R.I.P. Jack Bogle: An Investor’s HeroSubmitted by Bernhardt Wealth Management on January 22nd, 2019
On January 16, the investment industry lost a giant with the passing of John “Jack” Bogle at age 89. Bogle founded the Vanguard Group of Investment Companies in 1974 upon the simple notions—highly controversial at the time—that most investment managers cannot consistently outperform the markets over the long term, and that ordinary investors should have access to “owning the index”: being able to purchase an investment that mirrors the performance of the broad market indexes. Vanguard’s flagship fund, the Index 500 Fund, has attracted $441 billion since its beginning, and less than half of actively managed mutual funds have managed to outperform it. As a whole, Vanguard presently manages almost $5 trillion in assets.
Bogle was among the first to espouse and advocate for many of the principles that we incorporate in our fiduciary advising practice. Quoted in a New York Times interview in 2012, Bogle said, “Costs matter . . . Intelligent investors will use low-cost index funds to build a diversified portfolio of stocks and bonds, and they will stay the course. And they won’t be foolish enough to think that they can consistently outsmart the market.” He also is famous for his mantra, “Impulse is your enemy.” He elaborated, in a communication posted on a Vanguard website, “Eliminate emotion from your investment program. Have rational expectations for future returns and avoid changing those expectations in response to the ephemeral noise coming from Wall Street.”
We could not agree more. As we recently discussed in a blog article, the loud proclamations in the financial media are intended to garner clicks, “likes,” “shares,” and, ultimately, advertising revenue. They are not often a source of useful information for the individual investor. Like Bogle, we search relentlessly on our clients’ behalf for the most cost-efficient investment vehicles we can find, realizing that controlling costs is foundational to the financial success of any enterprise. Finally, we consistently counsel our clients to formulate a long-term strategy consistent with their goals and investment temperament and then to stick to it for the long haul—to “stay the course,” as Jack Bogle put it.
Jack Bogle’s common-sense approach to investing was canonized in his best-selling books, including Bogle on Mutual Funds, first published in 1993. Economist and Nobel laureate Paul A. Samuelson wrote in a foreword to that work, “John Bogle has changed a basic industry in the optimal direction. Of very few this can be said.” Bogle’s other books are Common Sense on Mutual Funds (1999, now in a 10th anniversary edition) and The Clash of the Cultures: Investment vs. Speculation (2012).
A man who regularly gave away half his salary to charity, Bogle will long be remembered as the person who brought index investing within the reach of the ordinary investor. He will also be revered for putting the benefit of those ordinary investors ahead of his own personal wealth—a fact he was proud of. Financial reporter Jeff Sommer wrote in a New York Times article on the date of Bogle’s death, “He built something bigger than personal wealth: a reasonable way for great masses of people to get a more equitable share of the world’s financial pie.” It is difficult to imagine a more honorable tribute.