Tags: Sloan | Vanguard | Buffett | important

Allan Sloan: 'Vanguard Much Less Fun Than Buffett, But Far More Important'

By    |   Friday, 15 May 2015 09:58 AM

Vanguard founder John Bogle and Berkshire Hathaway CEO Warren Buffett share much of the same investment philosophies. But the public treats Buffett like a rock star, while Bogle isn't quite as prominent.

"Comparing Buffett with Vanguard is like comparing a matinee idol who glories in his performance with a wallflower who devoutly wishes to be nothing but average," writes Allan Sloan, a columnist for The Washington Post.

"And average is the whole shtick of index funds, which aim at replicating the results of a stock index rather than trying to top its performance, as active managers do." Vanguard specializes in index funds.

Berkshire has a strong long-term track record of outperforming the S&P 500 index.

But "even though Vanguard is much less fun than Buffett, it’s far more important to retail investors," Sloan says.

"Buffett is a one-trick pony — though it’s a great trick — while Vanguard offers lots of easy-to-buy, low-cost index fund choices — or low-cost actively-managed funds. That’s why its investor body is measured in the millions, while Buffett’s is in the thousands."

The lesson of this comparison: "there are different roads to success," Sloan notes. "Buffett has prospered by being extraordinary. And Vanguard has prospered by being totally ordinary."

Elsewhere on the Buffett front, for years he has said he's reluctant to invest in technology stocks, because he doesn't understand the industry. Meanwhile, his Berkshire Hathaway is Coca-Cola's biggest shareholder.

But Buffet has sung the praises of the online home-sharing company Airbnb, and he had a business ties with Coke's arch rival, PepsiCo, writes Lucy Mueller of Go Banking Rates.

As for Airbnb, check out what Buffett wrote about it in his letter to Berkshire Hathaway shareholders this year.

"Airbnb's services may be especially helpful to shareholders who expect to spend only a single night in Omaha and are aware that last year a few hotels required guests to pay for a minimum of three nights. Those people on a tight budget should check the Airbnb website."

He was addressing shareholders who were traveling to Berkshire's annual meeting.

When it comes to Pepsi, Berkshire insured the company for a $1 billion sweepstakes the beverage company ran in 2003. Berkshire's profit: $10 million.

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Vanguard founder John Bogle and Berkshire Hathaway CEO Warren Buffett share much of the same investment philosophies. But the public treats Buffett like a rock star, while Bogle isn't quite as prominent.
Sloan, Vanguard, Buffett, important
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2015-58-15
Friday, 15 May 2015 09:58 AM
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