Jack Bogle 1929-2019
Jack Bogle’s heroism takes many forms. His gifts are well beyond financial/investing/money and have affected my life big time. My late husband, Dan, and I loved this man for good reason. At the end of this blog, read the tributes of his life and legacy from mainstream media, financial news, professional financial industry, financial reporters and other famous investors such as Warren Buffett.
In our free downloadable book, Late Bloomer Millionaires, we wrote about Jack’s influence on our investing development throughout the book. We cited or quoted him eleven times. His personal and professional values touched ours, and the company he started Vanguard Group reflects those values 100%, that is the primary reason why I have almost all of my money in Vanguard.
In our book Late Bloomer Millionaires, starting at the top of page 65 we wrote:
Eureka! The Man Who Created Index Funds
Steve found his epiphany at the popular Bogleheads.org investment forum and in John Bogle’s books about index funds. This forum includes many savvy and gratis contributors committed to balanced investing and indexing. It’s rare to find free unbiased resource where real people answer your specific financial questions. Affectionately titled “St. Jack” by thousands of his followers, Bogle founded the Vanguard Group in 1975 and made it into the most respected mutual fund company in the world.
At 82, he champions his pioneering efforts on behalf of low-cost index investing. After the tech bubble disaster, this was a man we wanted to know more about—a lot more. He created and introduced the first index fund, Vanguard 500 (VFINX), in 1976. He continued indexing the major asset classes discussed in chapter 4. In 1999 Fortune Magazine named Bogle one of the four investment giants of the twentieth century. Bogle’s adversaries are the same as ours—those employed in the financial industry who put their interests over us.
That did it: we found a like-minded professional friend. His investment strategy isn’t beholden to Wall Street’s values of charging enormous costs and encouraging reckless trading. His reasonable philosophy of investing fits our non-competitive California hippie values.
Bogle’s indexing strategy rarely trades. It provides average market returns. A good investment benefits all parties involved. Nothing cutthroat—it’s straight forward and ethical. We were relieved to find a common sense approach that built on what was congruent with our comfort level and values. Legions of investors have been attracted to indexing for their core holdings. Vanguard has $1.7 trillion in assets held for millions of people, making it the largest mutual fund company in the world. Bogle’s personal ethics pervade Vanguard’s corporate culture differentiating it from other investment companies. Vanguard has no shareholders.
It isn’t publicly traded or privately owned, unlike almost all the other Wall Street investment firms. The investors own Vanguard–people like us who buy its index fund shares. Vanguard has one master—the clients. The Vanguard executives embrace genuine fiduciary responsibility to their clients as evidenced by the following three basic Vanguard principles (Vanguard.com website):
- We’re owned by the funds that are owned by clients like you, so we have no competing loyalties. We don’t pay profits to a private owner or stockholders. We always keep your long-term interests in mind—even closing funds when necessary to keep away short-term performance chasers.
- Your funds are at-cost. You pay what it costs us to run the funds. By investing at cost, you keep more of your returns working for you, giving you a great start on reaching your financial goals.
- We help you focus on the long term. We don’t get caught up in the emotion of Wall Street’s mood swings—and we tell you why you shouldn’t either. We follow a disciplined long-term approach through good markets and bad. That’s just another way we keep your interests first. Their [Wall Street] self-interest will not soon change.
But as an investor, you must look after your self-interest.—John Bogle
Vanguard’s employee bonuses are only approved for cost-saving ideas: those which benefit their clients. Can you imagine Goldman Sachs approving their millions upon millions in employee bonuses due to cost saving ideas which directly benefit their clients? Not a chance, that will never happen. Vanguard and Wall Street’s corporate cultures are as disparate as Ghandi and Madoff.
Mr. Bogle has been gone for a week and the tributes of this giant of a man keep pouring in.
Below are his most prized gifts written by hundreds of admirers that Jack freely gave to the financial industry, DIY investors, America, and the world:
Student of the Industry
Mr. Bogle started in the budding mutual fund business in 1951 when his senior thesis caught the eye of Walter L. Morgan, founder of the Wellington Fund. The enterprising Princeton economics major penned the thesis, “The Economic Role of the Investment Company,” after reading a 1949 article inFortune magazine about the $3 billion mutual fund industry.
Protégé
“He knows more about the fund business than we do,” Walter Morgan told his colleagues before hiring Mr. Bogle at Wellington Management Company. Mr. Morgan would eventually name his fellow Princeton graduate as his assistant, and the two would go on to share a nearly 50-year friendship. Mr. Bogle later expressed gratitude to his mentor, who “took on a shy, crew-cut, boyish-looking, insecure, energetic, serious, and terribly ambitious young man and gave him his first break.”
