Jack Bogle, RIP

Over my life, I have not had many heroes. As I child in southern New England, Ted Williams of the Red Sox and Bob Cousy of the Boston Celtics certainly made the cut. When I began a golfer at age eight, I read about the history of the game voraciously. I wrote to both Bob Jones and Sam Snead for autographs and both responded within a week. In politics, there were none although I liked parts of what many people said and did very much. In economics, Nobel laureate Friedrich Hayek made the cut and in my personal life, two people who will go nameless will always be my heroes. In the business world, only one man stands out.

John C. “Jack” Bogle was the founder of the Vanguard group of mutual funds. Although he did not invent the index fund per se, he certainly popularized it. Jack preached the gospel of low cost investments. It is not exaggeration to say that people who invested in low cost index funds with Vanguard directly, often paid 1/20 of what others did with financial planners or some mutual funds. Over the years, as index funds flourished the industry was forced to lower their fees to stay competitive with Vanguard.

Jack lived to be 89 years old, the last 33 as a heart transplant recipient. He never lost his edge, his candor or sense of humor. The author of 10 books, he was busy until the end. I have read nine of his publications and would highly recommend his THE LITTLE BOOK OF COMMON SENSE INVESTING (John Wiley & Sons). It explains his philosophy with great clarity. Essentially, you are told to buy the entire market with an index fund, get low fees, and stay the course. Over the years, you will do very well as the economy grows. Channeling Miquel Cervantes of Don Quixote fame, he said, “Don’t look for the needle—buy the haystack.” Most of us rely on hot tips or waste our lives trying to find the next Google, Amazon, or Microsoft. Jack seemed to be saying buy an index fund, add to it through thick and thin and get on with your life.

To me, his best book was an amazing tome entitled, THE BATTLE FOR THE SOUL OF CAPITALISM (Yale University Press, 2005). It is a tour de force as it explains how small investors are often duped by financial salespeople and how many companies, especially multi-nationals, often “cook the books” with sophisticated accounting tricks. If you are serious about making money and keeping it, this is a must read.

Vanguard became so popular and index investing so prevalent that many modest investors were surprised to find themselves millionaires. They formed clubs locally and called themselves “Bogleheads”. Guess whom they would invite to be their guest speaker at their annual soirees? Even Warren Buffett conceded that Jack Bogle helped more people achieve financial independence than anyone in the U.S. Buffett recommends that almost all people should use index funds.

Someone once told me that they admired Bogle but that index funds were not really investing. I saw his point in the sense that there was not careful analysis of balance sheets, demographic or societal trends that many of us wonks go through when evaluating places to park our money. Yet, the success over the decades has been amazing with Bogle admitting that much of it is due to the low cost that his (and now other) index funds charge for their services. One might also say that with an index fund you do not “overthink” it. My only beef with Bogle was that he was not a fan of international investing. It is a big world out there and much future growth will come from non-U.S. companies (admittedly, many large US companies have a huge international presence).

Jack was consistent year after year. He stayed the course and never wavered. His approach required consistency, courage and patience. He once was quoted as saying “Time makes more converts than reason.”

There was only one Jack Bogle. The world needs a handful of men and women like him very badly.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com