John C. Bogle, 89, who revolutionized the way Americans save for the future, championed the interests of the small investor, and railed against corporate greed and the excesses of Wall Street, died of cancer Wednesday at his home in Bryn Mawr, his family confirmed.I absolutely love this article on Jack Bogle, he was and will always remain the most important person in the investment world very few people will know about and he would be fine by that.
Mr. Bogle, a chipper and unpretentious man who invited everyone to call him “Jack,” was founder and for many years chairman of the Vanguard Group, the Malvern-based mutual-fund company, where he pioneered low-cost, low-fee investing and mutual funds tied to stock-market indexes. These innovations, reviled and ridiculed at first, enabled millions of ordinary Americans to build wealth to buy a home, pay for college, and retire comfortably.
Along the way, Vanguard, which Mr. Bogle launched in 1974, became a titan in the financial-services industry, with 16,600 employees and over $5 trillion in assets by the end of 2018, and Mr. Bogle earned a reputation as not only an investing sage but a maverick whose integrity and old-fashioned values set an example that many admired and few could match.
“Jack could have been a multibillionaire on a par with Gates and Buffett,” said William Bernstein, an Oregon investment manager and author of 12 books on finance and economic history. Instead, he turned his company into one owned by its mutual funds, and in turn their investors, "that exists to provide its customers the lowest price. He basically chose to forgo an enormous fortune to do something right for millions of people. I don’t know any other story like it in American business history.”
Mr. Bogle is the second financial titan from the region to die in the last three days. Raymond G. Perelman, the master deal-maker and philanthropist who gave away more than $300 million to the University of Pennsylvania and other causes, died Monday at his home in Philadelphia.
Like Perelman, Mr. Bogle carved a remarkable path. In 1999, Fortune named Mr. Bogle one of the investment industry’s four giants of the 20th century, and in 2004, Time listed him among the 100 most influential people in the world.
Motivated by a mix of pragmatism and idealism, Mr. Bogle was regarded by friends and foes alike as the conscience of the industry and the sheriff of Wall Street.
“He was like the last honorable man, a complete straight-shooter,” said Rick Stengel, former managing editor of Time and former president of the National Constitution Center, where he worked closely with Mr. Bogle, who then chaired the center’s board. He was fond of saying that “‘so-and-so is all hat and no cattle.’ Jack was all cattle and not very much hat.”
“Whatever moral standards I may have developed over my long life, I have tried to invest my own soul and spirit in the character of the little firm that I founded all those years ago,” he wrote in his 2008 book, Enough: True Measures of Money, Business, and Life.
While Mr. Bogle was facile with numbers, he was much less interested in counting than in what counts, and his intellectual range was broad. He revered language, history, poetry, and classical wisdom, and frequently amazed and delighted people by reciting long passages of verse. He was the author of at least 10 books, mainly about investing — all of which he proudly wrote himself.
He was a social critic, civic leader, mentor, and philanthropist whose generosity to the institutions that shaped his character, notably Blair Academy and Princeton University, far outstripped his legendary frugality.
In his 70s, he displayed the energy of men half his age, and his pace and ambition were the more remarkable because of his lifelong battle with heart disease, the result of a congenital defect that affected the heart’s electrical current.
Mr. Bogle had his first heart attack in 1960, when he was only 30, and his heart stopped numerous times thereafter. When he was 37, his doctor advised him to retire. Mr. Bogle’s response was to switch doctors.
Mr. Bogle outlived three pacemakers, and kept a gym bag with a squash racket by his desk. In 1996, surgeons at Hahnemann University Hospital replaced his faulty heart with a strong one, ending a 128-day wait in the hospital. He reunited with his doctors years later.
With his new pump, Mr. Bogle experienced an adolescent surge of vitality that left associates panting to keep up.
“Jack operated at only two speeds, as fast as is humanly possible and stop,” said Paul Miller, the late private investor and founding partner of Miller Anderson & Sherrerd, who was a close friend of Mr. Bogle’s for decades.
