Bogle-isms

Jack Bogle is the Founder and former CEO of the Vanguard Mutual Fund Group. Back on December 31, 1975, he started the very first index fund which has become Vanguard (the largest mutual fund company in the United States). Vanguard has transformed the personal investing landscape over the years, and with the invention of low-cost index funds, saved Americans billions of dollars in investment fees.

One of the many books Jack has written, The Little Book of Common Sense Investing, is one of my personal favorites. I have been re-reading this book slowly recently (just a page or two at a time when I can spare a couple minutes), and wanted to share with you a number of his quotes that are scattered throughout the pages. Jack’s straight-forward and “common sense” approach to investing is a breath of fresh air, compared to the financial garbage shouted from every TV station or money website.

Here are a few of my favorite “Bogle-isms”:

  • “Fund investors are confident that they can easily select superior fund managers. They are wrong.”

  • “Accurately forecasting swings in investor emotions is not possible. But forecasting the long-term economics of investing carries remarkably high odds of success.”

  • “The stock market is a giant distraction.”

  • “If the data do not prove that indexing wins, well, the data are wrong.”

  • “We investors as a group get precisely what we don’t pay for. So if we pay nothing, we get everything.”

  • “The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.”

  • “When ever-counterproductive investor emotions are played on by ever-counterproductive fund industry promotions, little good is apt to result.”

  • “Managed mutual funds are astonishingly tax-inefficient.”

  • “Fund returns are devastated by costs, taxes, and inflation.”

  • “Only three out of the 355 equity funds that started the race in 1970-8/10 of 1 percent-have survived and mounted a record of sustained excellence.”

  • “Before you rush out to invest in these three funds with such truly remarkable long-term records, think about the next 35 years.”

  • “Funds with long-serving portfolio managers and records of consistent excellence are the exception rather than the rule in the mutual fund industry.”

  • “Two new Merrill Lynch funds: a marketing success for the firm; an utter failure for its clients.”

  • “Index funds endure, while most advisers and funds do not.”

  • “Common sense tells us that performance comes and goes, but costs go on forever.”

  • “My conclusions rely on mathematical facts-the relentless rules of humble arithmetic.”

  • “Your index fund should not be your manager’s cash cow. It should be your own cash cow.”

  • “Indexing stock market sectors, a strong idea. Betting on stock market sectors, a weak reality.”

  • “Among money market funds-surprise!-low cost wins again.”

  • “A “double whammy”: betting on hot sectors (emotions) and paying heavy costs (expenses) are sure to be hazardous to your wealth.”

  • “The real money in investment will be made not out of buying and selling but of owning and holding securities.”

  • “The two sources of the superior returns of the index fund: (1) the broadest possible diversification; and (2) the tiniest possible costs.”

  • “While an index-driven strategy may not be the best investment strategy ever devised, the number of investment strategies that are worse is infinite.”

These are just a few of my favorite quotes of his, and I hope you too can appreciate his bluntness. The investment industry could use more individuals like Jack that consistently put the client’s interest ahead of the firm’s.

 

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