The Future of Investing
Mike - Jul 09, 2014

Jack was featured in The Wall Street Journal’s “The Future of Everything” special report celebrating the Journal’s 125th anniversary.

John C. Bogle on the Future of Investing


A Memo from John C. Bogle
Mike - Jun 26, 2014

To: Veterans and Principals

From: John C. Bogle

Date: June 26, 2014

 Recognition for Vanguard and Indexing

            The almost overwhelming success of Vanguard and index funds continues to draw attention, not only from investors (over $77 billion of net cash flow so far this year, 95% of which went into our low-cost index funds), but also from the media. Attached are four recent articles noting our success.

  1. “Bogle Is In The Vanguard Of Mutual Fund Investing,” Investor’s Business Daily, June 12, 2014. This nice profile highlights the triumph of indexing, and Vanguard’s rise to prominence over the last four decades.

 

  1. “Facing price wars and robots, wealth managers push advice,” Reuters, June 20, 2014. I recently participated in the Global Wealth Management Summit hosted by Reuters. This article stems from that summit, and focuses on the growing market for web-based financial advisory services, such as Vanguard’s Personal Advisor Services. Of course, the opening line tickled me: “Jack Bogle, the founder of Vanguard Group and the pioneer of low-cost index investing, has won.”

 

  1. “Vanguard’s Bogle expects shrinking Wall Street,” Reuters, June 17, 2014. This article about my thoughts on the future of the financial industry also came out of the Reuters event.

 

  1. “Philosophy Differs From Strategy,” RickFerri.com, June 16, 2014. Independent financial advisor Rick Ferri writes about how his investment philosophy is based on the realization that trying to beat the markets is “costly and counterproductive,” so his investment strategy relies on low-cost index funds.

With all of Vanguard’s success over our four decades of existence (we’ll celebrate our 40th anniversary on September 24, 2014), it remains critically important that keep our focus on what’s best for our clients. I’ve used this quotation from Shakespeare many times before, “Uneasy lies the head that wears a crown.”

Indeed, Vanguard’s rise to the pinnacle of the mutual fund industry places a fragile crown on our heads. We must continue to focus on our founding values of stewardship and trusteeship of the assets entrusted to us by our clients.

Enjoy your summer.

Best, always,

Jack


“The Philosopher of Finance”
Mike - Jun 12, 2014

 

Jack has done numerous interviews on NPR, and has found public radio to be an ideal platform for conveying Vanguard’s values to both our clients and the general investing public. His most recent interview, by David Freudberg, host of the Humankind series, was titled “The Philosopher of Finance” and consists of two half-hour segments. In the interview, Jack and David discuss topics regarding human values, as well as issues that are of vital importance for long-term investment success.

The interview will be released as a free podcast today. Instructions on how to access the podcast are below.  I hope you’ll enjoy this discussion of our values and the keys to ensuring a secure retirement.

There are two ways you can hear this program:

1. The public radio producer will be making “The Philosopher of Finance” available for free download at their podcast

Humankind on Public Radio starting at noon on Thursday, June 12, 2014. (Those who subscribe to the podcast will then be able to hear a new episode of Humankind each week at no charge.) The podcast can be accessed here: http://tinyurl.com/HumankindPodcast

2. Those who wish to purchase a CD copy may place an order here:

http://www.humanmedia.org/catalog/program.php?products_id=368


A Memo to Principals and Veterans
Mike - May 22, 2014

 

May 20, 2014

 To Vanguard Principals and Veterans:

             As you all must know by now, I regard recognition of Vanguard in The Economist as among the highest possible accolades. This cover story in the issue of May 3, 2014, entitled “Death of the Fund Manager” is one more testimonial to all the good we do here at Vanguard.

             Attached are: (1) the opening editorial, “Cheap is Cheerful,” and (2) the main story, “Briefing: Fund Management. Will Invest for Food.” (Both pieces are informative and insightful. Too bad that the headlines fail to suggest that.)

