{"id":929,"date":"2014-03-06T16:01:42","date_gmt":"2014-03-06T21:01:42","guid":{"rendered":"http:\/\/johncbogle.com\/wordpress\/?p=929"},"modified":"2014-03-06T16:10:20","modified_gmt":"2014-03-06T21:10:20","slug":"a-memo-from-john-c-bogle-2","status":"publish","type":"post","link":"https:\/\/johncbogle.com\/wordpress\/2014\/03\/06\/a-memo-from-john-c-bogle-2\/","title":{"rendered":"A Memo from John C. Bogle"},"content":{"rendered":"

To: Veterans and Principals<\/span><\/b><\/p>\n

From: John C. Bogle<\/span><\/b><\/p>\n

Date: March 5, 2014<\/span><\/b><\/p>\n

Re: Lots More Public Recognition<\/span><\/b><\/p>\n

\u00a0<\/span>Part II<\/span><\/b><\/p>\n

\u00a0<\/span>1.\u00a0 Buffett Endorsement of Vanguard 500 Index Fund<\/a><\/b>. I first learned of the contents of Warren Buffett\u2019s annual letter to his Berkshire Hathaway shareholders in a note from one of our veteran crewmembers (thanks!), who wrote that Mr. Buffett has now \u201cconfirmed that Bogle is right.\u201d<\/i> I next heard from investment adviser and author Frank Martin, who wrote, \u201cJack, it looks like you are now the number two salesman for Vanguard.\u201d<\/i><\/span><\/p>\n

Both were comments on Warren\u2019s report that \u201chis money is where his mouth is.<\/i>\u201d His will provides a bequest for his wife, directing that his trustee should \u201cput 10% of [the bequest] in short-term government bonds and 90% in a very low-cost S&P 500 Index Fund. (I suggest Vanguard\u2019s.)\u201d<\/i><\/span><\/p>\n

\u00a0<\/span>The Buffett letter is also laced with the wisdom of Ben Graham, as outlined in The Intelligent Investor<\/i>. Enclosed\u00a0 are three pages of excerpts. Our crewmembers will find Vanguard\u2019s investment philosophy echoed here . . . over and over again.<\/span><\/p>\n

2.\u00a0 Do ETFs Turn Investors into Market Timers?<\/a><\/b> Wall Street Journal<\/i>, March 1-2, 2014. Here, popular columnist Mark Hulbert uses a variety of quotes from me on the trading activity in ETFs, noting that \u201cthe typical investor in [Vanguard\u2019s] ETFs trades less actively then investors [traders?] in ETFs sold by other fund firms.\u201d<\/i> His column ends with four recommended stock funds (all Vanguard funds) and four bond funds (including two Vanguard funds).<\/span><\/p>\n

3.\u00a0 How to Predict the Next Decade\u2019s Bond Returns<\/a><\/b>. Wall Street Journal<\/i>, March 3, 2014. Relying on research provided by the Bogle Financial Market Research Center\u2014and many conversations!\u2014reporter Chris Gay accurately describes the analysis I\u2019ve been producing for the past few decades: \u201ccurrent yield is the best indicator of how much you\u2019ll earn over time from fixed-income holdings.\u201d<\/i> 92% of the <\/i>future 10-year return is determined by the current yield. <\/i>My \u201cSeeing the Future\u201d <\/i>chart (illustrated here) could hardly make it clearer.<\/span><\/p>\n

\u00a04. Give Fees an Inch and They\u2019ll Take a Mile<\/a><\/b>. The New York Times<\/i>, March 2, 2014. \u201cWatch out for expenses. They will cut down your returns, shrink your nest egg, and may well prevent you from achieving your financial goals,\u201d<\/i> writes Times<\/i> 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: \u201cIn investing, you get what you don\u2019t pay for.\u201d<\/i><\/span><\/p>\n

5.\u00a0 What was John Bogle Thinking?<\/a><\/b> FORBES<\/i>, 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 \u201crevisited the idea of passive investing; which ultimately reversed [my] long-held view of active management, and changed Vanguard\u2019s destiny<\/i>.\u201d Rick calls it, \u201cJohn Bogle\u2019s epiphany<\/i>.\u201d If you\u2019re interested in Vanguard\u2019s early history, you\u2019ll love<\/i> this article!<\/span><\/p>\n

\u00a0<\/span>6.\u00a0 Are there any circumstances in which you\u2019d own an actively-managed fund?<\/a><\/b>, Kiplinger\u2019s Personal Finance<\/i>, February 2014. \u201cYes, although they are extremely rare,<\/i>\u201d is how I respond to the question, noting but two exceptions to my \u201crule<\/i>.\u201d (The tipster who showed me the article: a fellow-traveler on a recent airline flight!)<\/span><\/p>\n

\u00a0<\/span>7.\u00a0 Bogle: Indexing Has Gone Too Far<\/a>.<\/b> Financial Planning<\/i>, March 3, 2014. Here, journalist Paula Vasan (fairly) accurately reports the results of our luncheon conversation. The idea that indexing has \u201cgone much too far<\/i>\u201d (with my reasoning for that view) is only a small part of a controversial discussion on financial services today. I conclude that, yes, \u201csome investors really need advisors<\/i>,\u201d if only \u201cto keep them from doing anything<\/i>.\u201d<\/span><\/p>\n

\u00a0<\/span>8.\u00a0 Can Vanguard Become Too Big?<\/a><\/b> Financial Planning<\/i>, 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\u2019s amazing rise to our record share of fund industry assets, to 17.75% in stock and bond funds\u2014vs. 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 \u201coffers a best guess of 25%<\/i>.\u201d Who really knows?<\/span><\/p>\n

But, yes, as Bill McNabb acknowledges, there are \u201cdangers\u201d of giant size, \u201cincluding the possibility that a larger Vanguard could become bureaucratic and self-serving.\u201d<\/i> Best that we mind our P\u2019s and Q\u2019s!<\/span><\/p>\n

\u00a0*\u00a0\u00a0 *\u00a0\u00a0 *<\/span><\/b><\/p>\n

That\u2019s it for this huge list of press stories featuring Vanguard, just in the past few days and weeks.<\/span><\/p>\n

Good News!<\/b> Part III of this recent series, to be sent to you tomorrow, has only a single item . . . but a good one!<\/span><\/p>\n

 <\/p>\n

Best to all,<\/span><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Jack<\/em><\/span><\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

To: Veterans and Principals From: John C. Bogle Date: March 5, 2014 Re: Lots More Public Recognition \u00a0Part II \u00a01.\u00a0 Buffett Endorsement of Vanguard 500 Index Fund. I first learned of the contents of Warren Buffett\u2019s annual letter to his Berkshire Hathaway shareholders in a note from one of our veteran crewmembers (thanks!), who wrote […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[15,5],"tags":[],"class_list":["post-929","post","type-post","status-publish","format-standard","hentry","category-memos-to-principals-and-veterans","category-press-clippings"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts\/929","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/comments?post=929"}],"version-history":[{"count":2,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts\/929\/revisions"}],"predecessor-version":[{"id":936,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/posts\/929\/revisions\/936"}],"wp:attachment":[{"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/media?parent=929"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/categories?post=929"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/johncbogle.com\/wordpress\/wp-json\/wp\/v2\/tags?post=929"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}