John Clifton “Jack” Bogle (May 8, 1929 – January 16, 2019) was an American investor, business magnate, and philanthropist. He was the founder and chief executive of The Vanguard Group.
Early life and education
John Bogle was born on May 8, 1929, in Montclair, New Jersey,to William Yates Bogle, Jr. and Josephine Lorraine Hipkins.
His family was affected by the Great Depression. They lost their money and had to sell their home, with his father falling into alcoholism which resulted in his parents’ divorce.
Bogle and his twin, David, attended Manasquan High School near the New Jersey shore for a time. Their academic record there enabled them to transfer to Blair Academy on work scholarships. At Blair, Bogle showed a particular aptitude for mathematics, with numbers and computations fascinating him. In 1947, Bogle graduated from Blair Academy cum laude and was accepted at Princeton University, where he studied economics and investment. During his university years, Bogle studied the mutual fund industry. Bogle spent his junior and senior years working on his thesis “The Economic Role of the Investment Company”.
He earned his undergraduate degree in 1951 and attended evening and weekend classes at
Investment career
After graduating from Princeton in 1951, Bogle narrowed his career options to banking and investments. He was hired at Wellington Fund, where he showed great talent and led the manager of the fund, Walter L. Morgan, to say, “Bogle knows more about the fund business than we do.”Bogle was promoted to an assistant manager position in 1955, where he obtained
In 1974, Bogle founded the Vanguard Company which is now one of the most respected and successful companies in the investment world. In 1999, Fortune magazine named Bogle as “one of the four investment giants of the twentieth century”.
In 1976, influenced by the works of Paul Samuelson, Bogle founded First Index Investment Trust (a precursor to the Vanguard 500 Index Fund) as the first index mutual fund available to the general public. In a 2005 speech, Samuelson ranked “this Bogle invention along with the invention of the wheel, the alphabet, Gutenberg printing”.
Bogle had heart problems in the 1990s and, in 1996, he relinquished his role as Vanguard CEO to John J. Brennan, his handpicked successor and second-in-command whom he had hired in 1982. Bogle had a successful heart transplant in 1996. His subsequent return to Vanguard with the title of senior chairman led to conflict between Bogle and Brennan. Bogle left the company in 1999 and moved to Bogle Financial Markets Research Center, a small research institute not directly connected to Vanguard but on the Vanguard campus.
Investment philosophy
Bogle’s innovative idea was creating the world’s first index mutual fund in 1975. Bogle’s idea was that instead of beating the index and charging high costs, the index fund would mimic the index performance over the long run—thus achieving higher returns with lower costs than the costs associated with actively managed funds.
Bogle’s idea of index investing offers a clear yet prominent distinction between investment and speculations. The main difference between investment and speculation lies in the time horizon. Investment is concerned with capturing returns on the long-run with lower risk, while speculation is concerned with achieving returns over a short period of time. Bogle believed this is an important analysis to be taken into account as short-term, risky investments have been flooding the financial markets.
Bogle is known for his insistence, in numerous media appearances and in writing, on the superiority of index funds over traditional actively managed mutual funds. He contends that it is folly to attempt to pick actively managed mutual funds and expect their performance to beat a low-cost index fund over a long period of time, after accounting for the fees that actively managed funds charge.
Bogle argued for an approach to investing defined by simplicity and common sense. Below are his eight basic rules for investors:
- Select low-cost funds
- Consider carefully the added costs of advice
- Do not overrate past fund performance
- Use past performance to determine consistency and risk
- Beware of stars (as in, star mutual fund managers)
- Beware of asset size
- Don’t own too many funds
- Buy your fund portfolio – and hold it
‘Father of indexing’
John Clifton Bogle, known as “Jack” became a legend on Wall Street after he gave ordinary investors the chance to put their money in index mutual funds in the mid-1970s.
The practice has ballooned since then, to become a $10tn industry.
He was later renowned as “the father of indexing”, but when he first introduced it he was ridiculed.
Born in modest circumstances in New Jersey just a few months before the 1929 Wall Street crash, he worked his way through Princeton, where he studied economics, before landing his first job in the investment industry.
‘Bogle’s Folly’
John Bogle created Vanguard in 1974, and introduced the first indexed fund for individual investors in 1976.
Dubbed “The Vanguard Experiment”, rather than relying on the stock picking skills of fund managers, it simply tracked a broad market index such as the S&P 500.
Promising to only match what the broader market index could achieve wasn’t very enticing. The new index was ridiculed as “Bogle’s Folly”.
But he persisted, promoting the idea that a “passive” long-term approach could serve investors better than managed funds, particularly because it offers lower management fees and costs. The idea eventually caught on. Today the firm manages $5tn of investor funds”.
Curmudgeon
He broke from industry tradition again in 1977, when Vanguard ceased to market its funds through brokers and instead offered them directly to investors, eliminating sales charges.
In his later years Mr Bogle continued to press for reforms to corporate governance and fund administration.
He earned a reputation as a curmudgeon, who was at times at odds with his colleagues at Vanguard, but he continued to garner admiration.
“He made himself a centurion to the individual investor,” said Charles Ellis, an industry consultant
