Today CNBC's NetNet ran a great piece by their Senior Editor John Carney (http://www.cnbc.com/id/44599404/comid/1/cache/238#comments_top) about a fund manager's idea that the government should "license" board directors. John classifies this as "The Worst Idea of the Week" and I agree. I wrote a comment to his piece as follows:

There is no need for the government to "license" board members whatsoever. There already exists several Director Education groups within the country.

What really needs to happen is for more asset and mutual fund managers to take a greater interest in corporate governance, not only as an investment risk, but also as a force multiplier for alpha. If the largest holders of shareholder value behaved more like Bill Ackman, the Pershing Square Hedge Fund Manager, everyones equity investment boat would rise. And we also wouldn't have the need for Sarbanes-Oxley or Dodd-Frank.

This country is awash in MBA's and CFA's who wouldn't buy a car before looking at the car-fax, but would invest other peoples' money in the next Enron. They wouldn't hire a Jr. book-keeper without a background check, but couldn't care less about the corporate character of a firm added to the S&P 500 index. This idiocy and willful ignorance has to stop.

And this is why their should be some form of fiduciary standard enforced upon these firms - the largest holders of shareholder equity in America.

Great WSJ Interview with John Bogle

Jason Zweig, The Intelligent Investor writer for The Wall Street Journal, had a marvelous interview with a man I consider a genuine American Hero - John Bogle, founder of the Vanguard Mutual Fund Family of Funds (see it here; http://online.wsj.com/video/jack-bogle-why-mark-cuban-is-wrong-on-investing/A12A870B-7B21-42F5-BCA6-69329DDF5CA0.html?mod=WSJ_hpp_mpvidcar_2). Likewise Mr. Zweig follows up his interview with an equally as good column(http://online.wsj.com/article/SB10001424053111904103404576560913892680574.html) offering the reader additional insight and anecdotes.

Everyone out there who considers themselves a long-term investor should take advantage of this interview and column and steady themselves against what you see and hear about our financial markets. More and more our markets appear to be taken over by investment ghouls whose sole purpose is to diminish the value of investing and replace that disciplined approach with the instant gratification of "flash-trading". To me it's as if the rules of our roads were taken away and the Indy, Formula 1 and NASCAR drivers were driving with us on our own streets and highways, imagine that if you will? You and I simply wish to get from Point A to Point B, but these other drivers are allowed to drive among us at speeds that can approach 275mph! Their goal is to simply get there faster than you and in the process, maybe damage that car (mutual fund) of yours or even total it (an individual stock holder).

The SEC and CII should really be investigating all of these "dark-pools", HFT's, and ETF caused market swings. To my mind, these are what the front-runners were of the 1920's. Our long-term interests are being gamed and men like John Bogle are calling out the industry to do something about it.

Timely John Bogle on CNBC - 8 August 2011

It was really great to see John Bogle on CNBC today and weigh-in on his views regarding the S&P downgrade - http://video.cnbc.com/gallery/?video=3000037855 . It was also good to see and hear Jim Cramer asking Mr. Bogle a few prescient questions regarding ETF's and how ETF's are used by HFT (high-frequency-traders) to speculate. Both men agree that the SEC is not doing its job once again.

ETF's, HFT's, Dark-pools, have all made it much for difficult for "small" investors to have full-faith in the equities markets. The small investor knows they are being used as pawns and that "price discovery" and "liquidity" have very little to do with with why ETF's, HFT's and Dark-pools exist. They exist because they all make lots of money at the expense of others. They exist to "hide" activity, not to make the market more open, more transparent, or more accessible to the small investor. If the the SEC really cared why would they ever permit something called a "dark-pool" to exist in the first place; it's very name reveals it's purpose - "we're doing something we don't want the market to know about" in a very big way!

Acting Like An Investor - Bill Ackman

This weekend BARRON'S ran a wonderful profile by Jon Laing of hedge-fund manager Bill Ackman's PERSHING SQUARE CAPITAL MANAGEMENT titled, "The Happy Warrior". However, it was the cover title that caught my eye, "America's Amiable Activist".

The term "Activist" in investment circles usually conjures up the stereotype of the liberal gadfly railing against the corporate machine to change their ways, not kill snail-darters and butterflies, ceasing making bullets, booze, cigarettes, or only employee union workers. Here, however, the term "activist" really means "rational investor". For what Bill Ackman has done is engage companies he and his investors have "invested in" and coached, prodded, and charmed the coporate boards and managements of these firms to make better use of their corporate capital.

As some mutual fund managers might say, "In his doing this, he has essentially given other investors in these very same companies a free ride; his actions have not only lifted Pershing Capital's boat, but every fund manager who has invested in these same companies." Imagine if more professional investors acted more like Bill Ackman and, in turn, their actions in engaging corporate managers and boards created the kind of success and returns Bill Ackman's clients enjoy.

Acting more like an interested and concerned investor just might lead to better returns for everyone and even a more robust economy. I thought this is what Capitalism was all about.