A few days ago Mr. Bogle mailed me his twelfth book (with a valued personal message). It is titled "Stay The Course." It tells the incredible story of Jack's inspiring rise from a table-waiter to founder and CEO of the largest mutual fund company in the world. These are excerpts from this magnificent book:
Thank you, Mr. Bogle for a productive and honorable life well lived!Forward by Burton Malkiel:
"I served on the Vanguard board for 28 years. I can attest that every policy that came before the board was resolved by applying a simple criterion: Was the policy good or bad for the individual shareholder?"
"Perhaps my favorite testimonial to Jack was written by a group of acolytes, the Bogleheads, devoted to propagating Bogle's investment ideas: "While some mutual fund founders chose to make billions, Jack created Vanguard to make a difference."
Gems by John Bogle:
"For as long as I can remember, I've used the phrase "stay-the-course" to urge investors to invest for the long term and not be diverted by the daily sound and fury of the stock market."
"In 1975, Vanguard's mutual structure and index strategy defied convention."
"No one else who was involved in all of Vanguard's long saga still lives."
"My request to review the corporate minutes of the Vanguard mutual funds during the long period in which I served as chairman was denied by Vanguard."
"Stay the Course represent my own candid and deeply held opinions. They are not necessarily those of Vanguard's present management."
"The new organization would be fire first--and to this day -- the only mutual mutual fund organization run on an "at-cost"basis."
"An ugly fight for control of Wellington Management Company, a fight that cost me my job as CEO, made it appear for a time that my career in the industry I loved was over."
"Mutual fund shareholders ought to be given a fair shake."
Mr. Morgan -- my mentor and the great hero of my long career--was an industry pioneer."
"In the challenges that lay ahead, I would need a guiding star and a motto that encapsulates it. That that motto was, and still is, "Stay the Course."
"The Go-Go era went. It was superseded by something distinctively different, but, as it turned out, even worse: The "Nifty Fifty" craze in which the stock prices of the nation's fastest-growing companies lost all touch with their intrinsic values."
"From its high in early 1973 to its low in early October 1974, the U.S. stock market fell by 50%."
"I realized that a mutual company would never provide me with the personal fortune that so many denizens of Wall Street would earn."
"Even one person can make a difference."
"Incorporated on September 24, 1974, The Vanguard Group was born. We had defied precedent, and we had won the battle for the independence of our mutual funds too operate solely in the interest of our fund owners."
"The index fund was even better: it required no investment adviser, and would pay zero in advisory fees."
"When I decided to start our index fund, I possessed neither the training nor the talent for applied statistics.
"In those early days, the Vanguard funds were "load funds" sold exclusively through brokers."
"A midwest brokerage firm flooded Wall Street with posters, "INDEX FUNDS ARE UN-AMERICAN. HELP STAMP OUT INDEX FUNDS?""
"Indexing is the major force that is reshaping the mutual fund industry."
"We must never underrate the power of compounding investment returns, and always avoid the tyranny of compounding investment costs."
"Investors holding fast to the simple broadly diversified investment with rock-bottom costs -- the S&P 500 index fund -- would be rewarded with truly remarkable returns."
"In those days, investors who purchased share of our mutual funds were assessed front-end sales loads of 7.5% to 8.5%."
"The yield on short-term U.S. treasury bills, which peaked at above 16% in 1981, fell to only a hair above zero from 2008-2015."
"In 2017 alone, we estimate that Vanguard's low costs saved investors $29 billion in fees and expenses."
"We stuck with these two rules: (1) Increased market share is a measure of our success in serving clients, and not an objective; and (2) market share must be earned and not bought."
"On October 19, 1987 -- Black Monday -- stock market investors panicked, and the S&P fell 23% on that single day."
"We created the industry's first Balanced Index Fund (1992), the first Growth Index Fund (1992), the first Value Index Fund (1992) and the first LifeStrategy Funds (1994) precursors to our Target Retirement Funds (2003)."
"Target-date funds have proved to be the most powerful fund-industry-changing concept since the money market mutual fund and the index mutual fund."
"Morningstar bills our Growth and Value Index Funds as the first two "strategic beta" funds."
"In my years as CEO, I had never recommended a single fee increase, only those 200-plus decreases."
"In 1992, we again broke new ground with the creation of Vanguard Total Stock Market Index Fund -- destined to become the world's largest."
"Like my foolish opportunistic move in creating Vanguard Specialized Portfolios in 1985, I was wearing my marketing hat rather than my fiduciary hat when I created the Horizon Funds. I hope that my successors and colleagues will learn from my inexcusable mistakes."
"I can unhesitatingly describe Nathan Most's visionary creation of the ETF as the most successful financial marketing idea so far during the twenty-first century."
"While long-term investing is by definition a winner's game, short-term trading -- yes, let's call it speculation -- is by definition a loser's game."
"ETFs are fine, just so long as you don't trade them."
"The broker managing your account doesn't get a commission for a Vanguard fund. He can get his commission for buying you a Vanguard ETF."
"For active equity funds, performance comes and goes, and the public tends to invest in them after they've done well. -- Investors are often their own worst enemies."
"In early 2018, 48 Vanguard funds boasted Morningstar gold ratings, more than the total of 43 for our next four peers combined."
" In the stock market the past is not prologue."
" I received a heart transplant on February 21, 1990. More than 22 years later, I'm doing fine, thank you."
"Ideas are a dime a dozen. Implementation is everything."
"To a considerable extent, the firm's founding values reflect my own personal values: Respect for each human being -- from the highest to the humblest -- whom we meet along the road of life; fair dealing; commitment to one's colleagues and one's career; trusting and being trusted; personal integrity, passion and energy; and service to our client/owners, our communities, and our societies."
"Our "no perquisite" rule: No leased cars, no reserved parking places, no first-class flying, and no executive dining room."
"My firm-wide standard of conduct, applied universally to officers and crew alike: "Do what's right. If you're not sure, ask your boss.""
"Words can take an idea only so far. Deeds make words tangible."
"I care -- and care deeply -- about the fine human beings who have helped me to build Vanguard."
"My boosters in our shareholder base -- most notably "the Boglehead" of the nation's most popular financial website -- continue to write to me almost daily."
"Vanguard now operates 180 mutual funds in the United States alone."
"Warren Buffett is among the most enthusiastic proponents of the Vanguard 500 Index Fund."
"We were aware that in the ideal, the Total Stock Market Index would be the most pristine means for capturing the market's returns."
"Total Stock Market has been a runaway success. With more than $740 billion in total assets, in mid-2018, it is the largest mutual fund in the world."
"The across-the-board superiority of the indexes reflected in the SPIVA Scorecard is astonishing. The S&P indexes outperformed some 93% (!) of actively managed funds in the U.S."
"The continuation of Vanguard's leadership depends upon our deserving it."
"We know that index funds that are focused on broad diversification in the major market sectors, bought and held for the long term, have proved to be the optimal strategy for investment success."
"Believing that the future will closely resemble the past, and ignoring the inevitable uncertainty of investing -- and of life -- is to forget the lessons of history."
"The average annual compensation of independent directors serving on the boards of the five largest mutual fund companies is more than $400,000."
"Of course, Wall Street doesn't care much for index funds."
"Pascal's Wager: Consequences Must Outweigh Probabilities."
"Yes, institutional money managers must truly act as fiduciaries, placing our clients interest above all else."
"I've been cited for decisiveness, resilience, grit, and self-confidence (which, I pray, does not cross the line and become arrogance)."
"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 is based on simplicity, plain service, and honest stewardship."
"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 the Earth, and for enjoying a productive and honorable life well lived."
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