16 ms·

John C. Bogle Has Died

1084 points by gdubs 8y ago

cjcenizal 8y ago
I just finished reading "The Bogleheads' Guide to Investing", which opened my eyes up to how investing _really_ works -- turns out it's much simpler than I thought, which was an exciting realization to have. I'm sad to see him go.
- azhenley 8y ago
  I hadn't heard of that book but I've now added it to my list. Can you summarize the biggest thing you learned from it?
  - lukewrites 8y ago
    Hold a two- (or three-) fund portfolio of low cost index funds; invest in it regularly and stay the course. It's OK to invest in individual stocks, but do it for fun, not as (or with) your retirement savings. I like Bogle's "Little Book of Common Sense Investing"[0] a little more than the Bogleheads Guide, but they're both good :) [0] https://www.powells.com/book/-9781119404507 https://www.powells.com/book/-9781119404507
    - MarlonPro 8y ago
      Google "VTSAX". I originally had 3 funds but now holding just one - VTSAX. But of course, that will change as I get closer to retirement (still far :-))
      - perryh2 8y ago
        The 3 fund portfolio is better, which also includes international stocks and bonds. https://www.bogleheads.org/wiki/Three-fund_portfolio#Vanguard_funds https://www.bogleheads.org/wiki/Three-fund_portfolio#Vanguar...
        sokoloff 8y ago
        Maybe, depending on the definition of better. The single VTSAX fund has substantially outperformed the three-fund mix. In my case, I believe we're in a rising rate environment, therefore I'd rather not hold bonds; I'm realistically investing for my kids' consumption rather than our own (we have the basics well-covered already); VTSAX holds companies that have substantial outside the US exposure and most of my future expenses are tightly tied to the fortunes of the US economy. If your timeline is > 35 years, you're in the US, and intending to stay in the US, I could argue that pure VTSAX is better. Any of them are better than a "professional" financial advisor, IMO.
        jedberg 8y ago
        Not so far. VTSAX and VTI are basically the same thing. If you put $10,000 in in 2012, and just invested in the S&P500, you'd have $23,046. If you just did VTI (Vanguard Total Stock Market), you'd have $22,754 (and VTSAX would be $22,731). If you did the recommended 3 stock portfolio (VTI 42%, VXUS 18%, and BND 40%) you'd have $16,668. So while they all made money, the three stock portfolio made the least money. Unfortunately the Vanguard ETFs don't go back before the last recession, otherwise it would be interesting to see how the numbers invert, or if they do.
      - woodlumhoodlum 8y ago
        It has one of the LOWEST fees and has great returns I put my full 401k into VTSAX, as I have other diversified savings elsewhere.
        MarlonPro 8y ago
        My 401K is on a different fund only because VTSAX is not one of the options (but it's on an index fund tracking S&P 500). My IRA is fully on VTSAX. If I have an option, I'll put all my investments on VTSAX - I'm rooting for the US economy!
    - cjcenizal 8y ago
      ^ This! Also, the most valuable part of investing is asset allocation, i.e. how you split your money up between stocks and bonds (and optionally real estate). Take your age, and put that percentage of your money into bonds (if you're 30, put 30% of your money in bonds). Bonds are safer and you want to conserve your money as you age. Make sure the bond maturity dates aren't later than you're going to need them. Reallocate your assets every 18 months so that your diversification continues to match your age. Read fund prospectuses to learn about the fees and expenses they incur -- this is boring, but the lower the fees and expenses the better your portfolio will perform.
      - peferron 8y ago
        Regarding "your age in bonds", it's worth noting that Vanguard's all-in-one retirement funds don't follow this advice at all. For example, the Target Retirement 2050 fund has 10% bonds [1], while I would expect most people buying this fund to be 30+. [1] https://investor.vanguard.com/mutual-funds/profile/VFIFX https://investor.vanguard.com/mutual-funds/profile/VFIFX
        loeg 8y ago
        I'd suggest ramping up bonds shortly before retirement (and then ramping them back down again afterwards, which the vanguard funds do not do -- mostly because they cannot tell if you have actually retired on your target date).[1] [1]: https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/ https://earlyretirementnow.com/2017/09/13/the-ultimate-guide...
        JKCalhoun 8y ago
        There's the "100 minus your age rule", the "110 minus your age" rule... Linear, simple, all easy to remember — not necessarily "tuned".
      - mruts 8y ago
        Unless you are borrowing at the risk free rate (levering your bonds), I don’t think this is the best advice, unless you are open to holding junk bonds. Your Sharpe ratio is largely irrelevant [(returns - risk free rate) / std dev]. What you want is to optimize your Sortino ratio [loss / std dev]. Or, put another way, it’s more preferable that you make 100% returns one year, and lose 25% the next than to make 25% each year. The bonds are going to really drag on your returns and since bonds don’t seem correlated with equities anymore, they might not even be an equity hedge. Risk parity portfolios are designed to solve this problem through leverage.
    - jedberg 8y ago
      I just back tested this to 2012. If you put $10,000 in in 2012, and just invested in the S&P500, you'd have $23,046. If you just did VTI (Vanguard Total Stock Market), you'd have $22,754. If you do 60% domestic and 40% international (VTI and VXUS) you'd have $19,325. If you did the recommended 3 stock portfolio (VTI 42%, VXUS 18%, and BND 40%) you'd have $16,668. So while they all made money, the three portfolio made the least money. Unfortunately the Vanguard ETFs don't go back before the last recession, otherwise it would be interesting to see how the numbers invert.
      - ng12 8y ago
        The last few years are an outlier -- the US had a historic bull run and international stocks underperformed significantly. The point of the 3-fund is that it's a solid strategy no matter what the market looks like.
        jedberg 8y ago
        Yeah if I can find the data I'd back test further, but I suspect you'd be right.
        tonfa 8y ago
        https://www.portfoliovisualizer.com/backtest-asset-class-allocation https://www.portfoliovisualizer.com/backtest-asset-class-all... You can backtest it there. BTW 100% stock will likely beat the stock+fund, but at the cost of higher volatility (which can be an issue if you need the money eg during retirement)
        ericd 8y ago
        I really like this site for backtesting different mixes: https://portfoliocharts.com/portfolios/ https://portfoliocharts.com/portfolios/
      - Spooky23 8y ago
        A big part of that is that the average punter knows nothing, and that approach is likely to avoid losses. When people go all VTI, they tend to freak out when the market goes down, sell near the bottom and forget about it, only to buy it again after the value goes up.
  - JKCalhoun 8y ago
    Paying someone (a fund manager) a percentage of your investment every year to "pick the winning stocks" with your money is more often than not a money-loser. Looking at mutual funds over a period of years showed that very few of them even out-performed the market. Almost all of those that did out-perform the market actually still lost out when the fund manager's percentage was figured in. Fidelity Magellan Fund managed by Peter Lynch is one of the few exceptions where the fund not only outperformed the market but still did so after the fees. (But then that is why you have heard of Fidelity Magellan Fund and Peter Lynch.) Furthermore, as everyone jumped on Fidelity Magellan Fund it became too big and moved the market when it moved — and not in a beneficial way for the fund investors. tl;dr: a monkey throwing a dart (assuming he charges a fee below 1%) will outperform most of the Wallstreet fund managers. Put your money in an index fund, let the algorithm spread your money/risk out and wait a few decades.