“He was fiercely competitive when it counted, more intellectually alert than any person I’ve ever met, willing to face — indeed, almost court — controversy and criticism, stubborn but willing to compromise when absolutely necessary, and most importantly, loving, sentimental, kind, charitable, and courageous."
His greatest accomplishment, Mr. Bogle often said, was “putting the ‘mutual’ back in mutual funds.” His most important innovation was the index fund.
Mr. Bogle had long argued that a mutual fund representing a broad range of businesses — for instance, the Standard & Poor’s 500, an index containing the stocks of 500 large publicly held U.S. companies — would not only match the market’s average return but also generally surpass the performance of actively managed funds.
“You want to be average and then win by virtue of your costs,” Mr. Bogle said. “Cost is a handicap on the horse. If the jockey carries a lot of extra pounds, it’s very tough for the horse to win the race.”
That philosophy attracted a following, including a group of grateful devotees who called themselves the Bogleheads, and convened annually to swap investment advice and pay homage to the man who had done so much to nourish their portfolios.
“What impressed me most about Jack was his humility and approachability,” said Mel Lindauer, a leader of the Bogleheads and coauthor of The Bogleheads’ Guide to Investing. “His zeal for his mission of helping investors get a ‘fair shake’ was legendary. He worked tirelessly toward that goal, and his message never changed with the investing climate. The world won’t be the same without Jack. He was a true American hero.”
Mr. Bogle had hoped that the Vanguard model — “structurally correct, mathematically correct, and ethically correct” — would goad other investment firms to give customers a fairer shake. While index funds have become widely popular, Vanguard’s competitors often have been less than keen about following the company’s penny-pinching lead.
Nevertheless, Mr. Bogle, to use a pet phrase, “pressed on regardless.” After retiring as Vanguard's chairman and CEO in 1996 and its senior chairman in 2000, he became president of the Bogle Financial Markets Research Center, quartered in the Victory Building on the Vanguard campus.
When he was not touting the advantages of the Vanguard mode of investing, Mr. Bogle, a self-proclaimed “battler by nature,” was lambasting his professional brethren for “rank speculation,” reckless assumption of debt, “obscene” multimillion-dollar paychecks, and golden parachutes, and saying they had abdicated their duty as stewards in favor of self-interested salesmanship.
Along the way, Mr. Bogle attracted his share of critics. He was called a communist, a Marxist, a Bolshevik, a Calvinist scold and zealot, a holier-than-thou traitor and subversive who was undermining the pillars of capitalism with un-American rants.
Mr. Bogle characterized his pugnacious relationship with the financial industry as “a lover’s quarrel.” His mission, he said, was simple: to return capitalism, finance, and fund management to their roots in stewardship.
“He held our industry to a higher standard than it held itself, and I think a lot of people took umbrage at that,” said Arthur Zeikel, a former Merrill Lynch & Co. CEO who knew Mr. Bogle for decades.
“He never failed to mention, in speech after speech and talk after talk, that money managers had failed miserably to earn their high fees,” said Miller, the investment manager and longtime friend. “That he was correct in calling them the ‘croupiers at the gambling table’ did not endear him to the profession.”
“Simply put, Jack cared,” said William Bernstein. “He cared enough about his clients to personally answer their letters; he cared enough about his employees to be on a first-name basis with thousands of them, and to pitch in at the phone banks when things got busy; and in the end, he cared enough about his country that he spent much of his last two decades away from home tirelessly crusading against an increasingly elephantine and dysfunctional financial system.”
John Clifton Bogle early realized the value of a penny. His grandfather, a prosperous merchant, founded a company that became part of the American Can Co., and Mr. Bogle’s early years in Montclair, N.J., were affluent. But the Great Depression eventually erased the family fortune. Mr. Bogle’s father, an improvident charmer, was ill-equipped to cope. The Bogles lost their home and were forced to move in with relatives.
Mr. Bogle was proud of the many jobs he held in his youth — newspaper delivery boy, waiter, ticket seller, mail clerk, cub reporter, runner for a brokerage house, pinsetter in a bowling alley.
“I grew up in the best possible way,” Mr. Bogle said in 2008, “because we had social standing — I never thought I was inferior to anybody because we didn’t have any money — but I had to work for everything I got.”
