One of the greatest pleasures of my work is meeting with some truly wonderful people.
While finance is often thought of as having plenty “sharks” of questionable moral value looking for a quick buck, there are those who are also passionate, uplifting, and resolute.
John C. "Jack" Bogle was one of them.
His entire life was dedicated to providing a tool to allow investors to follow the market. And I do mean his entire life. He came up with the concept in graduate school and spent decades turning what could have just been an interesting academic piece into reality.
Remember, this was about getting investors to simply match the market, not beat the market. For all the hedge funds and newsletter writers out there, most folks just can’t beat the market consistently. But most investors, buying in and out of stocks, often lag the market itself. That’s because of commissions, losses, and taxes when successful.
With an index fund, investors would simply own the market itself. Great companies would be in there. So would the worst. In time, investors would simply do as the market does. In the last 60 years, that’s been a phenomenal run. Despite some major slowdowns from time to time, index investing keeps investors in the game.
It’s also allowed for folks to use tax-advantaged accounts like IRAs and 401(k)s effectively. If you’re limited in terms of contribution requirements, you certainly don’t want to follow up by lagging the market. And with the embedded tax advantages of these accounts, index investing can allow investors to actually do better than the market over time (or sooner if you have a company match).
None of this would have unfolded as quickly as it has without Bogle. Building Vanguard and creating the first index funds made the rest possible. Along the way, Vanguard would amass $5 trillion in assets.
But you won’t find Bogle on the Forbes 400 like other financial innovators.
That’s because Bogle kept fund fees low — as low as possible. Every pip, every percentage that went into a fund manager’s fee was money out of the customer’s pocket. Much like a doctor who shares a life-saving discovery with the world, he acted with grace and aplomb and shared it.
It’s what made him a true revolutionary. Someone else coming up with the same idea may have decided to take an extra percentage off the top… and made billions in the process.
But John’s relentless drive to serve the customer was truly capitalism at its finest.
Back in 2015, I interviewed him for the Financial Braintrust’s "Profit Report" series. We discussed the latest edition of his new book, the rise of fund investing, the potential dangers of index investing overtaking active investing (trading) as a strategy, and other topics. His answers were interesting, and he was far sharper than the average octogenarian.
Most of all, it was clear that he loved and had a passion for his work.
At the end of our interview, I acknowledged that he had come up with one of the best ways to ensure folks can grow their wealth safely in the stock market over time. There’s still room for trading, but that’s a different way to invest all together — and one with a lot of disadvantages compared to the index fund.
Suffering a heart attack at 30, a doctor advised him to retire when he again had heart trouble at 37. Instead, Bogle found a different doctor. A worker until the end, he passed on Wednesday at 89.
It is a tremendous loss, but the gift that he has left everyday folks with a chance to safely invest over the long term is impossible to forget.
Requiescant en pace.
Andrew Packer is a Senior Financial Editor with Newsmax Media. He currently writes the Insider Hotline investment advisory, serves as investment director for the Financial Braintrust, and writes the monthly newsletter Crisis Point Investor.
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