- Y7ZCQtNo39 8y ago
  It's simple, but requires a great deal of time to take advantage of compound interest. It's simple, but it requires dedication: you must say the course. Invest early, invest often, and invest for the long term. It is a happy realization, though, to recognize how simple it really is.
  - RickJWagner 8y ago
    "Stay the course"... a key phrase. You must be a fellow Boglehead! (Bogleheads have a handful of short phrases that describe the simple foundations of Bogle's investment philosophy. As you say, it's simple but takes time.)
  - JKCalhoun 8y ago
    Index funds, dollar averaging. I call it "get rich slow."
    - eru 8y ago
      Dollar averaging does not actually give you any benefits in an efficient market. (But if your money trickles in monthly, you might as well buy monthly if there are extra transaction fees.)
- JKCalhoun 8y ago
  I too am a Boglehead.
newfocogi 8y ago
Bogle is the reason a lot of bad investing decisions are passively avoided.
rukittenme 8y ago
Very sad. Millions of people will live comfortable, dignified retirements thanks to him. Mr. Bogle will be remembered as the Patron Saint of retirement investing.
gojomo 8y ago
A non-paywalled alternative story: https://www.cnbc.com/2018/12/14/jack-bogle-founder-of-vanguard-group-and-creator-of-the-index-fund-dies-at-age-89.html https://www.cnbc.com/2018/12/14/jack-bogle-founder-of-vangua... Reaching 89 seems pretty good for someone who had his "first of a half-dozen heart attacks at age 31" and got a heart transplant at 65. "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," billionaire investor Warren Buffett wrote in his annual letter in March 2017.
- synaesthesisx 8y ago
  How does one have multiple heart attacks at 31? Congenital defects? Just curious - I'm not too far from 30 and it makes me paranoid...
  - cperciva 8y ago
    I read that as him having his first heart attack at 31 and many more later in life. Aside from congenital issues, heart attacks at that age are typically complications of other issues.
  - ggambetta 8y ago
    I think it means the first of his lifetime six heart attacks was at 31. I'm 38 and equally paranoid :)
    - Scoundreller 8y ago
      Imagine how paranoid he must have been after his 3rd or 4th, knowing that it's probably going to happen again and may be his last...
  - oliveshell 8y ago
    >Congenital defects? Almost certainly. If your diet and lifestyle are even remotely healthy, and you don’t have a history of heart disease in your family, it’s very unlikely you have anything to worry about. Otherwise, a visit to a cardiologist should put your mind at ease.
ctchocula 8y ago
He could've been a billionaire. Instead he made hundreds of thousands of us investors millionaires. Thank you, Jack! RIP
oscilloscope 8y ago
John Bogle created the index fund, and along with it a savings philosophy that enabled the average investor to build wealth by taking an appropriate amount of risk (with exposure to stock/bond markets) and minimizing fees. The Bogleheads Wiki has great resources on topics related to savings, retirement and investing. Here are a couple entry points into what Bogle's method looks like: https://www.bogleheads.org/wiki/Bogleheads®_investment_philosophy https://www.bogleheads.org/wiki/Bogleheads®_investment_philo... https://www.bogleheads.org/wiki/Three-fund_portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio
- deleted 8y ago
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- GCA10 8y ago
  Not quite sure we can credit Bogle with creating the index fund. He certainly popularized it, though. Bill Fouse at Wells Fargo got a rather clunky version of an index fund started in 1971, based on equal weighting of all NYSE shares. It took a couple more years for various people, including Dean LeBaron (later of Batterymarch) and John Bogle to get everything working the right way with timely capitalization weighting and rebalancing. That's when the S&P 500 became the index of choice. Getting index funds to track consistently over time takes a fair amount of market monitoring plus basic computing power. (Reinvesting dividends brings one set of headaches; so does adjusting specific stocks' weightings as individual companies either shrink their float by buying back stock or expand it by issuing new shares.) All these calculations seem trivial today, but back in the 1970s, we didn't have up-to-the-minute electronic Edgar filings at the SEC. Or abundant computer power on everyone's desks.
  - daphneokeefe 8y ago
    I had the privilege of working with Bill Fouse and other brilliant people at Wells Fargo Investment Advisors in the 70s. At the time, it was a huge technical challenge to crunch the numbers for a multi-million dollar investment, and to execute it without affecting the market prices of the target stocks.
  - 8y ago
ydnaclementine 8y ago
Highly recommend listening to the bogleheads podcast ep 1 that interviews John Bogle. He turned out to be much more interesting than I thought: https://s134.podbean.com/pb/2e4222a012edece84e321989ac0c4095/5c3fb430/data2/fs88/3450151/uploads/Bogleheads_001.mp3?pbss=87a93265-c3ad-5bcb-9376-2ae6ef1c2ed3 https://s134.podbean.com/pb/2e4222a012edece84e321989ac0c4095...
harryh 8y ago
Jack Bogle is a legend and I have the majority of my money in Vanguard investment funds, but did you know that its corporate structure just might be a tax scam? https://www.nytimes.com/2016/02/07/your-money/vanguard-a-champion-of-low-fees-faces-a-peculiar-tax-challenge.html https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha... It sounds crazy at first, but after reading it's hard not to come away agreeing with the thesis.
- harryh 8y ago
  And the other fun "is it a conspiracy theory or maybe actually true?" thing about Vanguard/Index investing is the idea that it might be undermining capitalism itself because diversified owners aren't incentivized to compete. https://www.bloomberg.com/opinion/articles/2017-10-26/maybe-index-funds-will-destroy-capitalism https://www.bloomberg.com/opinion/articles/2017-10-26/maybe-...
  - walshemj 8y ago
    No why would it its mirroring the way investment trusts /investment companies work in the UK and where set up in the 19th century to allow small investors to invest.
    - harryh 8y ago
      I don't think UK investors in the 19th century were buying index funds where they owned a tiny piece of every company in the market. The current situation is quite a bit different.
      - walshemj 8y ago
        Its more the principal that the investment company doesn't pay tax the owners do
        harryh 8y ago
        Ah, I think you replied to my "destroying capitalism" comment when you meant to reply to my "tax scam" comment. Two different things. But anyways, the issue isn't about the company vs the owners paying the taxes because in this case the owners are the company. The issue is that these owners are (via the company) are (perhaps illegally) manipulating how their earnings are counted to lower their tax rate.
myth_buster 8y ago
As people are sharing resources related to John, the Freakonomics podcast, where John makes an appearance, on investing I found was informative as well. http://freakonomics.com/podcast/stupidest-money/ http://freakonomics.com/podcast/stupidest-money/
MarlonPro 8y ago
I wish I learned about Index Funds when I was younger. Thanks, Jack! I'm a happy Vanguard customer holding a single Index Fund fund.
isseu 8y ago
