John Bogle on the Balance Between Professional and Business Values in Investing—Part 1

An essay by Vanguard founder John Bogle, published in a recent issue of the CFA Institute’s Financial Analysts Journal, offers insights and guidance concerning the need for balance between professional values and business values in the world of investing and finance. This is the first installment of a five-part series providing highlights of the essay. Bogle cites a 2005 article in which Harvard professor Howard Gardner and Carnegie Foundation president Lee Shulman argue: “The primary feature of any profession [is] an inherently ethical relationship between the professional and the general society.” He then applies this notion to the finance industry, […]

John Bogle on Common Investor Mistakes

In a 2014 interview with AAII Journal, Vanguard founder John Bogle outlined common investor mistakes and other thoughts about the market. Here are some highlights: “The biggest mistake investors make is looking backward at performance and thinking it’ll recur in the future,” says Bogle, citing the importance of reversion to the mean. “The winners in decade one tend to be the losers in decade two,” he says, and vice versa. Considering returns in “nominal dollars.” Investors, he says, should account for inflation and fund expenses when evaluating investment income. “Indexing works,” he says, “because the math is correct, and that’s […]

Jack Bogle on Indexing: “Math is Math”

Back in 1976 when John “Jack” Bogle started the first index fund, his goal was to “capture the overall market’s return at much lower costs than the stock picking fund managers who so often failed to match it,” writes Bloomberg’s Michael Regan in a recent interview with the octogenarian and retired head of Vanguard. The lengthy conversation covers a wealth of topics including these highlights regarding index investing: While Bogle acknowledges that there are plenty of naysayers of index investing, he defends the strategy by stressing that there is an “underlying, fundamental trend” toward indexing that is “not one built on […]

Zweig on the Impact of Index Funds

Last month marked the fortieth birthday of the first index fund (launched by John Bogle, founder of the Vanguard Group) and the anniversary has triggered a lot of discussion and reflection on the trajectory this class of funds has traveled since. Jason Zweig of the Wall Street Journal shares some thoughts on the subject and how the phrase “too much of a good thing” could apply. Zweig reports that over the past year $409 billion has flowed into index funds, a class of funds that “slash the costs of investing by 90% or more by skipping most of the research […]

Jack Bogle on the Future of Index Investing

When Jack Bogle created the first index mutual fund for individual investors (Vanguard 500) forty years ago, he probably didn’t imagine that it would grow to 20 million investor-clients and more than $3 trillion. In last week’s Wall Street Journal, columnist Holman Jenkins, Jr. shares some of Bogle’s insights and opinions as he marks his 65th year as an industry leader. The 87 year-old visionary sees the appeal of index funds only magnifying given “the decade of depressed returns he sees ahead,” writes Jenkins. According to Bank of America, he adds, $600 billion in investor cash has exited actively managed […]