Q: You say that individual investors have paid a heavy price for the abuses that occurred within the corporate, investment and mutual fund communities during the past few years. In what ways?
A: Individual investors have incurred high losses by paying excessive costs for executive compensation and purchasing overpriced stocks from option-enriched executives and entrepreneurs. Investors have also sacrificed returns by paying excessive management and marketing fees to funds that have delivered market-inferior returns. These costs can deprive investors of as much as 75 percent of the potential longterm returns available in the stock market simply by owning an S&P 500 Index Fund.Q: Despite the problems you point to in the book, you remain optimistic about the future. What are some of the things that make you hopeful?
A: Progressive public policy has begun to move toward the creation of a better world for investors, with laws and regulations designed to enhance the accuracy of financial statements, to increase the responsibilities of directors, and to give owners opportunities to ensure that their interests are served. However, the greatest reforms will come when an even better educated and informed investing public takes action in its own enlightened self interest.Q: If you were to distill your book down to a few key messages, what would those be?
A: It is time to abandon the managers’ capitalism that has shaken our society’s belief in the fairness of the system and return to the owners’ capitalism that built our nation. We need to build independent boards of directors who will provide prudent stewardship of the assets of the owners. We need the new controlling stockholders of corporate America the mutual and pension funds to act responsibly and solely in the interests of their investors. We need to create far more efficient systems for retirement savings that assure investors and beneficiaries of their fair share of market returns. To begin these tasks, we need to form an independent federal commission to evaluate our new agency society, with a view toward restoring fiduciary duty and trust as its objective.