Freakonomics did a great podcast about index funds with him http://freakonomics.com/podcast/stupidest-money/ http://freakonomics.com/podcast/stupidest-money/ > Warren Buffett, the most famous investor in the world, had this to say recently: “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.”
- baron816 8y ago
  I hope they build that statue.
  - deleted 8y ago
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  - garmaine 8y ago
    Put it in front of the bull on Wall St.
    - deleted 8y ago
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    - sdenton4 8y ago
      Maybe riding the bull... Though apparently the space in front of the bull has opened up again: https://en.wikipedia.org/wiki/Fearless_Girl https://en.wikipedia.org/wiki/Fearless_Girl
    - ww520 8y ago
      Riding the bull, taming it.
      - deleted 8y ago
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    - aceperry 8y ago
      Matador style, about to kill the bull.
rhegart 8y ago
RIP. One of the biggest reasons the investment class was able to expand to the common person. Exorbitant fees, lack of knowledge of investments were huge barriers of entry to making passive income. Only the really wealthy really had access to both. The index fund and the low fees associated with it are huge reasons why savings aren’t lower than they already are. Upper middle class especially benefited greatly.
- MarlonPro 8y ago
  Index Fund made it possible for the layman to get into the game of investing.
  - p1mrx 8y ago
    Bogle converted an action game into an idle game.
- clairity 8y ago
  > "One of the biggest reasons the investment class was able to expand to the common person." not to nitpick too much, but the top 10% own 84% of stock [1] so the investment class hasn't reached very far down to the common person, who own most of their wealth in their homes (why the housing crisis disproportionately hit the bottom 80%). with that said, if there's one social program that could reduce wealth inequality, it would be manadatory retirement savings accounts for all and invested in (vanguard) index funds (and probably diversified into bonds at least). it could be employer funded, or even funded by lotteries or sin taxes for the bottom 80%. [1] https://www.nytimes.com/2018/02/08/business/economy/stocks-economy.html https://www.nytimes.com/2018/02/08/business/economy/stocks-e...
  - jdhn 8y ago
    >it would be manadatory retirement savings accounts for all and invested in (vanguard) index funds (and probably diversified into bonds at least) Doesn't Australia's superannuation work something like this? If I understand it correctly, a chunk of your salary is set aside, but instead of going into a pool like Social Security, it goes into a fund. I could be (and probably am) wrong as to how it works. That being said, I would love it if we could implement something like this in the US.
dguo 8y ago
The story behind Bogle founding Vanguard is one of my favorite business stories and one of my favorite examples of contrarian thinking. https://www.inc.com/magazine/201210/eric-schurenberg/how-i-did-it-john-bogle-the-vanguard-group.html https://www.inc.com/magazine/201210/eric-schurenberg/how-i-d... I don't generally like the idea of having personal heroes, but John Bogle would be on the short list.
- ThirdFoundation 8y ago
  I worked at Vanguard for about 5 years and Mr. Bogle was omnipresent on campus, working in his research area and dining (almost) every day in the on-campus cafeteria. In my few interactions with him, he was always nice and gentle. I only ever heard great things from my colleagues who had the chance to get to work with him closely or knew him better. Also, I appreciated that he was willing to grow, even into his old age, regarding his thinking on asset allocation. For example, his stance on holding an international stock index changed over time (from "unnecessary because most S&P 500 companies are multinational" to "there is some value to allocate a percentage of one's account to a broader international index"). Additionally, he wasn't afraid to completely go or say something against Vanguard after retiring. He stuck to his beliefs and was willing to challenge the company he started (and, albeit, was forced to retire from). For example, he was not supportive of Vanguard's deep foray into ETFs as he viewed them as encouraging short-term trading. All-in-all, he seemed like a wonderful person and the investment industry (and many other realms) are better because of him.
spinchange 8y ago
Hard to fully apprehend the impact this guy had on investing for regular people. In a very real sense, imagine the aggregate savings in fees he created for millions of people over the course of decades -- savings that were likely plowed back into people's retirement and total returns. Who else has done something for investors like this? I can't think of anyone even close.
Jhsto 8y ago
Just yesterday I watched this video on YouTube interviewing him: https://www.youtube.com/watch?v=zrCo0m5gSfc https://www.youtube.com/watch?v=zrCo0m5gSfc I found the clarity of his voice and the mental sharpness astonishing, given his age. Further, I wish information about index funds would be better explained in school.
- sashasmith 8y ago
  Was going to post the same link. He was an extremely smart guy. RIP Jack.
kuhhk 8y ago
From the Philly.com article: > “Jack could have been a multibillionaire on a par with Gates and Buffett,” said William Bernstein, an Oregon investment manager and author of 12 books on finance and economic history. Instead, he turned his company into one owned by its mutual funds, and in turn their investors "that exists to provide its customers the lowest price. He basically chose to forgo an enormous fortune to do something right for millions of people. I don’t know any other story like it in American business history.”
- BeetleB 8y ago
  From the same article: >For more than 20 years, he donated half his annual income to philanthropic causes, particularly those institutions that helped develop his mind and form his character.
- djrobstep 8y ago
  Bogle's greatest legacy might be... socialism. Index funds are slowly consuming more and more capital. To achieve democratic socialism smoothly, all we have to do is set up state-owned index funds, and let them keep growing until they've accumulated all of the capital. Voila, full democratic ownership of the means of production!
  - conanbatt 8y ago
    If the private market gives index-funds at no cost to the state, why state owned index funds :S.
    - djrobstep 8y ago
      I'm not sure what you mean.
      - chucksmash 8y ago
        Can't get around paywall to read TFA right now, but Vanguard funds are famously cheap in terms of fees.
rwbt 8y ago
Truly a saint. His index funds and passive investing school of thought probably saved trillions of dollars and made investing in the markets accessible to millions of everyday citizens. RIP.
paws 8y ago
Not sure how many HN people follow the Bogle philosophy, but to me it feels not inappropriate to turn on the black bar.
- DLA 8y ago
  Could not agree more.
- winslow 8y ago
  What is the black bar? My GoogleFu/DuckDuckGoFu returned nothing but articles about his passing.
  - jdhn 8y ago
    I believe that the black bar is put up at the top of the site after someone who is considered important by HN readership dies.
  - mindcrime 8y ago
    See: https://i.imgur.com/ZphvVST.png https://i.imgur.com/ZphvVST.png This is done when someone passes who is considered especially (noteworthy|significant|involved|something) to/with the HN community. AFAIK there's no exact formula for determining who the mods deem worthy of that tribute, but I do know that they don't do it for everybody famous who dies. It's usually people who are particularly close to the HN world in some way.
- deleted 8y ago
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- jmccaf 8y ago
  I vote for black-bar
- owenversteeg 8y ago