Innovator
Wellington Management Company traces its roots to the 1929 founding of the Wellington Fund (now Vanguard Wellington Fund), the nation’s first balanced mutual fund. At Mr. Bogle’s urging, the firm diversified its product lineup in 1958 with the introduction of the all-equity Windsor Fund. Later, under his leadership at Vanguard, other innovations would follow, including multitiered municipal bond portfolios in the 1970s, bond index funds in the 1980s, and tax-managed funds in the 1990s.
Whiz Kid
In 1965, at age 35, Mr. Bogle was named executive vice president of Wellington Management Company. A year later, he merged the firm with Thorndike, Doran, Paine & Lewis, a Boston-based money management firm. Institutional Investor magazine dubbed the dynamic team of five young executives “The Whiz Kids.” Mr. Bogle subsequently became Wellington’s CEO.
Entrepreneur
The bear market of 1973-74 led to poor performance for Wellington’s funds and caused friction among the partners. A management dispute resulted in Mr. Bogle’s firing from Wellington in 1974. Not one to go quietly, Mr. Bogle proposed a new mutual company to provide administrative services to the funds on an at-cost basis. That new company, The Vanguard Group, commenced operations on May 1, 1975, with $1.8 billion in assets under management and a staff (which became known as “crew”) of less than 50.
Founder
Under “The Vanguard Experiment,” mutual funds would be operated at cost and independently, with their own directors, officers, and staff. Vanguard thus represented a radical change from the traditional mutual fund corporate structure, in which an external management company managed fund affairs for profit. “Our challenge at the time,” Mr. Bogle recalled, “was to build, out of the ashes of major corporate conflict, a new and better way of running a mutual fund complex. ‘The Vanguard Experiment’ was designed to prove that mutual funds could operate independently, and do so in a manner that would directly benefit their shareholders.”
Historian
Mr. Bogle named the new mutual company after HMS Vanguard, Lord Nelson’s flagship at the great British victory over Napoleon’s fleet at the Battle of the Nile in 1798. Mr. Bogle said he “wanted to send a message … that our Vanguard would be, as the dictionary says, ‘the leader in a new trend.’ ”
Pioneer
Mr. Bogle brought index investing to the individual investor in 1976 when Vanguard introduced the First Index Investment Trust. Ridiculed as “un-American” and “a sure path to mediocrity,” the fund collected a mere $11 million during its initial underwriting. The fund, now Vanguard 500 Index Fund, has grown to be one of the industry’s largest. Today, index funds account for about three-fourths of Vanguard’s approximately $5 trillion in assets under management.
Maverick
In 1977, Vanguard converted from a broker-dealer distribution model to a no-load system. It was a bumptious move for the upstart enterprise, but a critical one for the company’s growth, according to Mr. Bogle, who said that “a no-load distribution network was a logical choice for a firm with our simple investment principles and rock-bottom costs.”
Critic
While a great proponent of the mutual fund as an investment vehicle, Mr. Bogle was also the mutual fund industry’s harshest critic, assailing high costs, deceptive advertising practices, and product proliferation throughout a career that spanned more than six decades. His iconoclastic ways earned him a reputation as “the conscience of the industry.”
Orator
Mr. Bogle was an engaging, enlightening, and widely sought-after speaker who would spend hours upon hours writing and rewriting his remarks. His speeches to the Vanguard crew were especially impassioned and inspiring. He collected these speeches in a 2002 book, Character Counts: The Creation and Building of The Vanguard Group.
Benefactor
Mr. Bogle was an active philanthropist for many and varied causes, from organ donation to the National Constitution Center. His favorite charitable endeavor was endowing Bogle Brothers Scholarships at his alma maters, Blair Academy and Princeton University. Hundreds of students have benefited from these scholarships.
Commentator
A ready source to the news media, Mr. Bogle was a frequent commentator on the financial markets, the fund industry, and business practices. He also dispensed sage and straightforward advice to individual investors during guest appearances on numerous financial programs on TV, radio, and the web.
Author
A prodigious writer, Mr. Bogle wrote 12 books, the last 11 after “retiring.” His best-selling Bogle on Mutual Funds (1994) was praised by investment titan Warren Buffett as “the definitive book on mutual funds.” His final book, Stay the Course: The Story of Vanguard and the Index Revolution, was published in 2018.
Warrior
Mr. Bogle battled a lifelong heart condition and suffered numerous heart attacks, but little did this slow him. After spending four months in a Philadelphia hospital, Mr. Bogle underwent a heart transplant on February 21, 1996. About eight weeks later, the irrepressible 67-year-old was back at work in his Valley Forge office and ventured to New York to receive a Fund Leader of the Year award.
