Why John Bogle is A Hero

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It was (almost) all over the news.

John Bogle’s passed away.

John Bogle was an unwanted superstar in the finance industry.

Most people desire to feel belonged to a group and would go along with the majority. Moreover, most dissidents get crushed.

But once in a while, a dissident would emerge and relentlessly fight against the establishment for what is just.

John Bogle was such a hero.

Instead of ripping off customers, he was fighting for the financial industry to make less money.

How well liked could he be then?

I bet there are people who hated Bogle even till today.

But it is too late. Bogle’s achievement can no longer be undone.

Bogle started the current-day behemoth Vanguard Group and was known to create the first index fund to track the S&P 500 index on 31 December 1975.

Fidelity Investments Chairman Edward Johnson was quoted as saying that he “[couldn’t] believe that the great mass of investors are going to be satisfied with receiving just average returns”.

As of 2017, Vanguard Group was the second largest asset manager with US$5,100 billion assets under management while Fidelity Investments was number six with US$2,488 billion.

Ouch!

Bogle definitely proved his point and his worth.

Bogle wasn’t my first touchpoint to low cost funds. It was the book titled Multiple Streams of Income by Robert Allen which I found a painless and automatic way to invest in an index fund on a monthly basis.

It was the book titled Multiple Streams of Income by Robert Allen which I found a painless and automatic way to invest in an index fund on a monthly basis.

I thought it was an excellent idea in 2006.

I have also read Burton Malkiel’s Random Walk On Wall Street, who slammed the mutual fund managers for their inability to help investors get better returns than the indices.

These first seeded my biased disdain over actively managed funds (we call them unit trusts in Singapore).

After seeing a lot of good recommendations, I went on to read Common Sense on Mutual Funds written by Bogle himself.

This was the very first one-sided virtual interaction with John Bogle and me. And his name has stuck with me since then. It was a familiar name I see in many of the finance articles, books, and even a forum in his namesake – bogleheads.org

Definitely, he has left an impact on my views about investing.

One of the very first investment I made was the STI ETF.

You might have noticed some of the articles we have written on this blog such as the STI ETF guide.

I have also published a book on Permanent Portfolio that utilises ETFs as building blocks for the investment approach.

All these wouldn’t have happened if not for John Bogle.

It has been a long time since I have read something about Bogle and his death has brought the focus back on him once again.

It is a good time for me to read through what others have written about him as well as his timeless quotes – it helps me reminisce the early days of my investment journey.

“John did more for American investors as a whole than any individual I’ve known, a lot of Wall Street is devoted to charging a lot for nothing. He charged nothing to accomplish a huge amount.”

Warren Buffett in a CNBC Interview

“Jack could have been a multibillionaire on a par with Gates and Buffett… 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.”

William Bernstein

“People mistakenly infer from Jack’s career that he only believed in market-cap weighted indexing. This is a gigantic misunderstanding. What he actually believed, based on over fifty years of experience in the mutual fund business, is that keeping costs low (fees, expenses, tax liabilities, etc) is preferable to any amount of excess return that an active manager might be relied upon to generate. Jack once said he’d rather invest in a low cost active fund than a high cost passive fund.”

The Reformed Broker

“Mr. Bogle, a fan of British Adm. Horatio Nelson, named the firm after Adm. Nelson’s ship in the 1798 Battle of the Nile and referred to employees as “crew.”

Jason Zweig and Sarah Krouse via Wall Street Journal

“His reputation as a tightwad was well earned. At breakfast with a reporter in 1993, at a suburban Philadelphia restaurant near Vanguard’s headquarters, Mr. Bogle figured out that he would beat the $5.95 cost of the buffet by ordering from the menu. If he had an early-morning meeting in New York, he would take the early Amtrak Metroliner shuttle rather than pay for a hotel room in Manhattan.”

Edward Wyatt via The New York Times

“He has always struggled with heart problems, having many heart attacks. He did a heart transplant when he was 65 years old. That eventually bought him 24 years more.

If I am correct, he holds the record of the longest recipient of a heart transplant.”

Investment Moats
I

“Don’t look for the needle in the haystack. Just buy the haystack!”

John Bogle

“Index funds eliminate the risks of individual stocks, market sectors, and manager selection. Only stock market risk remains.”

John Bogle

“The two greatest enemies of the equity fund investor are expenses and emotions.”

John Bogle

“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”

John Bogle

“Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes.”

John Bogle

“My only regret about money is that I don’t have more to give away.”

John Bogle

He probably got his inspiration from his idol Horatio Nelson. The Admiral lost his arm and had a host of injuries sustained in numerous battles but he continued to go back to the battlefields repeatedly. Bogle wasn’t in his pink of health and had heart issues, but that didn’t deter him from championing for investors’ interests and he managed to outlive four pacemakers.

Here’s an excerpt about how the Vanguard name came about from his speech in 2000,

“Despite that gloomy start, a bright light quickly turned on: The name “Vanguard.” Through another stroke of luck, in early September, as I was contemplating a name for our new enterprise, a dealer in antique prints happened by my office. I bought from him four prints showing various naval battles of Great Britain during the Napoleonic War Era. He gave me the book from which they had been removed, and I happened upon the text describing the Battle of the Nile, at which Lord Nelson had demolished the French fleet while losing scarcely a British ship. Right before my eyes was Nelson’s dispatch to the Admiralty, announcing the glorious victory and praising his crew. At the top, he had written the location of his flagship: “Vanguard, off the mouth of the Nile.” I knew I had the name of my new enterprise! Our incorporation on September 24, 1974, was our first date with destiny.”

He was indeed a vanguard in the financial industry.

He broke the norms of the high-fee and lucrative fund management business and scores of investors have been fleeing to passive index funds ever since.

I believe more will follow in the future and he probably knew that long before his death.

The game wasn’t over.

But John Bogle knew he’d already won.

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