Mr. Bogle attended Blair Academy in northwestern New Jersey, where he blossomed academically. From there, he went to Princeton, which offered him a full scholarship and a job waiting tables in the dining hall. At first, Mr. Bogle floundered, and his low grades in economics, his major, almost cost him his scholarship. But he applied himself and slowly mastered the demands.
In December 1949, while leafing through Fortune, he happened upon an article about the embryonic mutual-fund industry, and Mr. Bogle developed the topic for his senior thesis.
Mr. Bogle produced a scholarly opus that proved to be a blueprint for his career. “The principal function of mutual funds is the management of their investment portfolios,” Mr. Bogle wrote. “Everything else is incidental.... Future industry growth can be maximized by a reduction of sales loads and management fees.”
The thesis earned Mr. Bogle a top grade, and he graduated magna cum laude. After he sent a copy to Walter Morgan, Class of 1920 and founder of the Wellington Fund, based in Philadelphia, Morgan hired Mr. Bogle. In short order, Morgan became Mr. Bogle’s mentor. In early 1965, when Mr. Bogle was only 35, Morgan anointed him his successor.
Headstrong and impulsive, Mr. Bogle arranged a merger with high-flying investment managers in Boston. For six go-go years, the partnership flourished, but when stock prices plunged in 1974, Mr. Bogle was fired.
Refusing to surrender, Mr. Bogle persuaded the board of Wellington to split from the management company that canned him and appoint him to administer the funds at cost, thereby saving a bundle in fees.
Inspired by the 1798 Battle of the Nile, during which Lord Horatio Nelson sank the French fleet, snuffing Napoleon’s dream of world conquest, Mr. Bogle chose the name Vanguard after Nelson’s flagship.
“I wanted to send a message that our battle-hardened Vanguard Group would be victorious in the mutual fund wars,” Bogle wrote in Enough, “and that our ‘vanguard’ would be, as the dictionary says, ‘the leader in a new trend.’ ”
Now one of the world’s largest investment-management companies, Vanguard vies with BlackRock and Fidelity Investments for the title of biggest mutual-fund group.
If Vanguard runs a tight ship, it’s a direct reflection of its founder. When traveling, Mr. Bogle usually took the train or flew coach. From the station or airport, he walked to his destination rather than taking a cab, or hailed a cab rather than riding in a limo, even in his 70s.
When he was president of the Constitution Center, Stengel regularly met Mr. Bogle for power breakfasts at one of Mr. Bogle’s favorite eateries, Benny’s Place at Fourth and Chestnut Streets. There, Mr. Bogle ordered his customary breakfast of two eggs over easy, fried potatoes, two slices of rye toast and coffee, all of which he consumed, Stengel recalled, in an “incredibly systematic” way. Price: $3.60. Said Stengel: “I often felt compelled to leave an extra tip so the waitress wouldn’t feel shortchanged.”
Bill Falloon, an editor at John Wiley & Sons, remembers when Mr. Bogle visited the publisher’s Park Avenue office for a marketing strategy meeting about Mr. Bogle’s The Little Book of Common Sense Investing.
Weary from the train trip, Mr. Bogle asked where he could catnap. There was no bed or couch, he was informed. Not to worry, Mr. Bogle said. Just find me a room.
“So he walked into this little office and pushed a chair over so its back was on the floor,” Falloon recalls. “And then he stretched out and put his head on the back rest.”
Before nodding off, Mr. Bogle issued instructions: “If anybody wonders what I’m doing, tell them I’m dead.”
Mr. Bogle’s children recalled growing up in a drafty house in Haverford where the thermostat was set low in winter and they piled into their parents’ bedroom on steamy summer nights because it was the only spot with an air conditioner.
“He wore the same wool ties and suits forever,” said son Andrew Armstrong Bogle. “He had no desire to be ostentatious, and he didn’t hang out with just investment titans. He was just as comfortable, if not more so, with someone whose cab he happened to get into, talking to people in the subway or to a waiter at the Princeton Club. He genuinely liked talking to people and hearing their stories.”