  I think there's a ton of people here who follow Bogle's ideas. It's the go-to investment advice for anyone in tech that everyone parrots. That said, I think the discussion of a black bar every time someone dies is a little repetitive and kind of sours the process. On a related note, I was looking for the list of people who got black bars, and I couldn't find one. Does anyone know if there's an (un)official list? I'll start: Aaron Swartz Gerald M. Weinberg Steve Jobs Stephen Hawking Andy Grove Marvin Minsky I seem to remember Terry Davis didn't, which disappointed me, but made sense as there was confusion around if he was dead at first.
watertom 8y ago
Having had the extreme pleasure, and honor to work with Mr. Bogle I am truly saddened by his passing. He was selfless to a fault, a great man.
- eru 8y ago
  May I ask how you worked with him?
altairiumblue 8y ago
- Founded Vanguard and came up with the first index fund - Became wealthy without exploiting his clients, foregoing millions, possibly billions - Got a heart transplant at 65 and lived to 89 - Even in his recent interviews his voice always struck me as the voice of someone much younger, and he sounded very sharp mentally despite his age RIP
wjp3 8y ago
Thank you Jack. Signed, Vanguard investor.
bwb 8y ago
He probably did more than anyone else to safeguard American's retirement.
loteck 8y ago
If you don't know who Bogle is, and don't know much about individual investing for retirement, I would recommend you read William Bernstein's If You Can, a (free!) little 16-page booklet that just lays out the "Bogle method" for simple investing for retirement. [0] https://www.etf.com/docs/IfYouCan.pdf https://www.etf.com/docs/IfYouCan.pdf
- asr 8y ago
  If you like that, I would also read Chapter 1 of Bernstein's Four Pillars of Investing. Bernstein's books are all more or less re-writes of the same book multiple times in an attempt to make the Bogle/indexing idea approachable for different audiences. In addition to If You Can, Chapter 1 of Four Pillars is a history of securities returns and is the best thing I've ever read in terms of getting into the right head-space for long-term investing and thinking about risk. http://www.efficientfrontier.com/t4poi/Ch1.htm http://www.efficientfrontier.com/t4poi/Ch1.htm The rest of the book is good, too, but you can just read If You Can instead.
rolleiflex 8y ago
This is black-bar worthy — he did touch a lot of us with his work, and I’d like to think that he’s one of the few reasons the wealth generated in Silicon Valley largely stays to fund the next generation of startups (like mine). I’ve lost count of how many times I’ve recommended Vanguard personally.
- omegaworks 8y ago
  It's really amazing work he did considering that after the move to 401k and away from pensions in the private sector, there really are now few alternative paths to secure retirement. The move away from pensions could have been a veritable smorgasbord of fees for actively managed funds, but Vanguard provided broad access to something just as good (and more often than not, better[1]). 1. https://www.fool.com/investing/mutual-funds/mutual-fund-basics-index-funds-vs-actively-managed.aspx https://www.fool.com/investing/mutual-funds/mutual-fund-basi...
- shasheene 8y ago
  > and I’d like to think that he’s one of the few reasons the wealth generated in Silicon Valley largely stays to fund the next generation of startups (like mine). This is not directly true. Vanguard mutual funds provide 0.05% annual fee rather than ~1% annual fee to access the average return of an index (whether the index is the S&P500, or every publicly listed company in the US). While the low-cost has empirically provided a better (compounding) return for investors over the decades, Silicon Valley angel investors and VCs have generated their wealth from their own businesses, and re-invest some portion of it directly into the next generation of unlisted companies. The extra 1% annual return gained by accepting the average stock market return (at exceptionally low cost) is not what's driving startup investment. That said, the lower expected average market return (because the stock market being relatively highly valued, after the recovery from the 2008 crash, due to both record low interest rates, and to some degree a blind movement of capital towards index funds) may have some impact on temporarily increased VC dollars, trying to chase some kind of reasonable return.
  - ethbro 8y ago
    Presumably the parent meant that Bogle popularized index mutual fund investing in 1976, thereby catalysing the passive investing industry. And whereby there were previously only actively managed funds, the creation of that industry substantially lowered the cut money managers got from person wealth management. Thereby leading to generations of people with more control over their money and willing to take risks, where a professional money manager would have little incentive to invest in startups with wealth locked up in their funds.
deleted 8y ago
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tptacek 8y ago
Bogle is remembered primarily for his role in launching index funds, but I think a more telling part of his legacy is the structure of Vanguard, the firm he started, now the world's most trustworthy (and among the very largest) investment firms. Unlike most firms, Vanguard's funds own the firm, rather than the other way around. The funds are owned by Vanguard's customers, who transitively own the company. Vanguard "pays cost" for all the work its management and staff performs. To illustrate how powerful this structure is, see Matt Levine's writing about "the fake moon landing of financial news stories": a claim by a former Vanguard insider that the savings accrued to the funds (and thus customers) as its result constitute billions of dollars of taxable income (under the IRS whistleblower rules, some percentage of those taxes would go to the insider!): https://www.bloomberg.com/opinion/articles/2015-11-25/calpers-fees-and-culture-consultants https://www.bloomberg.com/opinion/articles/2015-11-25/calper... Bogle is a giant and a good guy in a field not packed full of good guys. RIP.
- bfdm 8y ago
  Followed the link to read about the taxes, but the framing doesn't make sense to me: The Vanguard Group is a mutual fund company whose adviser is owned by the funds, rather than being an independent profit-seeking corporation, so it can charge its funds lower advisory fees than its competitors do. (Disclosure: I am a Vanguard investor.) But the adviser is a taxable corporation, while the funds themselves are not taxable (they just pass through taxes to investors). There is a theory that the adviser should be charging Vanguard higher management fees, to reflect the "arm's length" prices that an independent adviser would charge, rather than the "at-cost" prices that it does in fact charge. Or rather, there is a theory that Vanguard owes taxes on the fees that the adviser should have charged, which would have been profit to the taxable corporation. Why is there any fee that "should" be charged? The premise seems flawed that fees need to anything more than cover costs to pay the employees to do their work. "If this structure were different, they'd charge more and make a profit and pay tax" ... But it's not different, so it doesn't make a profit, so it doesn't pay tax. Pretty simple.
  - drc500free 8y ago
