of speculation was accelerated by a new breed of institutional investor: the hedge fund, which typically turns over its portfolios at a 300 to 400 percent annual rate.

#13

The rise of speculation also reflects a broader change in American culture. All across the country, trusted professions have increasingly taken on the characteristics of businesses, and we Americans like to buy things in abundance before we have the cash to pay for them.

#14

The third driver of stock market speculation is the public’s and analysts’ optimistic expectations about future growth. This invites the application of formulas out of higher mathematics to establish the present value of the favored issues.

#15

The change in the culture of financial markets, and in the conduct, values, and ethics of so many market participants, has been fostered by the profound change that has taken place in the nature of our financial markets.

#16

In 1936, Keynes wrote that the stock market would become a battle of wits to anticipate the basis of conventional valuation a few months ahead of the general public. Six decades later, I had to concede that Keynes was right.

#17

The dominance of a culture based on short-term speculation has major implications that go far beyond the confines of our financial sector. It distorts our markets and ultimately distorts the way our businesses are run.

#18

The largest financial rewards in our nation are received by an investment community that subtracts value from its clients, while the business community adds value to society. This system is likely to bring social discord to our society and engender a harsh public reaction to today’s record disparity between the tiny top echelon of income recipients and the great mass of families at the base.

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