YouSaid · the spoken record

John Bogle

lines on the record: 74
first: 2019-01-28
most recent: 2019-01-28
sittings or episodes: 1
sources: podcast

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“I've usually used the phrase stay the course as one of the great rules of investment success. Ignore the day-to-day fluctuations in the stock market and focus on long-term growth of the US economy. But as I complete this memoir, stay the course is also a splendid rule for fighting our way through the inevitable ups and downs of the short spans of our existence on this earth and for enjoying a productive and honorable life well lived.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And he's going to continue his thoughts on work. Talks about how he admires Alexander Hamilton, and he's going to quote Lynn Manuel Miranda, who's the inventor, the creator of that hit Broadway Hamilton. So it says, Lynn Manuel Miranda described Alexander Hamilton's standards for getting ahead in one's work in his hit Broadway musical Hamilton. To paraphrase, the founding father with no father got farther by working harder by being smarter and by being a self-starter. Unfortunately, I cannot rap as well as Lincan. Although I secretly wish I could. And this is the last thing. We'll close the book here.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is his opinion on work. I've been working since I was nine years old, beginning as a newspaper deliverer, store clerk, postal worker, and waiter. I worked my way through school and college waiting on tables. And I also worked during summer vacations and holiday breaks. After college, I worked to build my career in the mutual fund business. In all my working career, however, I've only had a single job that I would call real work. When I was a pinsetter at the bowling alley of the New Jersey fire department. Other than that, all of my work has been fun, productive, and deeply fulfilling, even with a spiritual element.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“When I'm asked what is the secret of a life well-lived, I often answer, first rule, get out of the bed in the morning. If you don't do that, not much will happen. Then, every day teach something and learn something. Along the way, give an enthusiastic compliment to a deserving soul whom you may have never before met. Then you've earned a great night's sleep. You'll get it. When you awaken the next day, repeat these rules.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Is based on simplicity, plain service and honest stewardship. She talks a little bit about his religion in the book. I think he says he's Eschapalian, but he studied the Quakers and he's like, he feels that he was born with some of the innate values that Quakers preach. And he says, in retrospect, I see that my life and my design for Vanguard reflect many of the basic Quaker values. Simplicity, economy, thrift, efficiency, and service to others. And this is him on teaching and learning.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“He loves this. And again, remember earlier, I was like, you'd be really, I think people are really better served, like searching, like reading old books and seeing the knowledge that has existed about human history. He's recommending the story of the hedgehog and the fox. So he says the quotation that follows was found circa 670 BCE in a fragment of writing of the Greek philosopher. That's no way how to pronounce that. And this is what he says. The fox knows many things, but the hedgehog knows one great thing. For me, this idea provides an insight into our nation's money managers. We have an army of sly foxes who survive and prosper by knowing many things about complex markets and sophisticated marketing. The hedgehogs in the field know only one great thing. That investment success”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Was 25 years after they became friends again. I was inspired by that story. I decided to take the initiative to mend the rift and forgive my successors, even without their repentance. So he reached out to them and he says, My words were simple. 25 years is enough. Let's be friends. And so it would be. I am no hero though. I confess that I can't quite get an eye for an eye out of my mind. So it's so in his mind, but he's not acting on it. So at least that's good.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know how to write words. It escapes me at this moment. But I think the default for a lot of people is like, okay, you're going to screw me over, then that's fine. We're at war and I'm going to go get revenge, but it's all like that's our instinct. The difference between our instinct. And once we calm down and think about it, it's like, this is might not be the best path forward. So he's like, I soon realized that heeding this maxim was eating away at me. So basically his instinct was not serving him well. Then I learned of the mutual anonymity between former U.S. presidents, John Adams and Thomas Jefferson. They were political enemies until 1801 when Jefferson's presidency ended. Then their rift healed. They became friends. Their long years of correspondence ended only when both died on the same day.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, this is interesting. So he goes into detail in this book about how there's a lot of people that wronged him and try to basically destroy him, but that it's more powerful to forgive, even though he's kind of a fighter. He says, I confess that I always kind of liked the simple message, an eye for an eye and a tooth for tooth, meaning these people screwed me over I should do the same to them. In 1974, but he's going to change horse hair. In 1974, my former Boston partners abruptly cut short my career. It was hardball politics, for it was their investment failures that almost sank the company. So I returned to my earlier philosophy. The heck with asking for repentance, get revenge. I soon realized that heeding this maxim was eating away at me. So this is, I think, The battle, like.