How would Jack Bogle, one of the great disruptors in the financial industry and founder of the Vanguard Group, respond to investors’ fears about the volatility in the current market?
He would say, ‘ ‘Don’t do something, just stand there,’ “ said Jane Bryant Quinn, a financial writer who participated in a recent remembrance of the Bogle organized by Impact Communications. “The market always comes back.”
“Jack was pretty clear,” continued Quinn. “He would say, ‘You have to accept that markets are going to go down 25% or more from time to time and if you can’t do that then you’re probably not a candidate for being in the market at all.’ I would modify that, at least put less money into the market.”
Bogle would have turned 91 on Friday, May 8. He died in January 2019 after a renowned career that began when he joined Wellington Investment Trust at age 22, straight out of Princeton University, eventually becoming its president in 1967 after merging the firm with the Boston-based investment company Thorndike, Doran, Paine & Lewis. Seven years later Bogle was fired and founded The Vanguard Group. Two years after that, Vanguard created the first stock index fund for individual investors.
Bogle never stopped believing in several core principles for individual investors: Invest for the long term, at low cost, in diverse assets and buy the whole market; don’t try to beat it.
“Jack revolutionized investing,” said Rick Ferri, founder of Ferri Investment Solutions. “It took almost 12 years for Vanguard to get its first $1 billion into its S&P 500 500 index fund, but then things really took off.”
Bogle created more index funds, including an international stock index fund, U.S. total stock market index and total bond market index, and “by 1996 he had covered the world,” said Ferri. “You could go and create a full index portfolio that had an extremely high probability of outperforming anything else.”
Vanguard’s first index mutual fund now has about $500 billion in assets as well as an ETF double, and the Vanguard Group has $6.2 trillion in total assets, making it the second largest asset manager in the world.
“The phenomenon he created is almost immeasurable. He has saved hundreds of billions, if not trillions, of dollars for investors,” Ferri said.