While Mr. Bogle may have been cheap in the transactions of daily life, he was remarkably generous in a grand way. For more than 20 years, he donated half his annual income to philanthropic causes, particularly those institutions that helped develop his mind and form his character.
At Blair, Mr. Bogle chaired the board of trustees, chose the headmaster, and helped finance the construction of several buildings.
“He was like a surrogate father to me,” said former headmaster Chan Hardwick. “He told me the most important thing in a relationship is trust, and trust is based on honesty. After he hired me, he said, ‘You’re going to make mistakes. There will be things you’ll do that you’ll wish you hadn’t, and things you won’t do that you’ll wish you had. If you’re honest with me, I’ll support you fully.’ ”
At Blair and Princeton, Bogle endowed the Bogle Brothers Scholarships, which enabled scores of budding scholars to further their education. His twin brother David died in 1995.
“He took chances on people because someone took a chance on him,” said Stengel. “Much of his own altruism stems from the fact that he was a scholarship kid.”
“It will surprise no one who knew Jack that he directed his support to financial aid and promoting community service,” said former Princeton president Shirley Tilghman. “He served his university on many occasions — from leading the Class of 1951 at its 25th reunion to advising the Princeton University Investment Co.”
Mr. Bogle’s philanthropy reflected his belief that to whom much is given, much is expected.
Two of his children followed his example of service in an obvious way. His daughter Barbara Bogle Renninger served on the board of the Gesu School in North Philadelphia, where she was also a volunteer math tutor; his son Andrew was a patron of Robin Hood, a philanthropic organization established by investment bankers and hedge-fund managers to alleviate poverty in New York City.
“When we were growing up, we were told that we’re very fortunate in so many ways and that we were expected to give back,” Andrew Bogle recalled. “We could choose our own way of contributing, whether it be time or money or just our thoughts, but we knew that the default option is that you're going to give back.”
Disengaging himself from guiding Vanguard and forging a new role for himself was challenging for Mr. Bogle, who was dismayed by the rift that developed between him and the man he had groomed to succeed him, John J. Brennan. Mr. Bogle was incapable of retirement.
Although he played no role in managing Vanguard after 2000, he continued to show up every weekday, usually in suit and tie and shined shoes, to discharge his duties as president of the Bogle Financial Markets Research Center. He wrote articles, speeches, and books, answered questions from investors, granted interviews to reporters, and continued to cultivate and encourage members of Vanguard’s “crew” while keeping a three-person staff busy.
“In a lot of ways, the last decade, an extra decade of my life, has been the happiest of my life,” Mr. Bogle said in 2008. “I’m contributing to society. I’m doing what I want to do. I’m writing what I want and saying what I want, and I think my name and reputation, for whatever that’s worth, have been enhanced.”
Mr. Bogle wasn’t afraid to criticize his own index fund creation — which he wrote may have grown too large. In an op-ed for the Wall Street Journal in 2018, he warned that the concentration of ownership created by indexing firms presented a threat to the markets.
Three index fund managers dominate the field with a collective 81 percent share of index fund assets: Vanguard has a 51 percent share; BlackRock 21 percent; and State Street Global 9 percent.
“Most observers expect that the share of corporate ownership by index funds will continue to grow over the next decade. It seems only a matter of time until index mutual funds cross the 50 percent mark. If that were to happen, the ‘Big Three’ might own 30 percent or more of the U.S. stock market — effective control. I do not believe that such concentration would serve the national interest,” he wrote.
Another institution that benefited tremendously from Mr. Bogle’s involvement was the Constitution Center, whose board he chaired from 1999 to 2007.
“Introducing the center to the nation with Mr. Bogle as chairman was a huge advantage,” said Joe Torsella, the center’s president at the time and now Pennsylvania treasurer. “It declared to the outside world that we were national and bipartisan, and aspired to the highest level of excellence.”
Mr. Bogle served on numerous boards during his career, including the board of governors of the Investment Company Institute, which he chaired in 1969 to 1970. He was also a fellow of the American Philosophical Society and the American Academy of Arts and Sciences. He received honorary degrees from a dozen universities, including his alma mater, which also bestowed on him its highest accolade, the Woodrow Wilson Award, for “distinguished achievement in the nation’s service.”