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And he actually says one of the best advice you can give somebody comes from the book The Little Engine That Could. The Little Engine That Could Offers the Best Brief Advice for a successful career that I can imagine. I think I can. I think I can. I think I can. I knew I could. I knew I could. I knew I could.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“This is his opinion on determination. Years ago, I asked some friends and most members of my family what they thought was my single most important trait. Each came up with the same word. Determination. I'm also known for my contrainism. Another way to put that is there must be a better way. I've also been cited for decisiveness, resilience, grit, and self-confidence, which I pray does not cross the line and become arrogance. One of his favorite quotes is from Dylan Thomas, and it says, do not go gentle into that good night. Rage, rage against the dying of the light.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“This is him on Warren Buffett. The Oracle of Omaha has been described as a better salesman than I for the Vanguard five hundred index fund. He's boosted it in seven Berkshire Hathaway annual reports. He also put his money where his mouth is, including winning a winning bet that the S&P 500 would outpace a select group of hedge funds. I think he won a couple million dollars on that, by the way, and directing the trustee of his wife's estate to invest 90% of its assets in the Vanguard 500 index fund. So when he gives, when people ask him for investment advice, he almost always says, just put it in the Vanguard 500 index fund. And he's also putting his money where his mouth is because after he dies, 90% of his wife's estate is going to go into that.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“This is his opinion on books. I love writing books, and I have a lover's quarrel with the mutual fund industry. That combination has resulted in twelve books, ten of which have helped to drive Vanguard's success as an industry rebel creating a new industry, one among those companies that consider themselves insurgents waging war on behalf of the underserved customer. Why do I write? Because I love to do it, because writing takes those incoherent, rambling thoughts we all have rattling around in our brains and demand that they be focused and articulate, even impassioned one's short existence on this planet.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“So talks about this guy named Jesse Gage crushed me with a 40 on my first exposure to algebra, but I ended the year earning $100 on my final exam. His other teachers, Henry Adams and Marvin Mason, corrected my English papers with a fury and with red pens. The markups of my papers were not pretty sights, but my ability to write began under their tutelage. Determined to overcome that slow start, I worked hard and graduated at the top of my class and was named best student. That may have been the first hint that I had the grit to stay the course.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“He wants to talk about what he learned at Blair Academy, which I think it's a boarding school, it's a high school, what we call high school now. This fine New Jersey boarding school and was and remains among the principal cornerstones of my long life. My experienced masters at Blair seem to see something worthwhile in me. They would not accept flawed work.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“So it says in this memoir or source, I present a list of some things that are important to me, institutions that have helped me develop my mind and gave me the opportunity to give back to the community. I also want to honor some of the individuals who have helped shape who I am and some traits that shape my character and much more. And so he does this in little, it's an alphabetical order. I'm just going to pick out some of the ones that particularly resonate with me and just very quick and to the point. So this one is on advice. This ancient Persian proverb offers the best advice that I know for dealing with the inevitable ups and downs of life. The best times and worst times alike. And that proverb is, this too shall pass to pass.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“The lessons they've learned to benefit future generations, which I think is extremely helpful. And at this point in time, we're the beneficiaries of all their experience. They've distilled their ideas. They saved us making mistakes or having to live 70 years. And we could take their ideas and apply it to our lives. And that's what he's talking about here. He's like, listen, there's been tons of people that have helped me. I needed to go ahead and pass that along and repay that to future generations. So he says, you know, I want to honor some of the people that have influenced my life. He says, I want to cite a few passages by others that I have found inspiring.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Called What Really Matters. And he, well, let me read the introduction to this memoir. So much of the investing public seems at least vaguely aware of my career, my indexing insurgency, and my investment philosophy. In this final chapter, I'd like to reveal a bit of who I am and how I tried to serve society, some of my joys, and some of my sorrows, and even some of my fears. How much delight I receive from helping others, as many decades ago, others helped me along this road of life. So this is something that I found very common a lot of these autobiographies of entrepreneurs that we've covered on the podcast are written when they're much older. They're much closer to the end of their life, whether it be 70, 80, and in this case, in the mid-80s. And I like, I think this is extremely valuable. First of all, it seems to be common that people want when they're close to the end of their life. They want to pass on.