"Everybody says the task is to restore investor confidence. I disagree," John Bogle, legendary investor and founder of the Vanguard family of mutual funds, said at the recent IPAA investment conference in New York. From an evaluation of the wave of corporate scandals and attempts at reform, he concludes that institutions, companies and investors must return to the principals and values of the founding fathers. "The task is to restore the integrity of the business and financial system. Our economic growth depends on capital formation." Bogle is calling for a higher set of principals and character for individuals and companies. "We all let greed overrule our reason [in the booming 1990s]." The 100 largest financial institutions own 50% of all the common stock in the country and they must take a more active role, he said. "We need a whole new mindset among investors-shareholders ought to start acting like the owners they are instead of acting like traders. Ownership entails rights and responsibilities." He decried the recent tendency of corporations to be managed for the short-term benefit of stock speculators rather than the long-term interests of the business itself, or of the common investors. "There was too much focus on the price of the stock and not enough on the value of the corporation behind the stock," he said. "When you can't meet your numbers by making them, then meet them by counting [tricks]. Push accounting practices and mergers for growth instead of building intrinsic value." -Leslie Haines
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