Jack Bogle

A suburban Philadelphia pension fund drove a dozen miles to have Vanguard’s Jack Bogle tell them to invest in index funds. One imagines that Googling “Jack Bogle” would have had the same effect.

Then again, maybe the statue convinced them to give almost all of their money to Jack Bogle. Read more »

  • 11 Dec 2012 at 1:50 PM

Markets Ruined By Too Much, Too Little Liquidity

A cool thing about financial markets is that every trade has two sides, so everything that happens, someone can complain about. “Economic growth is too robust!,” someone probably says, when it is.

Does that help explain the difference between this CNBC article about investors who are mad that there’s too much trading in the financial markets, and this Bloomberg article about investors who are mad that there’s too little trading in the financial markets? Compare these stats:

While companies raise about $250 billion a year in equity financing through IPOs and additional equity offerings, [Vanguard founder Jack] Bogle said there’s $33 trillion worth of trading going on, “which is [bad].”

With these stats:

Average volumes of bonds changing hands each day this year represent 0.29 percent of the market’s face value, according to data compiled by Bloomberg and Trace, the Financial Industry Regulatory Authority’s bond-price reporting system. That’s down from 0.32 percent in 2011 and 0.5 in 2005. …

An average of $16.93 billion of investment-grade and high- yield bonds traded every day this year as the value of outstanding corporate bonds rose to $5.72 trillion, according to Finra and Bank of America Merrill Lynch index data. … Dollar-denominated corporate bond issuance of $1.4 trillion this year is up from $1.13 billion in 2011 and surpassed the previous record of $1.24 billion in 2009, Bloomberg data show.

So … probably not, right? Just different markets. Bond volumes are famously drying up due to impending Volcker bans on prop trading, increased agita about allocating capital to trading books at banks, etc., while stock volumes are famously zoomsploding due to high frequency trading and evil speculators who are only in the financial markets to make money, the jerks.1

But if you take the numbers in those two excerpts and sort of throw them all together you get … I dunno, what do you make of this? Read more »