    It depends on how well established the market price is. If I sell you a $300k house for $150k, I've given you $150k of value. I'm either incompetent or purposefully gifting you $150k. There's a price that should be charged based on similar houses. If I do that on behalf of a company by selling THEIR house, I'm either incompetent or embezzling money. If it turns out I sold it to a friend, it's clear I was embezzling. If I don't know the person (i.e. "arms length") I'm just incompetent. In this case there is a market price for advisory services that you can figure out by looking at all the other similar advisers out there. You could make the argument that there are not enough similar advisers to establish what the price "should" be, or that it's not sufficiently below them to establish how much of a discount there is. But mainly no one cares to go after the 401(k) balances of millions of middle class Americans on a technicality, so it's a non-starter.
winslow 8y ago
Anyone know why some sites are naming him as Jack Bogle while others use John Bogle? [1] https://www.cbsnews.com/news/jack-bogle-index-fund-pioneer-and-vanguard-founder-dead-at-89/ https://www.cbsnews.com/news/jack-bogle-index-fund-pioneer-a...
- wharnal 8y ago
  Jack is short for John.
  - chirau 8y ago
    Lol. Really? How is it shorter? I think it's just a nickname, which does not necessarily mean shorter.
    - greglindahl 8y ago
      “Short” is short for “nickname”, in this case.
      - dceddia 8y ago
        Yeah, and if you say them out loud, "Jack" sounds a slight bit faster than "John" I think.
  - pembrook 8y ago
    You'll hear the same with John F. Kennedy. Some people refer to him as Jack Kennedy. Here's why the names are interchangeable: https://dmnes.wordpress.com/2017/01/28/why-is-jack-a-nickname-of-john/ https://dmnes.wordpress.com/2017/01/28/why-is-jack-a-nicknam... "[Jack], the commonest pet-name for John, has caused a good deal of difficulty owing to the natural assumption that it must be derived from the French Jacques and should therefore logically represent James rather than John. The problem was cleared up by E. W. B. Nicholson in a little book entitled The Pedigree of Jack and of Various Allied Names (1892). He showed that there is no recorded instance of Jack, Jak, Jacke, or Jakke ever being used to represent Jacques or James, and that no statement in favor of the French connexion has been produced from any early writer. He then proceeded to elucidate and illustrate with examples the development of Johannes [the standard Latin nominative form] to Jehan [the standard Old and Middle French oblique form] and Jan [the standard Middle Dutch form], whence, by addition of the common suffix -kin [a uniquely English suffix], we get Jankin, which as a result of French nasalization becomes Jackin [this is the same nasalization that gets us Harry from Henry], and was finally shortened to Jack. There was a similar development from Jon to Jock (the Scottish form of the name)."
m0zg 8y ago
It is quite possible that thanks to John millions of people today enjoy financially secure retirement. A huge VOO position (+some BRK.B) has certainly served me well as a volatility attenuator.
dhfromkorea 8y ago
RIP, Mr. Bogle. Does anyone know how Bogle concretely thought of the existence of samples like Warren Buffett who have outperformed the market over decades, granted the outperformance may not continue in the future [1]. I presume Bogle's view on this would be nuanced. [1]: https://qz.com/1216260/warren-buffett-doesnt-beat-the-market-anymore/ https://qz.com/1216260/warren-buffett-doesnt-beat-the-market...
santoshalper 8y ago
I admire John a great deal and have been a lifelong, very happy Vanguard client. RIP.
mruts 8y ago
Bogle was certainly a visionary, though I always find it odd that he never got on the ETF bandwagon. They are the next logical step in his vision for finance. Granted, they carry some risks that index funds don’t (liquidity and market risk), but they provide many advantages (like taxes). They also can be repurposed for any kind of investment vehicle as they essentially are just an “API.”
- lr4444lr 8y ago
  Bogle said in an interview that I cannot find but i's probably on YouTube that he saw nothing wrong with ETFs as an investment product, simply that they encouraged non-passive behavior for most investors, and he thought temptation to time the market or liquidate/buy at the wrong time were tremendous stumbling blocks or get hoodwinked by grandiose promises of some arcane sector, and ETFs made that easier to give in to. (I'm paraphrasing.)
lr4444lr 8y ago
Wow. Thus passes a legend. Deserves the black bar IMHO, if you consider the debt owed to him by roboadvisors and such.
RickJWagner 8y ago
Very sad to see this. Bogle spent a lot of time (and gave up the opportunity for a lot of money) preaching to people about how wealth can be accumulated. He really had a heart for helping people. Watch some of his interviews on YouTube. He speaks very clearly, but it's easy to see he was a brilliant man. Unless you're already a 'Boglehead': If you get ONE thing out of today's Hacker News, take an hour and learn the simple message John Bogle preached. Your future self will thank you profusely.
mudil 8y ago
It is important to note that John Bogle or Vanguard did not invent ETFs. They popularized it. The first rudimentary ETF was probably Toronto 35 Index Participation Units (TIPs 35) traded on Toronto Stock Exchange. The first fully mature ETF was State Street Global Investors's S&P 500 Trust ETF (SPDR). State Street company is still a major player in the ETF space today.
asimjalis 8y ago
Why is there no black bar on the HN main page? I thought it was an algorithm that searched for the word “died”.
- grzm 8y ago
  AIUI, the black bar is a manual process, not automated.
avar 8y ago
For those who want to hear Bogle's voice and a summary of his career in his own words check out this 2007 interview of EconTalk: http://www.econtalk.org/bogle-on-investing/ http://www.econtalk.org/bogle-on-investing/
jasin 8y ago
Due to his heart transplant, he was sometimes dubbed as the only man in Wall Street with a heart. Rest in peace.
debbiedowner 8y ago
This being a coding community, has anyone ever created an ipython notebook or similar that uses historical data to see how these passive investing products perform over all possible long intervals? I'm curious what are the conditions for doing well with passive investing depending on your buy/sell strategy and times? I suspect it can't just be a long enough interval of holding the indexes, it also depends on when you retire, or at what rate you buy indexes over your lifetime, or some other things that perhaps is just dependent on your life schedule and not really under your control. This is what some traders tell me, and I've never done the work myself to prove them wrong. How much chance is there in doing well with passive investing over a whole lifetime?
- xapata 8y ago
  I don't understand what you're contrasting with. The evidence is that passive investing works over a lifetime. It may not perform well over a particular decade. The strategy is simply buy and hold. Somewhat better is to buy small amounts periodically, to average the cost. Don't sell. This may change in the future, of course, but that's not really actionable knowledge.
  - debbiedowner 8y ago
    Okay, great, so link me to some of this non anecdotal evidence please :) What are best numerical values for lifetime, how slowly can you withdraw money when you retire, what are the best lengths of retirement etc. I want to see which passive investment strategies work. We can all think of examples where someone buys indexes over time, and then chooses to retire in the wrong decade. I want to know how many good and bad outcomes there are over our known historical data, and see what percentage of the time passive investing works. How much better fo some passive investors do versus others, how much luck is involved? If you must compare to say buying and holding a commodity like gold. But really I'm just interested in how varryingly successful passive investing strategies can be. I was hoping for code, just because I wanted millions of examples, not just a couple success and dud stories.
    - xapata 8y ago

