Greenville

Many in the financial industry were saddened to hear of the passing of John C. Bogle at the age of 89 on January 16, 2019. At the time of his passing, Mr. Bogle was surrounded by family in Bryn Mawr, PA, which happens to be about 20 miles from where I was born in Landsdale, PA.

“Jack,” as he was affectionately called, founded the Vanguard Group in 1974 and built it into a giant mutual fund company with nearly $5 trillion in assets under management today.

Like many others, I admired this legend and much of what he stood for. One day in 2015, when Mr. Bogle was 85, I boldly asked him to write to me with a piece of advice. Advice that perhaps summed up his life. He graciously accepted my offer…

Overcoming Adversity

We all face adversity throughout our lives. For some, it is a loss of a loved one…perhaps a little child, a spouse, or an aging parent. For others, it may be a loss of employment or a financial setback. Maybe someone you loved and trusted disappointed you or failed you in some way.

Like so many of us, Mr. Bogle faced difficult challenges during his lifetime. He was born in 1929 with a congenital heart condition that would cause his heart to beat weakly, as often as 200 times a minute instead of the normal 60-70. He faced at least six heart attacks during his life and received a heart transplant in 1996.

Bogle’s Folly

At least as early as 1963, the great financial analyst Benjamin Graham had advocated the creation of what we know today as the index fund. Indexing is the practice of structuring an investment portfolio to mirror the performance of a market yardstick, like the S&P 500 stock index. However, the idea seemed crazy at the time as fund managers, sometimes called “gunslingers,” managed “go-go” funds which could earn returns in excess of 100%.

In 1976, Mr. Bogle launched the First Index Investment Trust (now Vanguard 500 Index Fund) and opened for business with $11.3 million in assets which was a far cry from the $150 million target set by himself. At the time, Mr. Bogle faced some of the harshest critics who called his little mutual fund “Bogle’s Folly,” “a sure path to mediocrity,” and even “un-American.” Of course, we now know that Jack had the last laugh.

Even in retirement, Mr. Bogle faced adversity. After giving up the chief executive title to his handpicked successor, John J. Brennan, Mr. Bogle openly disagreed with several of Mr. Brennan’s decisions. A rift developed between them, and Mr. Bogle left the Vanguard board to set up the Bogle Financial Markets Research Center, a financial research institute, in order to “let the controversy die away in a gracious way.”

Press on regardless

Mr. Bogle’s wife Eve, whom he married in 1956, once gave him a stone from a Vermont stream with the phrase, “Press on, regardless,” carved into it. The phrase became one of Mr. Bogle’s mantras and a quintessential phrase of the Bogle family.

Due to his heart condition, Mr. Bogle was told in his 30s he wouldn’t live into his 40s, would never work again, and shouldn’t have any more children. Mr. Bogle believed he could survive anything and that emboldened him to press on, regardless. Despite doctors warnings, he had two more children and continued to play squash.

Mr. Bogle built Vanguard, on a cornerstone belief that over the long term, most investment managers cannot outperform the broad market averages. Despite his critics, he pressed on, regardless and popularized indexing.

Consumer Advocate

Some of our favorite movies are those with characters who beat all odds to win in the end…Rudy, Rocky, Frodo Baggins, and Andy Dufresne to name a few. In the financial industry, many consider Mr. Bogle to be such a protagonist.

Mr. Bogle was an outspoken critic of investment management fees.
Bogle’s many admirers nicknamed him “Saint Jack” for his efforts to slash investing costs. He made people aware of expenses and told them that costs come right out of the bottom line.

In a New York Times article in 2012, he was quoted, “In investing, you get what you don’t pay for. Costs matter. So intelligent investors will use low-cost index funds to build a diversified portfolio of stocks and bonds, and they will stay the course. And they won’t be foolish enough to think that they can consistently outsmart the market.”

In his last days, Jack expressed irritation with our leaders in Washington who struggle with imposing a fiduciary duty on all financial advisors who guide individual investors. Intelligent Investing is a fee-only fiduciary Registered Investment Advisor (RIA) who agrees with Jack’s frustration.    

Gratefully Generous

Vanguard’s consistent growth produced riches for Mr. Bogle, but not to the extent that one might think. For example, the chairman of Fidelity Investments has a net worth of $7.4 billion, according to Forbes, and Mr. Bogle’s net worth was around $80 million last year.

Mr. Bogle regularly gave half his salary to charities. “My only regret about money, is that I don’t have more to give away.” In a 2012 Reuters’ interview, he said, “The best rule for philanthropy is to give until it hurts, as much as you can, because none of us can get through life all by ourselves.”

Mr. Bogle’s Note

When I asked Mr. Bogle to sum up his life with words of wisdom, I didn’t know what to expect. I was excited when Mr. Bogle’s letter arrived in my possession. I carefully opened the “Vanguard-red” lined envelope, and read the following:

March 23, 2015

Dear Hans Blake,

With special thanks for your trust in Vanguard.

“Press on, Regardless!”

Best, always,

Jack

Jack’s Legacy

Intelligent Investing holds core values similar to Mr. Bogle. He had compassion for retail investors whom he thought were paying too much for what they received. We believe we should have compassion toward those who don’t have as much. Like Jack, we believe legacies should consist of not just passing on valuables, but also values. His integrity and honest transparency was refreshing. We strive to have a similar moral compass. He also tried to speak the truth in love. Many active managers who disagreed with Jack had much admiration for his candor and passion for what he believed. We also want all our conversations to balance the truth with love.

Second, Intelligent Investing also holds investment philosophies similar to Mr. Bogle’s. Although we are not strictly passive, we believe that by keeping portfolio costs down, our clients may have a better chance at keeping more of their money and compounding their returns over time.

Finally, we believe that our clients’ retirement years can be the best they’ve ever had. A retiree is transitioning from one phase of life to the next and not retiring from life. Jack accomplished much in his “retirement years” and we believe our retiree clients can as well.

Reflection on Jack’s note

I’ve often thought about Jack’s wisdom as I face difficult days and circumstances that are often out of my control. You may be currently facing a difficult circumstance–taking care of an elderly parent, dealing with a boss or child who doesn’t listen, or working through a family or financial situation. If you know deep down inside that you are right, I encourage you to take Jack’s advice and, “Press on, Regardless!”

References

https://johncbogle.com/wordpress/, https://www.nytimes.com/2019/01/16/obituaries/john-bogle-vanguard-dead.html, https://www.kiplinger.com/article/investing/T030-C007-S001-john-bogle-patron-saint-index-investing-dies-89.html, https://www.reuters.com/article/us-column-taylor-bogle/me-and-my-money-jack-bogle-idUSBRE88A0LI20120911