John C. (Jack) Bogle
John Bogle is the founder of Vanguard Group mutual fund, now one of the largest fund firms in the world. Bogle is a no-load mutual fund pioneer and a tireless champion of low-cost index investing for regular, everyday investors. His index fund Vanguard 500 was the first of its kind and it has been instrumental in both the growth of Vanguard Group and Bogle’s career. In fact, such is his impact on the investing world that Fortune has called him one of the top four 20th Century giants of investing.
A native of New Jersey, John Bogle and his family were, like many people at the time, impacted greatly by the Great Depression, as they had to sell their home to compensate for losing nearly everything in the crash. Still, Bogle was a good student who graduated from Princeton magna cum laude in economics. While at Princeton, Bogle’s particular focus was on studying mutual funds to such an extent that he wrote his senior thesis on them, which helped lay the foundation for his later concept of how to invest in index mutual funds as an investor and how to become client-centered as an investment firm.
Bogle’s Days at Wellington
After Princeton, John Bogle considered going into banking before he settled on investing. He started working at Wellington Management, where he stayed for over two decades prior to founding Vanguard. At Wellington, he demonstrated great talent as a fund analyst and quickly rose the ladder. He was so committed to his ideals and principles that he managed to persuade the Wellington brass not to concentrate on one fund and to create a new, more varied fund. This was a turning point for his career and laid the groundwork for his future successes.
However, his early successes did not make him invincible, for he made a grave mistake later, as chairman of Wellington, that resulted in his being fired. His error, a merger that ended up not going well, taught him the lesson of being overconfident, immature, and impulsive.
The Vanguard Group
John Bogle founded Vanguard Group in 1974 and was there for 25 years in an active role. Not too long after forming the company, he created the Vanguard 500 Index Fund, the first of its kind to be available to the general public. Bogle grew the company, with this fund as its lead, into the respected and successful behemoth it is today.
In 1999, Bogle left his active role at Vanguard due to creative differences. He became president of Bogle Financial Markets Research Center, which is indirectly related to Vanguard – it’s not part of the company but its offices are on the Vanguard campus.
Bogle’s Impactful Investing Strategies
John Bogle is often described as the investing industry’s “conscience” due to his evolutionary investing ideas. In his mind, the principles of his “investor-first” philosophy are not to be compromised. As such, he’s been a regular critic of various aspects of the industry that are not focused on the client or low cost.
Throughout his long and distinguished career, Bogle has seen enough highs and lows to pinpoint 8 basic investing principles for the everyday individual investor:
· Invest simply – don’t own too many funds
· Take into consideration all investment-related costs and expenses and don’t spend too much money on them
· Select low-cost funds
· Don’t overrate a fund’s past performance, yet use it to measure consistency and current risk
· Be committed for the long term and be patient
· Take emotion out of decisions and invest rationally
· Universality is a suitable strategy for the layman individual investor
· Beware of fund managers touted as “gurus” or “stars”
Bogle also advises investors, especially new ones, to be prepared to lose, and possibly big, or get out of investing; not all investments will be winners. He also notes that just as the fruits of an investment become visible, investors should be aware that this is also when risk is at its highest.
Finally, Bogle believes broad-based index mutual funds that are no-load, low-cost, low-turnover, and not aggressively managed are usually the best, safest funds to invest in.
Though John Bogle has spent several decades actively managing investments and advising clients, he still has managed to write about and give lectures on investing. In fact, he has had nearly a dozen books published on the subject, including the classic Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor in 1999 and the on-target 2012 book Clash of Cultures: Investment vs. Speculation.
If you’re an everyday investor with a self-professed lack of confidence or knowledge about investing, these two books are a must-read.