1084 points by gdubs 8y ago

I just finished reading "The Bogleheads' Guide to Investing", which opened my eyes up to how investing _really_ works -- turns out it's much simpler than I thought, which was an exciting realization to have. I'm sad to see him go.

azhenley 8y ago
I hadn't heard of that book but I've now added it to my list. Can you summarize the biggest thing you learned from it?
- lukewrites 8y ago
  Hold a two- (or three-) fund portfolio of low cost index funds; invest in it regularly and stay the course. It's OK to invest in individual stocks, but do it for fun, not as (or with) your retirement savings. I like Bogle's "Little Book of Common Sense Investing"[0] a little more than the Bogleheads Guide, but they're both good :) [0] https://www.powells.com/book/-9781119404507 https://www.powells.com/book/-9781119404507
  - MarlonPro 8y ago
    Google "VTSAX". I originally had 3 funds but now holding just one - VTSAX. But of course, that will change as I get closer to retirement (still far :-))
    - perryh2 8y ago
      The 3 fund portfolio is better, which also includes international stocks and bonds. https://www.bogleheads.org/wiki/Three-fund_portfolio#Vanguard_funds https://www.bogleheads.org/wiki/Three-fund_portfolio#Vanguar...
      - sokoloff 8y ago
        Maybe, depending on the definition of better. The single VTSAX fund has substantially outperformed the three-fund mix. In my case, I believe we're in a rising rate environment, therefore I'd rather not hold bonds; I'm realistically investing for my kids' consumption rather than our own (we have the basics well-covered already); VTSAX holds companies that have substantial outside the US exposure and most of my future expenses are tightly tied to the fortunes of the US economy. If your timeline is > 35 years, you're in the US, and intending to stay in the US, I could argue that pure VTSAX is better. Any of them are better than a "professional" financial advisor, IMO.
      - jedberg 8y ago
        Not so far. VTSAX and VTI are basically the same thing. If you put $10,000 in in 2012, and just invested in the S&P500, you'd have $23,046. If you just did VTI (Vanguard Total Stock Market), you'd have $22,754 (and VTSAX would be $22,731). If you did the recommended 3 stock portfolio (VTI 42%, VXUS 18%, and BND 40%) you'd have $16,668. So while they all made money, the three stock portfolio made the least money. Unfortunately the Vanguard ETFs don't go back before the last recession, otherwise it would be interesting to see how the numbers invert, or if they do.
    - woodlumhoodlum 8y ago
      It has one of the LOWEST fees and has great returns I put my full 401k into VTSAX, as I have other diversified savings elsewhere.
      - MarlonPro 8y ago
        My 401K is on a different fund only because VTSAX is not one of the options (but it's on an index fund tracking S&P 500). My IRA is fully on VTSAX. If I have an option, I'll put all my investments on VTSAX - I'm rooting for the US economy!
  - cjcenizal 8y ago
    ^ This! Also, the most valuable part of investing is asset allocation, i.e. how you split your money up between stocks and bonds (and optionally real estate). Take your age, and put that percentage of your money into bonds (if you're 30, put 30% of your money in bonds). Bonds are safer and you want to conserve your money as you age. Make sure the bond maturity dates aren't later than you're going to need them. Reallocate your assets every 18 months so that your diversification continues to match your age. Read fund prospectuses to learn about the fees and expenses they incur -- this is boring, but the lower the fees and expenses the better your portfolio will perform.
    - peferron 8y ago
      Regarding "your age in bonds", it's worth noting that Vanguard's all-in-one retirement funds don't follow this advice at all. For example, the Target Retirement 2050 fund has 10% bonds [1], while I would expect most people buying this fund to be 30+. [1] https://investor.vanguard.com/mutual-funds/profile/VFIFX https://investor.vanguard.com/mutual-funds/profile/VFIFX
      - loeg 8y ago
        I'd suggest ramping up bonds shortly before retirement (and then ramping them back down again afterwards, which the vanguard funds do not do -- mostly because they cannot tell if you have actually retired on your target date).[1] [1]: https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/ https://earlyretirementnow.com/2017/09/13/the-ultimate-guide...
      - JKCalhoun 8y ago
        There's the "100 minus your age rule", the "110 minus your age" rule... Linear, simple, all easy to remember — not necessarily "tuned".
    - mruts 8y ago
      Unless you are borrowing at the risk free rate (levering your bonds), I don’t think this is the best advice, unless you are open to holding junk bonds. Your Sharpe ratio is largely irrelevant [(returns - risk free rate) / std dev]. What you want is to optimize your Sortino ratio [loss / std dev]. Or, put another way, it’s more preferable that you make 100% returns one year, and lose 25% the next than to make 25% each year. The bonds are going to really drag on your returns and since bonds don’t seem correlated with equities anymore, they might not even be an equity hedge. Risk parity portfolios are designed to solve this problem through leverage.
  - jedberg 8y ago
    I just back tested this to 2012. If you put $10,000 in in 2012, and just invested in the S&P500, you'd have $23,046. If you just did VTI (Vanguard Total Stock Market), you'd have $22,754. If you do 60% domestic and 40% international (VTI and VXUS) you'd have $19,325. If you did the recommended 3 stock portfolio (VTI 42%, VXUS 18%, and BND 40%) you'd have $16,668. So while they all made money, the three portfolio made the least money. Unfortunately the Vanguard ETFs don't go back before the last recession, otherwise it would be interesting to see how the numbers invert.
    - ng12 8y ago
      The last few years are an outlier -- the US had a historic bull run and international stocks underperformed significantly. The point of the 3-fund is that it's a solid strategy no matter what the market looks like.
      - jedberg 8y ago
        Yeah if I can find the data I'd back test further, but I suspect you'd be right.
        tonfa 8y ago
        https://www.portfoliovisualizer.com/backtest-asset-class-allocation https://www.portfoliovisualizer.com/backtest-asset-class-all... You can backtest it there. BTW 100% stock will likely beat the stock+fund, but at the cost of higher volatility (which can be an issue if you need the money eg during retirement)
        ericd 8y ago
        I really like this site for backtesting different mixes: https://portfoliocharts.com/portfolios/ https://portfoliocharts.com/portfolios/
    - Spooky23 8y ago
      A big part of that is that the average punter knows nothing, and that approach is likely to avoid losses. When people go all VTI, they tend to freak out when the market goes down, sell near the bottom and forget about it, only to buy it again after the value goes up.
- JKCalhoun 8y ago
  Paying someone (a fund manager) a percentage of your investment every year to "pick the winning stocks" with your money is more often than not a money-loser. Looking at mutual funds over a period of years showed that very few of them even out-performed the market. Almost all of those that did out-perform the market actually still lost out when the fund manager's percentage was figured in. Fidelity Magellan Fund managed by Peter Lynch is one of the few exceptions where the fund not only outperformed the market but still did so after the fees. (But then that is why you have heard of Fidelity Magellan Fund and Peter Lynch.) Furthermore, as everyone jumped on Fidelity Magellan Fund it became too big and moved the market when it moved — and not in a beneficial way for the fund investors. tl;dr: a monkey throwing a dart (assuming he charges a fee below 1%) will outperform most of the Wallstreet fund managers. Put your money in an index fund, let the algorithm spread your money/risk out and wait a few decades.
Y7ZCQtNo39 8y ago
It's simple, but requires a great deal of time to take advantage of compound interest. It's simple, but it requires dedication: you must say the course. Invest early, invest often, and invest for the long term. It is a happy realization, though, to recognize how simple it really is.
- RickJWagner 8y ago
  "Stay the course"... a key phrase. You must be a fellow Boglehead! (Bogleheads have a handful of short phrases that describe the simple foundations of Bogle's investment philosophy. As you say, it's simple but takes time.)
- JKCalhoun 8y ago
  Index funds, dollar averaging. I call it "get rich slow."
  - eru 8y ago
    Dollar averaging does not actually give you any benefits in an efficient market. (But if your money trickles in monthly, you might as well buy monthly if there are extra transaction fees.)
JKCalhoun 8y ago
I too am a Boglehead.

newfocogi 8y ago

Bogle is the reason a lot of bad investing decisions are passively avoided.

rukittenme 8y ago

Very sad. Millions of people will live comfortable, dignified retirements thanks to him. Mr. Bogle will be remembered as the Patron Saint of retirement investing.

gojomo 8y ago

A non-paywalled alternative story: https://www.cnbc.com/2018/12/14/jack-bogle-founder-of-vanguard-group-and-creator-of-the-index-fund-dies-at-age-89.html https://www.cnbc.com/2018/12/14/jack-bogle-founder-of-vangua... Reaching 89 seems pretty good for someone who had his "first of a half-dozen heart attacks at age 31" and got a heart transplant at 65. "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," billionaire investor Warren Buffett wrote in his annual letter in March 2017.

synaesthesisx 8y ago
How does one have multiple heart attacks at 31? Congenital defects? Just curious - I'm not too far from 30 and it makes me paranoid...
- cperciva 8y ago
  I read that as him having his first heart attack at 31 and many more later in life. Aside from congenital issues, heart attacks at that age are typically complications of other issues.
- ggambetta 8y ago
  I think it means the first of his lifetime six heart attacks was at 31. I'm 38 and equally paranoid :)
  - Scoundreller 8y ago
    Imagine how paranoid he must have been after his 3rd or 4th, knowing that it's probably going to happen again and may be his last...
- oliveshell 8y ago
  >Congenital defects? Almost certainly. If your diet and lifestyle are even remotely healthy, and you don’t have a history of heart disease in your family, it’s very unlikely you have anything to worry about. Otherwise, a visit to a cardiologist should put your mind at ease.

