Jack Bogle, who passed away on Wednesday, was a giant in so many ways. He was also my friend and befriended millions of others in ways we will appreciate for generations to come.
The founder of the modern, low-cost index fund and the $5 trillion Vanguard Group, Bogle’s guiding principle in investing was simple: Costs matter. The lower the cost of investing, the more money you can make over time.
But first, let me tell you about the friendship part. I met Jack years ago at a financial journalism conference. I had booked him as a keynote speaker, but had never met him before, although I heard him countless times at other major events.
At the time, Jack was having some technical issues with his slides, so we defaulted to an ultra-low tech device called an overhead projector. I flipped his transparencies (remember those?).
What was in his slides? The rosetta stone for smart investing for all time: Why market timing was a bad idea (most people lost money); why picking mutual funds based on past performance was a worse idea (you weren’t likely to get those returns) and why keeping costs low in investing was a big winner (you made more money).
Of course, this wasn’t the first time I had seen this essential information. I had been repeating those lines in hundreds of pieces for Forbes and other publications. By the way, I still have his slides.
Yet Jack was not only pleasant in dealing with a financial journalist — he had a great sense of humor — he extended another gracious gesture a few years later. He volunteered to write a forward for my book Keynes’s Way to Wealth.
Much to my surprise, the great economist John Maynard Keynes was one of his investing heroes. Jack wrote a gem of a forward, which floored me. It was beyond generous, but that was Jack. His generosity of spirit touched so many and it reached far beyond the world of money management.
In his retirement, Jack didn’t quit. He took on subjects like corporate governance, Wall Street regulation and the emerging world of exchange traded-funds (ETFs), which were market-listed versions of mutual funds, but usually offering much cheaper management fees. Jack didn’t much like ETFs, which were eventually used for timing specialized markets. That ran against his mantra.
For such a sophisticated intellect on finance, Jack’s advice was direct and accessible. “Don’t just stand there, do nothing” was his advice for investors wanting to jump in and out of the market. That was his stay-the-course credo for nearly any investor, which proved to be profitable advice for people who took it.
Let’s say you stayed in the stock market from the dark days of 2009 to the present. Had you followed Bogle’s advice and stayed put, you would’ve tripled your money — just by staying in cheap, passive stock index funds. Doing nothing had its virtues then and now. Warren Buffett even recently bet a hedge fund manager that this strategy would work over time. Buffett won. Most investors who adhere to this tactic win as well.
Of course, Jack’s mammoth influence changed the entire business of retail investing. His low-cost, mutual model at Vanguard led to thousands of similar, bargain-priced funds and ETFs. The little heralded price war to lower fund costs is still going on. Industry titans like BlackRock, Fidelity and Schwab are deeply involved. It’s a win-win for investors.
How can we honor Jack’s legacy? Every time you invest in a brokerage account, insurance product, IRA, 401(k), 403(b) or 457 plan, insist on paying the least amount of money for annual management fees.
This is more than a smart money move. It will make your life easier because you will have a larger nest egg in the future. Somehow, I know that a bell will ring somewhere whenever you do this and will keep on ringing a sweet sound for decades to come.