"You need investors to give a damn. They're the owners. A hundred institutional investors own 50 percent of all the stock in America. But where have they been? Has anyone heard from them? I call it the silence of the funds." -- John Bogle

Bogle is right, but one of the paradoxes of diversification is that no single fund holds a position in any one stock greater than 1-2% of their assets, so one fund's stake never amounts to much. Maybe the total shares in one company held across multiple funds within one fund family would amount to something more significant, but again it wouldn't be that large.

A better point to make is that mutual fund managers are not true owners anymore (if indeed they ever were?), but have become short-term traders instead. Buffett talked about this in the interview I posted from the other day.

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This news headline from today should make you chuckle: Wade Cook Financial Agrees to Bankruptcy. An excerpt: "In October 2000, the company, which charges $6,295 for its 16- hour 'Wall Street Workshop,' settled Federal Trade Commission charges that it misrepresented its stock trading success to attract customers. The company disclosed that it lost 89 percent of its stock portfolio's value in 2000 and 60 percent in 2001."

There will always be hucksters shamelessly promoting so-called "workshops" to gullible investors. Las Vegas is a popular, though amusingly dubious, venue for these "study sessions." Swindlers brazenly charge ridiculous sums of money (for example, $1,250 per person for a one-day meeting) in exchange for the "secret" to their success. Raking in money from the naive and the desperate sure beats trading for a living!

But self-styled gurus looking to make a quick buck off the innocent have to be careful about making claims of expertise, because regulators like the FTC, CFTC, SEC (and our friends to the north at the BCSC) are actively watching, and building cases against, these greedy charlatans.

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