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And now here's John's takeaways from those paragraphs. Wow. A bold, ambitious founder. Insurgents waging war on their industry. Creating an entire new industry altogether. A clear sense of mission. Employees deep feelings of personal responsibility. Abhorring complexity and bureaucracy celebrate employees at the front line. I repeat these phrases so that readers will not quickly overlook their parallel to the vanguard story. Truth told, these phrases are a perfect thumbnail sketch of what I did my best to create. Okay, so now I'm going to skip all the way to the end of the book, and this is where we'll close. His last chapter is, he calls it a memoir of sorts.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Groups. And now he's coming to this, like his conclusion about what he observed now, 30 years earlier. The manager's idea was to facilitate trading among the funds and then encourage investors to trade the 15 industries based on market trends. kind of like a old idea but but kind of dressed up as if it's something new but it's not new they soon began to founder and all 15 industry funds went out of business with such a flawed investment premise despite their brilliant for a time marketing premise these funds ill serve their investors and fell out of the mainstream So he basically is doing the same thing and they wind up not serving the investors in Vanguard. He says, it occurs to me that most of my mistakes I've made during my long career came on those occasions, happily rare, when I removed my investment hat and put on a marketing hat.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the book is talking about the ideas he had. It's also what I love, he's got a great humility where he goes into a lot of his failures. And this one failure could be described, a failure caused by focusing on the competition and not learning from the past. Enlisting our successes, I cannot in good conscience ignore one of the great failures of my long career. In 1984, I was anxious, too anxious to compete with archival fidelity. So Fidelity gets into these things called sector funds and he says, I decided that we needed to meet the challenge. So we formed Vanguard specialized portfolios, which is just another way of saying they're going to basically copying with Fidelity's jump into sector funds, even though he saw back in the 60s the problem with doing so. I should have known better. In 1951, studying the fund industry from my Princeton Senior thesis, I observed the performance of five sector funders.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“If we carry this process back to Vanguard's founding in 1974, the aggregate savings of the aggregate savings to Vanguard's investors can be fairly estimated at $217 billion. So a quarter trillion. I take great pride in the fact that the company I founded has been able to give so much back to its investors. They deserve every penny of it. He knows fundamentally why he exists, and that's a serve the interests of his customers.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“I may have bored you with these data, but I wanted to establish a firm footing for our focused on low costs, always low cost for our investors. Now let's have some fun and talk real dollars. The impact of Vanguard's at cost structure translates to billions of dollars saved by investors every year. In 2017 alone, we estimate that Vanguard's low-cost saved investors $29 billion in fees and expenses. So to compare that, remember, he's putting the benefit of his customers first, right? And in one year alone, he saved $29 billion. Well, in that same year, banks, which no one ever talks about them putting the interest of their customers first. Not in this country at least, made $30 billion just an overdraft fees.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Vanguard's funds would certainly almost whip them over time once costs were deducted. And this is that great quote I mentioned earlier. Performance comes and goes. Costs go on forever. It seemed obvious that Vanguard would come to dominate the fixed income field, and so we did And now I'm finally getting to the point about the impact this product had in dollars and why he gets so much adulation.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“So, in addition to applying this for his logic to index funds for stocks, he's like, hey, wait, I can do this. This logic still holds true for bonds. So he says, even as I came to believe that precious few stock managers could outguess the market over the long term, so I had also come to believe that precious few bond managers could accurately forecast the direction and level of interest rates and outguess the bond market. Yet our peers offering quote-unquote managed tax exempt bond funds were implicitly promising to do exactly that. A promise that could not be fulfilled.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“for nearly a half century. We would sell shares of our fonts on a no-load basis, meaning without sales commission, entirely eliminating the need for brokers. So instead of paying them less, we're just going to get rid of them completely. We would not rely on sellers to sell fund shares, but rather on buyers to buy them. So, this is just solid old school wisdom that applies to both good and bad times. The stock market environment that Vanguard Index Fund entered was, in a word, terrible. The mutual fund industry, including Vanguard's prehistory under Wellington, had jumped into the go-go era as if it would last forever. It didn't. Nothing does.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And I just want to make clear it's not like he came right out of the gate in 1970s with the lowest cost possible. I told you, I think he says over his career, they lowered the fees 200 times. They had to start out with a lot of dealing with a lot of legacy stuff. So this is how he eliminates a 50-year tradition, which is sales commission. So he said, from the outside of the struggle of Vanguard's independence, I had realized the anomaly of striving to operate a rock bottom annual expense at rock bottom annual expense ratios. As we continue to be dependent on the broker dealer community, so it's kind of hard to do that if you're having to pay all these fat commissions. Like nearly all of our peer fund managers, Vanguard's distribution strategy was linked to stockbrokers, so he's going to change this distribution strategy. I decided that we must resolve this anonymously. I can't even pronounce symbol words, guys. I outlined my plan to abandon the distribution system that had supported well-being.