             Despite the accolades for index (“tracker” in the UK) funds, the authors seem unaware of the impact that indexing has already had on Vanguard and the fund industry. Ever irrepressible, I wrote a letter to the editor presenting the data. It’s probably too late and long to be published, but I’m sure you’ll enjoy it (Attachment 3).

             We’ve come such a long way since we began in 1974. Thank you for all your help in making it happen.

 Jack


A Memo from John C. Bogle
Mike - May 02, 2014

To: Veterans and Principals

From: John C. Bogle

Date: May 1, 2014

 

A Remarkable Salute from Investors and CNBC

            As many of you have already reported to me, CNBC has ranked me among the top ten people who have had “the most profound impact on business and finance” over the past quarter-century. (CNBC has just begun its second quarter-century.) In this context, I’m sending along two attachments.

1.      “Index Mutual Fund Pioneer.” The CNBC profile of my long career is remarkably insightful, particularly in its recognition of the role of “Bogle’s evangelism.” They also identify the often-unrecognized link between Vanguard’s truly mutual structure and that first index fund.

However you may feel about the culture of stock market television, I’m actually deeply touched by being placed high (#9) on the CNBC list of “25 transformative leaders, icons, and rebels of the past quarter-century.”

NOTE: I’ve also included a link to the CNBC video on my career. It’s just three minutes in length, but professionally done and power-packed.

2.      “The List: CNBC First 25.” Who are these other icons? Here’s the list, led (deservedly, I think) by #1 Steve Jobs and #2 Bill Gates. Interestingly, Warren Buffett (#6) and I (#9) are the only people from the field of investment management (also, in a limited way, Carl Icahn, #17) on this influential list, which includes at least eight leaders from abroad.

One of our crew members called an amusing point to my attention. I’m sandwiched between #8 Mark Zuckerberg (net worth, $28.5 billion) and #10 Larry Ellison (net worth, $48 billion). Last time I looked, I’m well below average (to say the least!) relative to these successful fellows.

*           *            *

            Our organization structure and our index strategy represent the solid core of the reputation we have earned and the trust we have established with investors . . . and with the world. How good it feels to be recognized on the CNBC list of these 25 men and women who have been “the rebels, icons, and leaders in the vanguard (yes!) of that change,” from yesteryear’s era of business and finance to today’s.

Enjoy!  Always,

Jack


CNBC 25
Mike - Apr 29, 2014


A Memo from John Bogle
Mike - Apr 16, 2014

To:          Veterans and Principals

From:    John C. Bogle

Date:     April 15, 2014

Re:         More Recognition for Our Firm, Part II

This follow-up note to my mailing of April 10 includes five more recent articles from the press:

1) “Vanguard Founder Discusses How to Invest.” This interview in Investor’s Business Daily was published on April 2. While several of the quotes are a bit casual (if not mystifying!), the overall tone of the story is highly positive.

2) “Michael Lewis is Wrong About Rigged Markets.”  Jonathan Berr’s April 3 story in Moneywatch is yet one more contribution(?) to the huge publicity campaign that kicked-off Flash Boys. While I didn’t have the benefit of knowing the opinion of later commentators, my position is not much different from those of Burton Malkiel, Arthur Levitt, Morningstar’s John Rekenthaler,  and other thought leaders.

3) “On Smart Beta, Smart Skeptics.” James Green’s thoughtful story in Investment Advisor magazine (March 31, 2014). Of course, my response is blunt—smart beta is a “marketing gimmick.” Might as well be honest!

4) “Vanguard Beats BlackRock . . .” Christopher Condon’s article in Bloomberg Business Week (April 1, 2014) is one more long, well, “commercial” for our firm, its mission, and the work we all do. It is surely a rare quarter when we capture 90%(!) of all ETF cash flows as we did in the three months ended March 31, 2014, but of course there’s a message there.

5) “The Inevitable Standard.” Investment News, April 7, 2014. The “Inevitable Standard” cited in Mark Schoeff Jr.’s perceptive story is a federal standard of fiduciary duty—something I’ve been seeking for many years. I’m certain that my dream will come true . . . some day.