Investor Advocate
Mr. Bogle passionately promoted the importance of values and stewardship, frequently reminding the Vanguard crew of their obligation to serve the “down-to-earth, honest-to-God human beings with real needs and aspirations who believe that we offer them sound investment programs, with clearly delineated risks, at fair prices.” One magazine called him the “mutual fund investor’s best friend.”
Leader
In its early days, Vanguard struggled with poorly performing funds and an exodus of shareholders. It was a tenuous time for the fledgling enterprise, but Mr. Bogle, as fierce as he was proud, would not allow the company to fail. Bolstered by rebounding markets and favorable regulatory changes that created the 401(k) retirement plan and the IRA, Vanguard would soon flourish. Mr. Bogle led Vanguard until 1996, by which time Vanguard managed $180 billion in assets and was the nation’s second-largest mutual fund company. He remained on the board as senior chairman until 1999.
Icon
Mr. Bogle was revered by individual investors and even developed a cult following among some dyed-in-the-wool Vanguard clients calling themselves “Bogleheads.” Mr. Bogle’s stature in the investment management industry was affirmed by the news media, too. In 1999, Fortune magazine cited him as one of the investment industry’s four “Giants of the 20th Century.” Five years later, Time magazine named Mr. Bogle to its list of the 100 most influential people, and Institutional Investor magazine rewarded him with a Lifetime Achievement Award.
Catalyst
Mr. Bogle’s formation of a “mutual” mutual fund company, his tireless upholding of sound investing principles, and his strict adherence to the highest professional standards helped transform an entire business. Nobel-winning economist Paul A. Samuelson observed in the foreword to Bogle on Mutual Funds: “John Bogle has changed a basic industry in the optimal direction. Of very few can this be said.”
Idealist
From his Princeton thesis that foreshadowed Vanguard’s creation to his final books calling for sweeping financial industry reform, Mr. Bogle endeavored to make the ideal a practical reality. He declared in his final chapter of Enough: “Because what I’m battling for—building our nation’s financial system anew, in order to give our citizen/investors a fair shake—is right. Mathematically right. Philosophically right. Ethically right.”
My farewell to a true hero:
Good Bye Jack. It has been a sad week for me, and millions of Americans. We will never forget you and what you did for Dan and me, and millions of us regular folk. It was an honor to have met you, talked to you on the phone via Bob Brinker’s “Money Talk” radio show about the 403(b), and follow your investment acumen. We will be pushing for you to get the Presidential Medal of Freedom that you were nominated for.
Steve’s BIO:
Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) union newspaper for 13 years. Thrice featured retirement plan advocate in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group 403bAware for teacher colleagues and wrote 7,500 posts in three investment forums since 1997. Frequently quoted by the media, testified at California State legislative hearings and honored with the “Unsung Hero” award by UTLA for his retirement planning advocacy.
For the last twelve years, he serves as a volunteer on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee contains collective bargaining reps from the unions and monitors the district’s tax-deferred retirement plans, 457b/403b, of 55,000 former and current LAUSD employees, worth $2.5 billion in total assets.
He started this blog in 2012 to help all PreK-12 public school educators nationwide, especially his Los Angeles Unified School District colleagues. He belongs to a small national group of 403(b) advocates (mostly teachers) who want to bring closer attention to the 403(b). During the last 25 years, over 30 newspaper articles have been published and each one says the same thing, TSAs (Tax Sheltered Annuities) are terrible 403(b) plans and the salesperson gets the benefit from lucrative commissions and high costs. Nobody in educational leadership reads these articles NOR talk about the proper place for annuity products publically. We come together at 403bwise.com. Come on over if you want to join us so we can help our colleagues avoid these self-conflicted retirement plans, TSAs.
Great tribute, Steve. When I was with Jack, I walked in the shadow of greatness.
Hard to believe that he is gone. The baton has been passed. It’s up to us to carry on his work.
Mel
Thank you Mel.
We will be feeling the shock and sadness for some time. Yes, it IS hard to believe he is gone. He was everywhere on the news, at conferences, and where I met him at the 2013 Bogleheads reunion. When I brought up the 403(b), he said “Don’t get me started on the 403(b)!” He was as frustrated as those of us who are trying to reform it.
He lived a celebrated and wonderful life FOR US, a life of giving courageously with honor and the highest ethics that any human could attain. And HE DID IT for years!
Thank you again Mel. I really appreciated your comment and that the baton is ours to carry on.
Steve