ctchocula 8y ago

He could've been a billionaire. Instead he made hundreds of thousands of us investors millionaires. Thank you, Jack! RIP

oscilloscope 8y ago

John Bogle created the index fund, and along with it a savings philosophy that enabled the average investor to build wealth by taking an appropriate amount of risk (with exposure to stock/bond markets) and minimizing fees. The Bogleheads Wiki has great resources on topics related to savings, retirement and investing. Here are a couple entry points into what Bogle's method looks like: https://www.bogleheads.org/wiki/Bogleheads®_investment_philosophy https://www.bogleheads.org/wiki/Bogleheads®_investment_philo... https://www.bogleheads.org/wiki/Three-fund_portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio

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GCA10 8y ago
Not quite sure we can credit Bogle with creating the index fund. He certainly popularized it, though. Bill Fouse at Wells Fargo got a rather clunky version of an index fund started in 1971, based on equal weighting of all NYSE shares. It took a couple more years for various people, including Dean LeBaron (later of Batterymarch) and John Bogle to get everything working the right way with timely capitalization weighting and rebalancing. That's when the S&P 500 became the index of choice. Getting index funds to track consistently over time takes a fair amount of market monitoring plus basic computing power. (Reinvesting dividends brings one set of headaches; so does adjusting specific stocks' weightings as individual companies either shrink their float by buying back stock or expand it by issuing new shares.) All these calculations seem trivial today, but back in the 1970s, we didn't have up-to-the-minute electronic Edgar filings at the SEC. Or abundant computer power on everyone's desks.
- daphneokeefe 8y ago
  I had the privilege of working with Bill Fouse and other brilliant people at Wells Fargo Investment Advisors in the 70s. At the time, it was a huge technical challenge to crunch the numbers for a multi-million dollar investment, and to execute it without affecting the market prices of the target stocks.
- 8y ago

ydnaclementine 8y ago

Highly recommend listening to the bogleheads podcast ep 1 that interviews John Bogle. He turned out to be much more interesting than I thought: https://s134.podbean.com/pb/2e4222a012edece84e321989ac0c4095/5c3fb430/data2/fs88/3450151/uploads/Bogleheads_001.mp3?pbss=87a93265-c3ad-5bcb-9376-2ae6ef1c2ed3 https://s134.podbean.com/pb/2e4222a012edece84e321989ac0c4095...

harryh 8y ago

Jack Bogle is a legend and I have the majority of my money in Vanguard investment funds, but did you know that its corporate structure just might be a tax scam? https://www.nytimes.com/2016/02/07/your-money/vanguard-a-champion-of-low-fees-faces-a-peculiar-tax-challenge.html https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha... It sounds crazy at first, but after reading it's hard not to come away agreeing with the thesis.

harryh 8y ago
And the other fun "is it a conspiracy theory or maybe actually true?" thing about Vanguard/Index investing is the idea that it might be undermining capitalism itself because diversified owners aren't incentivized to compete. https://www.bloomberg.com/opinion/articles/2017-10-26/maybe-index-funds-will-destroy-capitalism https://www.bloomberg.com/opinion/articles/2017-10-26/maybe-...
- walshemj 8y ago
  No why would it its mirroring the way investment trusts /investment companies work in the UK and where set up in the 19th century to allow small investors to invest.
  - harryh 8y ago
    I don't think UK investors in the 19th century were buying index funds where they owned a tiny piece of every company in the market. The current situation is quite a bit different.
    - walshemj 8y ago
      Its more the principal that the investment company doesn't pay tax the owners do
      - harryh 8y ago
        Ah, I think you replied to my "destroying capitalism" comment when you meant to reply to my "tax scam" comment. Two different things. But anyways, the issue isn't about the company vs the owners paying the taxes because in this case the owners are the company. The issue is that these owners are (via the company) are (perhaps illegally) manipulating how their earnings are counted to lower their tax rate.

myth_buster 8y ago

As people are sharing resources related to John, the Freakonomics podcast, where John makes an appearance, on investing I found was informative as well. http://freakonomics.com/podcast/stupidest-money/ http://freakonomics.com/podcast/stupidest-money/

MarlonPro 8y ago

I wish I learned about Index Funds when I was younger. Thanks, Jack! I'm a happy Vanguard customer holding a single Index Fund fund.

isseu 8y ago

Freakonomics did a great podcast about index funds with him http://freakonomics.com/podcast/stupidest-money/ http://freakonomics.com/podcast/stupidest-money/ > Warren Buffett, the most famous investor in the world, had this to say recently: “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.”

baron816 8y ago
I hope they build that statue.
- deleted 8y ago
  [deleted]
- garmaine 8y ago
  Put it in front of the bull on Wall St.
  - deleted 8y ago
    [deleted]
  - sdenton4 8y ago
    Maybe riding the bull... Though apparently the space in front of the bull has opened up again: https://en.wikipedia.org/wiki/Fearless_Girl https://en.wikipedia.org/wiki/Fearless_Girl
  - ww520 8y ago
    Riding the bull, taming it.
    - deleted 8y ago
      [deleted]
  - aceperry 8y ago
    Matador style, about to kill the bull.

rhegart 8y ago

RIP. One of the biggest reasons the investment class was able to expand to the common person. Exorbitant fees, lack of knowledge of investments were huge barriers of entry to making passive income. Only the really wealthy really had access to both. The index fund and the low fees associated with it are huge reasons why savings aren’t lower than they already are. Upper middle class especially benefited greatly.

MarlonPro 8y ago
Index Fund made it possible for the layman to get into the game of investing.
- p1mrx 8y ago
  Bogle converted an action game into an idle game.
clairity 8y ago
> "One of the biggest reasons the investment class was able to expand to the common person." not to nitpick too much, but the top 10% own 84% of stock [1] so the investment class hasn't reached very far down to the common person, who own most of their wealth in their homes (why the housing crisis disproportionately hit the bottom 80%). with that said, if there's one social program that could reduce wealth inequality, it would be manadatory retirement savings accounts for all and invested in (vanguard) index funds (and probably diversified into bonds at least). it could be employer funded, or even funded by lotteries or sin taxes for the bottom 80%. [1] https://www.nytimes.com/2018/02/08/business/economy/stocks-economy.html https://www.nytimes.com/2018/02/08/business/economy/stocks-e...
- jdhn 8y ago
  >it would be manadatory retirement savings accounts for all and invested in (vanguard) index funds (and probably diversified into bonds at least) Doesn't Australia's superannuation work something like this? If I understand it correctly, a chunk of your salary is set aside, but instead of going into a pool like Social Security, it goes into a fund. I could be (and probably am) wrong as to how it works. That being said, I would love it if we could implement something like this in the US.

dguo 8y ago

The story behind Bogle founding Vanguard is one of my favorite business stories and one of my favorite examples of contrarian thinking. https://www.inc.com/magazine/201210/eric-schurenberg/how-i-did-it-john-bogle-the-vanguard-group.html https://www.inc.com/magazine/201210/eric-schurenberg/how-i-d... I don't generally like the idea of having personal heroes, but John Bogle would be on the short list.

