RIP: John C. Bogle

From the WSJ:

Born in Montclair, N.J., on May 8, 1929, Mr. Bogle and his twin brother David arrived five months before the Great Crash that began that October wiped out much of their family’s wealth. Mr. Bogle delivered papers and worked as a waiter growing up.

At Blair Academy and Princeton University, Mr. Bogle said he initially struggled with the subject of economics. An article about the mutual-fund industry in the December 1949 issue of Fortune magazine inspired his 1951 senior thesis, titled “The Economic Role of the Investment Company.” He graduated from Princeton magna cum laude in economics.

Mr. Bogle’s first job in the investment world was as a clerk to Walter L. Morgan, who founded the first-ever balanced mutual fund at Wellington Management.

Despite his eventual advocacy for index funds, Mr. Bogle was contemptuous early in his career of the idea that trying to beat the market was a waste of money.

In 1960, under the pen name John B. Armstrong, he wrote a lengthy article for the Financial Analysts Journal in which he ridiculed the very idea “that the mutual fund itself should buy the market average,” or settle for a return no better than that of a benchmark like the Dow Jones Industrial Average or the S&P 500 index. In 1973, he gave a speech insisting that “the average individual is getting ‘above-index’ results in mutual funds” and that “neither compensation of salesmen, nor profitability of broker-dealers and underwriters, is excessive.”

Only after he was fired as Wellington’s president in 1974 by his partners and launched Vanguard as an independent company the following year did Mr. Bogle challenge the industry’s prevailing orthodoxy that price was a signal of quality and embrace low-cost investing.

Mr. Bogle chose to organize Vanguard as a mutual company, an idea he said he had unsuccessfully pitched to his Wellington colleagues years earlier. Along the lines of a consumer cooperative, the firm would be—and still is—owned not by private shareholders who seek to maximize their own profits but rather by its fund investors, who earn higher returns as Vanguard drives costs lower. In 1977, Vanguard also went “no-load,” eliminating the sales commissions and all middlemen on its funds.

Mr. Bogle’s insistence on integrity, which often struck many of his competitors as sanctimonious, steered Vanguard clear of the scandals that periodically swept through the mutual-fund industry. Still, when it came to corporate governance, Mr. Bogle became a greater proponent of index and other funds harnessing their power on shareholder votes after his tenure at Vanguard than he was during it.

At Vanguard, Mr. Bogle paid himself well but not lavishly, though he and other firm executives have never publicly disclosed those figures. Mr. Bogle frowned on ostentation, driving a Volvo station wagon, vacationing in Lake Placid, N.Y., flying economy class and haggling for discounts at hotels.

Vanguard continues to take a similarly thrifty approach to its business at its Malvern campus, whose plain brick buildings bear the names of warships. Mr. Bogle, a fan of British Adm. Horatio Nelson, named the firm Vanguard after Adm. Nelson’s ship in the 1798 Battle of the Nile and referred to employees as “crew.”

Despite Mr. Bogle’s age and lengthy career, he had chronic coronary failure and suffered at least seven heart attacks—the first at age 31. He endured a malfunctioning pacemaker before finally receiving a heart transplant in 1996.

“I didn’t think about [dying],” he told an interviewer in 2007. “I just got on with what needed to be done.”

Posted by on January 16th, 2019 at 9:46 pm


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