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“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. Says he is a hero to them and to me. Mutual, and then this is Samuelson, the guy that wrote that, basically that call to arms back in the 70s? I just covered it. I don't even remember now. And now he's talking in 2005. And he says, you know, I mean, he's a little hyperbolic here. He's saying, he ranks this invention along with the invention of the wheel, other stuff like that. Maybe not. But it's important. And he said, this is Samuel stood talking. A mutual fund that never made Bogle rich, but elevated the long-term returns of mutual fund investors. This was something new under the sun.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“The power of an idea whose time has come, and he definitely believes that the idea of the index fund, it was their time. It was its time to happen. And very simple pragmatic advice. I would say simple but not easy given our nature. It says we must never underrate the power of compounding investment returns and always avoid the tyranny of compounding investment costs. So stay the course and then monitor your expenses. And this is Warren Buffett on Bogle. 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 had urged investors to invest in ultra-low cost index funds and listen to the words that Buffett's using because we always talk about missionary zeal. In his crusade, not in his business, in whose crusade, Jack was frequently mocked by the investment management industry. Today, however,”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so now we're gonna see the results of that. So he raises, what is that, 11.5 million in the 1970s. And this is just him talking, like projecting in the future about what the actual result was. So that was just the humble beginning. By the end of 1982, the assets of the first investment trust topped $100 million. We reached, so it started with $11 million, 1982 is $100 million. 1988, they had a billion. And then by 2018, they had two funds, one $640 billion, and the second $742 billion. So you just see the growth over time. And then he states this sentence, this perspective again. Without Vanguard, the creation of the index fund would have occurred anyway, I'm sure. And he's quoting Victor Hugo here. He says, Victor Hugo got it right. No army can resist.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And he's going to, this is something I think is helpful for all of us. Anyone with a new idea must expect to be greeted with skepticism, followed by condemnation and attack when the idea becomes a reality. This was described as Bogle's folly. This is such a bizarre response from his competitors too. Brokerage firms flooded Wall Street with posters illustrated by an angry Uncle Sam using a large rubber stamp to cancel the index fund's stock certificates. Its headline screamed. Index funds are unamerican. Help stamp out index funds. What a bizarre marketing tactic. Saving you money is unamerican. Okay.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Hey, I have this new fund. I want to raise $150 million in this IPO. And as we've been talking about his determination, initially he failed. He calls it a flop. So he says, brokerage firms representatives did not seem particularly smitten with the idea. An index fund, after all, implied essentially that their profession, selecting well-managed funds for their clients, was a loser's game. When the IPO closed on August 31st, 1976, it was a complete flop. It produced but 11.3 million dollars of investor capital. This is the funny part and another example of his stubbornness. The apologetic underwriters suggested that we cancel the offering and return the money to the investors. No, I recall them saying to them, we now have the world's first index fund, and this is the beginning of something big.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Four decades later, the accumulated assets of the index funds formed by those early pioneers who sought to lead the indexing revolution totaled zero. I also think something to help John not give up is that seed of anger I mentioned earlier and the fact that he believed in this. He was willing to dedicate his career and his life to this idea. And if you're completely intransigent, that actually increases your chances of success. He's just not, he's not willing to budge and he's not going to give up because he feels he's right. Okay, so this is something I don't quite understand. He doesn't. elaborate in the book But I guess when you're starting a fund, the way to start a fund back in those days, like you IPO, so he's going around and saying.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, power law level success, but moderate success is extremely achievable if you don't make bad decisions and you just don't quit. And you see this in so many different domains. The context of the discussion here is like around the time he started index fund, there was a couple people tried to try this idea before, but they never, like, they had the idea. They maybe started, couldn't raise money, or it just basically all failed. And he said, none of those fledgling efforts in indexing bore fruit. Not one of those early pilot lights ignited the flame of indexing. All of those tentative forays failed to create a single index fund that was sustainable and successful, all except one being John.