 Keep fighting the good fight!

Best, always

                 Jack


Memo to Veterans and Principals
Mike - Apr 14, 2014

To: Veterans and Principals

 From: John C. Bogle

 Date: April 10, 2014

 Re: More Recognition for Our Firm

             The spate of attention focused on Vanguard that took me three consecutive mailings to send you (on March 4, March 5, and March 6, 2014) subsided. But, surprisingly, it resumed about 10 days ago, although this note requires only two mailings. This is the first such mailing; the second will be circulated on Tuesday, April 15.

 1)      “The Inspiration for John Bogle’s Great Invention.” On March 5, The Wall Street Journal’s MarketWatch began a series called “Things Written Long Ago That I Wish I Had Read Long Ago.” The first essay in the series was columnist George Sisti’s piece on Paul Samuelson’s essay, “Challenge to Judgment,” published in the very first issue of The Journal of Portfolio Management in 1974. As many of you know, it was this essay that helped inspire the creation of the world’s first index mutual fund. To this day, I remember in considerable detail this remarkable piece, and the credibility that this brilliant Nobel Laureate brought to my forthcoming creation.

2)      “You Don’t Know Jack: The Education of Jack Bogle.” On April 4, the Philadelphia Business Journal published this lengthy interview, focused on Vanguard’s history and my long career. Perhaps I was a bit too honest in responding to the final question, but that kind of candor is a small price to pay for the credibility that Vanguard has established with the press and the public.

3)      “Bogle: Tilt To Corporates for More Yield.” Olly Ludwig, financial editor of ETF.com (formerly IndexUniverse.com, not, for me, a happy change!) covers a wide range of issues relating to Vanguard and the fund industry. Some of the numbers are a bit garbled, but you’ll get the point. Despite another bit of controversy, stories don’t get much more positive for our firm than this one.

Happy reading! More to come.

 Best,

                                          Jack   


A Memo from John C. Bogle
Mike - Mar 06, 2014

To: Veterans and Principals

From: John C. Bogle

Date: March 6, 2014

Re: The Cascade of Press Coverage Abates . . . for a Moment.

 

Part III

As promised yesterday, just a single final addition to the recent flurry of favorable public recognition of Vanguard. (Part I, March 4, 2014. The ECONOMIST and The Financial Analysts Journal—“The Arithmetic of ‘All-In’ Investment Expenses.” Part II, March 5, 2014. The Warren Buffett endorsement, etc.)

 In Part III, Finance in Philadelphia–Leadership, Decline, Renaissance,” I’m sending along a major speech on the role of our Greater Philadelphia region in contributing to America’s economy. As you will note, Vanguard is now the leader of our region’s recent renaissance. In that role, each of us here has an obligation to represent our community with knowledge of the past, dedication to high standards, and conduct characterized by integrity and humility.

The text of the speech is preceded by an article in The Philadelphia Inquirer on February 7, 2014, reporting on the forum in which I delivered my remarks. One local journalist described my essay as “excellent, revelatory reading. I love the irony of how the Quaker precept of thrift has returned to fashion, thanks to Vanguard, vision, and perseverance.” My historical perspective begins with Robert Morris in 1776 (and, in the same year, the wisdom of Adam Smith). Today, as by far the largest firm in the giant mutual fund industry, we have become the embodiment of thrift and simplicity. These principles work!

 Q.E.D.           

                                     Best,

                                          Jack   


A Memo from John C. Bogle
Mike - Mar 06, 2014

To: Veterans and Principals

From: John C. Bogle

Date: March 5, 2014

Re: Lots More Public Recognition

 Part II

 1.  Buffett Endorsement of Vanguard 500 Index Fund. I first learned of the contents of Warren Buffett’s annual letter to his Berkshire Hathaway shareholders in a note from one of our veteran crewmembers (thanks!), who wrote that Mr. Buffett has now “confirmed that Bogle is right.” I next heard from investment adviser and author Frank Martin, who wrote, “Jack, it looks like you are now the number two salesman for Vanguard.”