In addition to squash, Mr. Bogle enjoyed tennis and golf, sailing, and summering at Lake Placid, N.Y. He kept his wits sharp by daily attacking the New York Times crossword puzzle, which he was known to complete in less than 20 minutes.
Mr. Bogle especially loved to write. Most recently, he published Stay the Course: The Story of Vanguard and the Index Revolution” (Wiley, 2018).
“I don’t think there’s an author who spent greater care on the words he chose,” said Falloon, the Wiley editor who worked with Mr. Bogle. “When he did a book, he was so meticulous; he’d rewrite and rewrite. He always went the extra mile to make sure there wasn’t a single person who could not understand what he was saying.”
Despite the heavy demands on his time, Mr. Bogle put his family first. When his children were growing up, he was almost always home for dinner.
“This was our time to talk to each other and find out what was going on in each other’s lives,” Andrew Bogle recalled. “Looking back now, I find it remarkable that he was able to work as hard as he did but still say, ‘This is a priority and what I’m going to do — be home every night.’”
Another family rite revolved around the Fourth of July, a holiday that evoked Mr. Bogle’s strong sense of patriotism. Children and grandchildren gathered at the family camp on Lake Placid. They sang patriotic songs (Lee Greenwood’s “God Bless the USA” was a favorite), and Mr. Bogle raised a toast to the country of which he was so proud.
“My dad may have seemed like a hard-charging businessman, but underneath there was real emotion and care and concern and empathy,” said daughter Barbara. “Even as he became more prominent, he did not change within the family. He remained a man without pretense and pomposity.
“When he had the heart transplant, it changed him dramatically. He became much more connected to the family. He was very emotional, and teared up easily over things. He was literally reborn, and he really appreciated the chance of having a second go at life.”
A man who believed in the value of introspection and who was always questioning his own motives and behavior, Mr. Bogle sought to define what it means to lead a good life. It was not about wealth, power, fame and other conventional notions of success, he concluded.
“It’s about being a good husband, a good father, a good colleague, a good member of the community. Everything else pales by comparison. The accumulation of material goods is a waste — you can’t take them with you, anyway — and the waste is typified by our financial system. The essential message is, stop focusing on self and start thinking about service to others.”
In addition to his son and daughter, Mr. Bogle is survived by his wife, the former Eve Sherrerd, whom he married in 1956; children Jeanne Bogle England, Nancy Bogle St. John, Sandra Hipkins Bogle, and John C. Bogle Jr.; and at least 12 grandchildren.
A private service will be held next week.
You might find it odd that I'm devoting an entire post on Jack Bogle but I can think of nobody else who has helped millions of retail investors all over the world invest properly in markets using low-cost exchange-traded funds (ETFs), and help build their retirement savings over the long run.
Jack Bogle realized early on the value of 1) proper diversification, 2) keeping fees as low as possible and 3) staying the course over the long run.
And it's not just retail investors. Institutional investors including mutual funds and hedge funds routinely invest in ETFs to lower their cost and mimic market returns.
You can call Jack Bogle a maverick, a legend, a titan, the great disrupter but these are all titles he cared little about.
His measure of success was simple: “It’s about being a good husband, a good father, a good colleague, a good member of the community. Everything else pales by comparison. The accumulation of material goods is a waste — you can’t take them with you, anyway — and the waste is typified by our financial system. The essential message is, stop focusing on self and start thinking about service to others.”
Bogle comes from another generation, the greatest generation. The late President George H.W. Bush also came from that generation. There aren't many people left from this generation, much to the detriment of our society.
In a society where we glorify billionaire money managers for reaching the pinnacle of success, Jack Bogle has done more to irrevocably change the investment landscape for everyone than all these billionaires put together.
His net worth was roughly $80 million, nothing to scoff at, but when you read about the outrageous pay packages being doled out on Wall Street to investment managers producing mediocre long-term results, you realize Bogle earned every penny of his fortune.
Today, Vanguard is one of the largest investment companies in the world with over $5 trillion in assets under management, 16,000+ employees working in 18 locations worldwide, and 20 million investors in over 170 countries. The firm produces great research and has an excellent YouTube channel.