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Something John also picked up is that most human nature, most people quit. They want to lose weight. They'll quit on their diet. They want to work out. They stop working out. They want to build a business and they quit. They do all these things. This is why I have friends that I want to start podcasts and I unequivocally say if there's something you're passionate about you want to talk about do it and do it now and they're like, yeah, but like there's hundreds of thousands of podcasts out there. And I'm like, that's not, that's, yeah, there's five, six hundred seven hundred thousand in the Apple podcast directory right now. But do you know how many of them have stopped updating? They're like, no, 75%. How do you know that? Because you know humans quit. The vast majority of people give up. And that's why if you just stay the course, which is what John's telling us to do, you're going to have greatly better results. If you can just survive, then you will have better results. It doesn't mean you can predict outsize.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, there's a lot of things he talks about that are good ideas for investing, but I feel they're also true for company and personal finances as well. And this is one of them. Great long-term rewards can result from small differences in cost. This was my simple thesis in creating that precedent shattering investment strategy. And so this is something that we know this in company finances because a lot of these guys, a lot of these entrepreneurs are obsessed with frugality. They like industry. They like efficiency. They don't like waste. And I just saw, I usually find examples of the opposite. I don't come across them unless they almost come exclusively from Twitter. And somebody posted on Twitter that the company we work, which is still not profitable, which means if investors say they're going to stop funding the company, the company will go out of business.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“The index market's huge. There's like three main players though. But they're like, you were successful for a long time. How come no one said, hey, we should come in and compete with them? And I loved John's answer. He goes, the answer is simple. Index funds have a real problem. All the damn money goes to the investors. Managers can't take anything. In other words, there's no economic incentive to do so, which makes the sacrifice that John made in starting this product, which is basically he forgot a, let's see, I think the technical term is a metric shit ton of profits and gave it back to his customers. So we're actually going to learn more about that because I'm reading another one of his books. He wrote like 11 or 14 books, something like that, something crazy. And he talks more.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“The whole market requires no load and keeps commissions, turnover, and management fees to the feasible minimum. And that one sentence out the entire product structure for Vanguard. Dr. Samuelson's challenge struck me like a bolt of lightning, igniting my conviction that upstart Vanguard had a remarkable, even unique opportunity to operate a passively managed, low-cost index fund and have the market to ourselves for at least a few years. None of our competitors in the mutual fund industry wanted to start a low cost, indeed at cost mutual fund. All of our peers had the opportunity to start an index fund. Only Vanguard had both the opportunity and the motive. So going back to my notes on the podcast that I took with John, he expounds on this. He was asked the question, he's like, Vanguard's an enormous success. And I think right now.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, he's saying, remember when he said back, he's like, listen, a lot of what happened to me was locked because this idea was going to come one way or another, whether I did it or somebody else did it. So he finds the writings of this guy named Paul Samuelson. And he was writing about the issues with fund managers. And he was doing this in the early 1970s. And he did an analysis of the returns. He's like, wait, this doesn't make sense. Similar conclusion that John has. But John takes this idea and runs with it. Dr. Samuelson could find no brute evidence that fund managers could systematically outperform the returns of the S&P 500 index on a repeatable and sustained based. Now, this still holds true today. In essence, he demanded that someone somewhere start an index fund modeled on the S&P 500. As yet, he wrote, there exists no convenient fund that”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't see how I kept my cool under the pressures of battle, but paraphrasing Kipling, I treated triumph and disaster those two imposters just the same. I like that. That's almost like he had a stoic nature, realizing that you can't get too excited when things go well and you can't get too bummed out when things are going bad because both of those are inevitable. I knew what I wanted to accomplish and Vanguard's novel mutual structure was the key to what would come next, the world's first index mutual fund. I love this idea about motive and opportunity.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is him telling us that another piece of advice that I feel has echoed a lot in the entrepreneurs is knowing why you are doing what you are doing. And if you don't know why you're doing what you're doing, you're more likely to quit. So he says the guiding star of Stay the Course again proved to be an essential aspect of my ability to surmount challenges. Weathering the heartaches and disappointments of the years from 1965 to 1974 depended on my dogged determination to stay the course of my career. The battle was long and hard, but the result would one day bring a revolution to the world of mutual funds. In retrospect, I don't see how I kept my cool.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there has to be. I think in some cases it's helpful that the seed of your determination is anger. In his case, it's the anger of being what he feels unfairly scapegoated. It's the anger of his idea not being listened to, even though he feels it objects to be true. I found that I'm going back over my notes for a bunch of the podcasts, but specifically I think all the books that I've read so far for the podcast are extremely valuable. But if I've told you this before in conversation, I really try to design within constraints. So if I'm talking to a friend, I'm like, hey, I like to pit like false constraints on. It's like, okay, if you're stuck on an abandoned on a desert island, you can only bring one music album with you to listen to for the rest of your life. What is it? If you can only visit one city the rest of your life, where do you go? I like this because you're...”