Both were comments on Warren’s report that “his money is where his mouth is.” His will provides a bequest for his wife, directing that his trustee should “put 10% of [the bequest] in short-term government bonds and 90% in a very low-cost S&P 500 Index Fund. (I suggest Vanguard’s.)”

 The Buffett letter is also laced with the wisdom of Ben Graham, as outlined in The Intelligent Investor. Enclosed  are three pages of excerpts. Our crewmembers will find Vanguard’s investment philosophy echoed here . . . over and over again.

2.  Do ETFs Turn Investors into Market Timers? Wall Street Journal, March 1-2, 2014. Here, popular columnist Mark Hulbert uses a variety of quotes from me on the trading activity in ETFs, noting that “the typical investor in [Vanguard’s] ETFs trades less actively then investors [traders?] in ETFs sold by other fund firms.” His column ends with four recommended stock funds (all Vanguard funds) and four bond funds (including two Vanguard funds).

3.  How to Predict the Next Decade’s Bond Returns. Wall Street Journal, March 3, 2014. Relying on research provided by the Bogle Financial Market Research Center—and many conversations!—reporter Chris Gay accurately describes the analysis I’ve been producing for the past few decades: “current yield is the best indicator of how much you’ll earn over time from fixed-income holdings.” 92% of the future 10-year return is determined by the current yield. My “Seeing the Future” chart (illustrated here) could hardly make it clearer.

 4. Give Fees an Inch and They’ll Take a Mile. The New York Times, March 2, 2014. “Watch out for expenses. They will cut down your returns, shrink your nest egg, and may well prevent you from achieving your financial goals,” writes Times financial editor Jeff Sommer. He sums up his long article (largely focused on a study by the SEC) with this (I suppose) classic Bogle quote: “In investing, you get what you don’t pay for.”

5.  What was John Bogle Thinking? FORBES, February 10, 2014. Here, investment adviser (and Boglehead!) Rick Ferri, relying on my recent correspondence and the history of my indexing philosophy, as well as subsequent interviews, describes how I “revisited the idea of passive investing; which ultimately reversed [my] long-held view of active management, and changed Vanguard’s destiny.” Rick calls it, “John Bogle’s epiphany.” If you’re interested in Vanguard’s early history, you’ll love this article!

 6.  Are there any circumstances in which you’d own an actively-managed fund?, Kiplinger’s Personal Finance, February 2014. “Yes, although they are extremely rare,” is how I respond to the question, noting but two exceptions to my “rule.” (The tipster who showed me the article: a fellow-traveler on a recent airline flight!)

 7.  Bogle: Indexing Has Gone Too Far. Financial Planning, March 3, 2014. Here, journalist Paula Vasan (fairly) accurately reports the results of our luncheon conversation. The idea that indexing has “gone much too far” (with my reasoning for that view) is only a small part of a controversial discussion on financial services today. I conclude that, yes, “some investors really need advisors,” if only “to keep them from doing anything.”

 8.  Can Vanguard Become Too Big? Financial Planning, March 4, 2014. Allan S. Roth, journalist, money manager, and, yes, Boglehead, has asked a good question, and penned a thoughtful article in response. Several charts show Vanguard’s amazing rise to our record share of fund industry assets, to 17.75% in stock and bond funds—vs. 17.74% (interesting!) for our two largest rivals combined. Asked to predict (guess at) our market share in 2030, Rick Ferri and Bill Bernstein suggest 30% to 40%, Bogle “offers a best guess of 25%.” Who really knows?

But, yes, as Bill McNabb acknowledges, there are “dangers” of giant size, “including the possibility that a larger Vanguard could become bureaucratic and self-serving.” Best that we mind our P’s and Q’s!

 *   *   *

That’s it for this huge list of press stories featuring Vanguard, just in the past few days and weeks.

Good News! Part III of this recent series, to be sent to you tomorrow, has only a single item . . . but a good one!

 

Best to all,

                                         Jack