The very same values that Jack Bogle brought into work every day remain the guiding principles of this company which posted a beautiful tribute to its founder on its site.
In terms of retirement, millions of investors are now able to save and earn more over the long run because of Jack Bogle, up to 30% more over many decades (if not more from saving on lower fees as they get exposure to the stock market over many years).
Active managers including hedge funds criticized Bogle and the shift to passive investing but the truth is he had the last laugh and always put investors' interests first.
We can have a debate, a rigorous debate on the limits of passive investing and I'm sure Jack Bogle would welcome it, but there's no denying the shift to passive investing is here to stay and it will grow over the decades to come.
Still, my personal belief is there will be periods where active investing will outperform passive and there will always be a mutually symbiotic relationship between the two.
Also, the boon in passive investing since the 2008 crisis was helped by the longest bull market in history which was in turn helped by quantitative easing from the Fed and other central banks.
In other words, the structural landscape for the boon in passive investing couldn't have been better. It will be a lot tougher growing passive assets in a long bear market or a long sideways market that goes nowhere (that's where active managers will shine but you still need to find them and make sure they aren't charging you crazy fees for outperforming the market which is no easy feat).
And in his last major interview, Jack Bogle gave a warning about this bull market:
In a Barron’s interview published in December, Bogle said investors should prepare for 2019 by decreasing exposure to stocks and increasing investment in defensive strategies, such as fixed income securities like bonds.The full Barron's story is available here and it's well worth reading, especially now that markets snapped back and everything seems fine.
“Trees don’t grow to the sky, and I see clouds on the horizon. I don’t know if and when they’ll arrive. A little extra caution should be the watchword,” Bogle told Barron’s. “If you were comfortable at a 70 percent to 30 percent [allocation to stocks and fixed income], under these circumstances you’d like to go back to 60 percent to 40 percent, or something like that.”
Bogle did not believe investors for the long term should try to pull completely out and time the market, which he said is “a really dumb strategy.” Instead, he said it’s time “to really be thinking how much risk you want to have” and make some defensive moves.
“If I had a big liability in a year, I’d get prepared for it right now,” Bogle added.
Even before the year-end extreme stock market volatility, Bogle told CNBC in April that he had never seen volatility like this in his 66-year career. For 2018, the S&P 500 and Dow Jones Industrial Average posted their worst annual losses since 2008.
Vanguard has more than $5 trillion under management.
Bogle's wisdom, however, goes way beyond markets and investing. He was much more concerned about civic duty and helping the less fortunate.
In fact, if you were to teach your children a few life lessons, I would start by making them read Jack Bogle's The Little Book of Common Sense Investing and then teach them the following:
- If you always spend more than you earn, you'll never save a dime.
- Diversify your investments. Your first $10,000 should be invested in the S&P 500 ETF (SPY) and as you build your nest egg over the years, maintain an appropriate balance between stocks and bonds (70/30, 60/40 or even 50/50 if you're very conservative). You can invest in individual stocks later after you've built a nice nest egg.
- Rebalance your portfolio at least once a year and sometimes more often, like after a disastrous quarter where stocks get roiled.
- Whether or not you become a successful investor following these principles, always give back to society and help those who are less fortunate than you. It's simply the right thing to do and it will give your life a lot more meaning and purpose.
That's exactly what Jack Bogle did and the more I read about him, the more impressed I am with his intellectual breadth and depth and his generosity.
So, for all these reasons, I dedicated an entire post to this great man, he deserves it.
And I agree with Warren Buffett on Jack Bogle: "If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value."
Below, John Clifton "Jack" Bogle was an American investor, business magnate, and philanthropist. He passed away on Wednesday, January 16 at age 89. I embedded a clip in honor and remembrance of his legacy as a champion of index investing and putting investors' interests first, both of which were core principles in the company he founded, The Vanguard Group. If it doesn't load below, watch it here.
In the second clip, Jack Bogle explains why "if you hold the stock market, you will grow with America." Wise advice from one of the greatest long-term investors of our time.