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“It was the most heartbreaking moment. Actually, until then, the only heartbreaking moment of my entire career. I decided to fight back. So, this is the beginning when I referenced earlier his doggedness, his stubbornness, his perseverance. And I think”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“My partners quickly found a scapegoat not among themselves despite their responsibility for their terrible performance of the mutual funds whose portfolios they actually manage so that he's actually going to get fired here from this three of the four funds. Each of the funds had a manager and three of the four failed. And again, they're like, oh, it's not us. It's you. You got to go, which is just hilarious to me. Not among themselves, despite the responsibility for their terra performance of their mutual funds who portfolios they managed. They chose me as their scapegoat because he was also the CEO. The chief executive responsible for the merger that wrecked such havoc on the returns earned by the vessel who had trusted us. Yet I had ceded substantial voting power to the new managers to accomplish the merger. That was his downfall. They banded together and they fired me.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“So he says it was high time I added that any conflicts between the profession of investing and the business of investing be reconciled in favor of the client. And so I'm skipping over parts about this, but he's giving talks at this time to other, like to organizations of investment professionals. And he's like, listen, this is objectively true. And if we can figure it out, it's only a matter of time to our customers figure it out. So if we don't change our industry will cease to exist. And for that fundamental truth, he is ostracized in general and made fun of. They call this when he starts his company, and we're going to get there in a minute, they call it Bogles Folly. They think this guy's, you know, that he's crazy. He doesn't know what he's talking about. Okay, so this is before he gets there though, before he starts his company, he's got to get fired, and this is going to happen here.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“I questioned. He's like, what's going on? He goes, I questioned whether our public ownership structure was the best for our mutual fund shareholders. So there's that thing that he was writing about 20 years earlier in his Princeton thesis is now coming back. And he had to come back. This failure had to happen to him for him to understand, oh my God. Like I've been through this before. Like we cannot, the future is fundamentally unpredictable. No active manager is going to beat the market returns over a long period of time. Like our entire industry is a fraud.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“And you just, that's just not true. They're just human beings. And human beings are fundamentally flawed. Okay, so the results, but the difference between a lot of us and John is this failure actually leads to introspection. So he's going to, this is when he's going to learn. He's like, oh, well, he's also going to get fired too. So that helps. Okay, so at the same time, Wellington's new business model began to fail. Three of our four new funds that are aggressive new managers brought into our fold collapsed.”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“Stocks such as Xerox, Polaroid, IBM, Avon, and Digital Equipment Corporation soared. These stocks at their peaks were valued at fifty times earnings or more, but reality finally took over and the stock prices collapsed. Participants in that bubble included not only mutual fund managers, but the vast majority of institutional investors, insurance companies, and even college endowment funds. From its high in early nineteen seventy three to its low in early October 1974, the US stock market fell by 50%. So he's saying not only it happened to us, it happened to other mutual fund managers, it happened to institutional investors who are supposed to be the pros, insurance companies and college endowment funds. I always talk about the fact that books can one book”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“It's run by a bunch of other partners and has more, let's say, aggressive funds. And John, even though he's running the company, together, there are a bunch of young guys and they actually land on the cover of a magazine and they call them the Wiz Kids. And it says, together, we five Wiz Kids whizzed high for a few years. So they transitioned from being conservative. They jump in with what everybody's doing. They're copying. It's like, yeah, we can do this too. The go-go era went, went. It was superseded by something distinctly different, but it turned out even worse. The nifty 50 craze in which the stock prices of the nation's fastest growing companies lost all touch with their intrinsic values. The simple principle don't worry, high valuations don't matter. Earnings growth will Ultimately, bail you out. Does that sound familiar?”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source
“I was but 35 years old. But after working with me for almost 15 years, Mr. Morgan had come to trust my judgment. Perhaps overly self confident, I thought the solution was obvious, and this is the mistake that John talks about that he made. And the mistake is basically copying. It's like, well, if we're getting our butts kicked by everybody else, like, clearly, we got to ditch this conservative approach as well. And so John takes over, he becomes a CEO, he finds another firm that has”
2019-01-28 · Founders · #57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution · IDENTIFIED FROM THE TRANSCRIPT · source