PT - JOURNAL ARTICLE AU - John C. Bogle TI - A Question So Important that it Should Be Hard to Think about Anything Else AID - 10.3905/jpm.2008.701621 DP - 2008 Jan 31 TA - The Journal of Portfolio Management PG - 95--102 VI - 34 IP - 2 4099 - https://pm-research.com/content/34/2/95.short 4100 - https://pm-research.com/content/34/2/95.full AB - While the simple investment principles espoused 60 years ago by Benjamin Graham remain valid today, investment strategies have become far more active, as the financial sector has come to play a dominant role in our economy. Mutual funds have become less diversified; their portfolio turnover has risen sixfold; and investors now hold fund shares for dramatically shorter periods. Fund expense ratios have risen sharply, a manifestation of the soaring costs of the U.S. financial sector, estimated at $528 billion in 2007. Financial sector earnings have risen commensurately, to more than $200 billion, contributing as much as one-third of the aggregate profits of the S&P 500. As gross return in the financial markets, minus the costs of intermediation, must equal the net return delivered to investors, such costs constitute a substantial drag on investor wealth. Yet both the profession and the academic community have largely ignored systemwide costs. It is high time for an in-depth study of the costs and benefits of our financial system, to ensure that it functions in the national public interest and in the interest of investors.TOPICS: Financial crises and financial market history, exchanges/markets/clearinghouses, mutual fund performance