John C. Bogle – The Institute for Fiduciary Standard, via Wikimedia Commons

We are saddened by the passing of John Bogle, founder of the Vanguard Group. He was 89.

A champion for investors, Jack Bogle will be remembered for transforming the investment world by introducing the very first index mutual fund. He also continually battled opposition and even faced ridicule from the industry because of his insistence on reducing costs and defending investors’ best interests.

All the while, he steered Vanguard to become the second largest investment firm in the world, with $4,9 trillion in assets.

 

Warren Buffet said it best in his 2016 annual letter to shareholders:

“If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds.

In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value.

In his early years, Jack was frequently mocked by the investment-management industry. Today,
however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.”

A towering figure in life and in the investment industry, he was born 5 months before the crash of 1929 which almost wiped out his family’s wealth. He ran his paper route and waited tables to eventually graduate from Princeton magna cum laude in economics. He first worked as a clerk for Walter R. Morgan the founder of Wellington, and then rose through the ranks to become its president.

He launched Vanguard in 1974 and being an avid student of naval history, he named the company after Horatio Nelson’s flagship at the Battle of the Nile in 1798. The company still proudly uses the nautical imagery and name that, according to Mr. Bogle, resonated well with the themes of leadership and progress he wanted the company to symbolize.

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At a commencement address at Georgetown University in 2007, upon receiving an Honorary Degree of Doctor of Humane Letters, Mr. Bogle framed his views of the financial industry and investors’ best interests brilliantly:

“Yes, the more that our financial system takes, the less our investors make. Yet the financial field is where the money is made in modern-day America, the breeding ground for the wealthiest of our citizens. (If you made less than $140 million dollars last year, you didn’t make enough to rank among the 25 highest-paid hedge fund managers.) When we add up all those hedge fund fees, all those mutual fund management fees and operating expenses; all those commissions to brokerage firms and fees to financial advisors; investment banking and legal fees for all those mergers and IPOs; and the enormous marketing and advertising expenses entailed in the distribution of financial products, we’re talking about some $500 billion dollars per year. That sum, extracted from whatever returns the stock and bond markets are generous enough to deliver to investors, is surely enough, if you will, to seriously undermine the odds in favor of success for our citizens who are accumulating savings for retirement.

But it’s not time for any of you to rest in peace, or to rest in any other way. Bright futures lie before you. There’s the world’s work to be done, and there are never enough citizens with determined hearts, courageous character, intelligent minds, and idealistic souls to do it. Yes, our world already has quite enough guns, political platitudes, arrogance, disingenuousness, self-interest, snobbishness, superficiality, war, and the certainty that God is on one side or the other. But it never has enough conscience, nor enough tolerance, idealism, justice, compassion, wisdom, humility, self-sacrifice for the greater good, integrity, courtesy, poetry, laughter, and generosity of substance and spirit. It is these elements that I urge you to carry into your careers, and remember that the great game of life is not about money; it is about doing your best to build the world anew.

And that’s enough . . . at least for today.”

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It’s now time for you to rest in peace, Mr. Bogle. Know that your work, your mission and vision will endure.

At PWL we subscribe to your ideals and we will continue to battle the headwinds from the industry, as you did, to defend investors’ best interests.

“Fair Winds and Following Seas”, Captain.