ThirdFoundation 8y ago
I worked at Vanguard for about 5 years and Mr. Bogle was omnipresent on campus, working in his research area and dining (almost) every day in the on-campus cafeteria. In my few interactions with him, he was always nice and gentle. I only ever heard great things from my colleagues who had the chance to get to work with him closely or knew him better. Also, I appreciated that he was willing to grow, even into his old age, regarding his thinking on asset allocation. For example, his stance on holding an international stock index changed over time (from "unnecessary because most S&P 500 companies are multinational" to "there is some value to allocate a percentage of one's account to a broader international index"). Additionally, he wasn't afraid to completely go or say something against Vanguard after retiring. He stuck to his beliefs and was willing to challenge the company he started (and, albeit, was forced to retire from). For example, he was not supportive of Vanguard's deep foray into ETFs as he viewed them as encouraging short-term trading. All-in-all, he seemed like a wonderful person and the investment industry (and many other realms) are better because of him.

spinchange 8y ago

Hard to fully apprehend the impact this guy had on investing for regular people. In a very real sense, imagine the aggregate savings in fees he created for millions of people over the course of decades -- savings that were likely plowed back into people's retirement and total returns. Who else has done something for investors like this? I can't think of anyone even close.

Jhsto 8y ago

Just yesterday I watched this video on YouTube interviewing him: https://www.youtube.com/watch?v=zrCo0m5gSfc https://www.youtube.com/watch?v=zrCo0m5gSfc I found the clarity of his voice and the mental sharpness astonishing, given his age. Further, I wish information about index funds would be better explained in school.

sashasmith 8y ago
Was going to post the same link. He was an extremely smart guy. RIP Jack.

kuhhk 8y ago

From the Philly.com article: > “Jack could have been a multibillionaire on a par with Gates and Buffett,” said William Bernstein, an Oregon investment manager and author of 12 books on finance and economic history. Instead, he turned his company into one owned by its mutual funds, and in turn their investors "that exists to provide its customers the lowest price. He basically chose to forgo an enormous fortune to do something right for millions of people. I don’t know any other story like it in American business history.”

BeetleB 8y ago
From the same article: >For more than 20 years, he donated half his annual income to philanthropic causes, particularly those institutions that helped develop his mind and form his character.
djrobstep 8y ago
Bogle's greatest legacy might be... socialism. Index funds are slowly consuming more and more capital. To achieve democratic socialism smoothly, all we have to do is set up state-owned index funds, and let them keep growing until they've accumulated all of the capital. Voila, full democratic ownership of the means of production!
- conanbatt 8y ago
  If the private market gives index-funds at no cost to the state, why state owned index funds :S.
  - djrobstep 8y ago
    I'm not sure what you mean.
    - chucksmash 8y ago
      Can't get around paywall to read TFA right now, but Vanguard funds are famously cheap in terms of fees.

rwbt 8y ago

Truly a saint. His index funds and passive investing school of thought probably saved trillions of dollars and made investing in the markets accessible to millions of everyday citizens. RIP.

paws 8y ago

Not sure how many HN people follow the Bogle philosophy, but to me it feels not inappropriate to turn on the black bar.

DLA 8y ago
Could not agree more.
winslow 8y ago
What is the black bar? My GoogleFu/DuckDuckGoFu returned nothing but articles about his passing.
- jdhn 8y ago
  I believe that the black bar is put up at the top of the site after someone who is considered important by HN readership dies.
- mindcrime 8y ago
  See: https://i.imgur.com/ZphvVST.png https://i.imgur.com/ZphvVST.png This is done when someone passes who is considered especially (noteworthy|significant|involved|something) to/with the HN community. AFAIK there's no exact formula for determining who the mods deem worthy of that tribute, but I do know that they don't do it for everybody famous who dies. It's usually people who are particularly close to the HN world in some way.
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jmccaf 8y ago
I vote for black-bar
owenversteeg 8y ago
I think there's a ton of people here who follow Bogle's ideas. It's the go-to investment advice for anyone in tech that everyone parrots. That said, I think the discussion of a black bar every time someone dies is a little repetitive and kind of sours the process. On a related note, I was looking for the list of people who got black bars, and I couldn't find one. Does anyone know if there's an (un)official list? I'll start: Aaron Swartz Gerald M. Weinberg Steve Jobs Stephen Hawking Andy Grove Marvin Minsky I seem to remember Terry Davis didn't, which disappointed me, but made sense as there was confusion around if he was dead at first.

watertom 8y ago

Having had the extreme pleasure, and honor to work with Mr. Bogle I am truly saddened by his passing. He was selfless to a fault, a great man.

eru 8y ago
May I ask how you worked with him?

altairiumblue 8y ago

- Founded Vanguard and came up with the first index fund - Became wealthy without exploiting his clients, foregoing millions, possibly billions - Got a heart transplant at 65 and lived to 89 - Even in his recent interviews his voice always struck me as the voice of someone much younger, and he sounded very sharp mentally despite his age RIP

wjp3 8y ago

Thank you Jack. Signed, Vanguard investor.

bwb 8y ago

He probably did more than anyone else to safeguard American's retirement.

loteck 8y ago

If you don't know who Bogle is, and don't know much about individual investing for retirement, I would recommend you read William Bernstein's If You Can, a (free!) little 16-page booklet that just lays out the "Bogle method" for simple investing for retirement. [0] https://www.etf.com/docs/IfYouCan.pdf https://www.etf.com/docs/IfYouCan.pdf

asr 8y ago
If you like that, I would also read Chapter 1 of Bernstein's Four Pillars of Investing. Bernstein's books are all more or less re-writes of the same book multiple times in an attempt to make the Bogle/indexing idea approachable for different audiences. In addition to If You Can, Chapter 1 of Four Pillars is a history of securities returns and is the best thing I've ever read in terms of getting into the right head-space for long-term investing and thinking about risk. http://www.efficientfrontier.com/t4poi/Ch1.htm http://www.efficientfrontier.com/t4poi/Ch1.htm The rest of the book is good, too, but you can just read If You Can instead.

rolleiflex 8y ago

This is black-bar worthy — he did touch a lot of us with his work, and I’d like to think that he’s one of the few reasons the wealth generated in Silicon Valley largely stays to fund the next generation of startups (like mine). I’ve lost count of how many times I’ve recommended Vanguard personally.

omegaworks 8y ago
It's really amazing work he did considering that after the move to 401k and away from pensions in the private sector, there really are now few alternative paths to secure retirement. The move away from pensions could have been a veritable smorgasbord of fees for actively managed funds, but Vanguard provided broad access to something just as good (and more often than not, better[1]). 1. https://www.fool.com/investing/mutual-funds/mutual-fund-basics-index-funds-vs-actively-managed.aspx https://www.fool.com/investing/mutual-funds/mutual-fund-basi...
shasheene 8y ago
> and I’d like to think that he’s one of the few reasons the wealth generated in Silicon Valley largely stays to fund the next generation of startups (like mine). This is not directly true. Vanguard mutual funds provide 0.05% annual fee rather than ~1% annual fee to access the average return of an index (whether the index is the S&P500, or every publicly listed company in the US). While the low-cost has empirically provided a better (compounding) return for investors over the decades, Silicon Valley angel investors and VCs have generated their wealth from their own businesses, and re-invest some portion of it directly into the next generation of unlisted companies. The extra 1% annual return gained by accepting the average stock market return (at exceptionally low cost) is not what's driving startup investment. That said, the lower expected average market return (because the stock market being relatively highly valued, after the recovery from the 2008 crash, due to both record low interest rates, and to some degree a blind movement of capital towards index funds) may have some impact on temporarily increased VC dollars, trying to chase some kind of reasonable return.
- ethbro 8y ago
  Presumably the parent meant that Bogle popularized index mutual fund investing in 1976, thereby catalysing the passive investing industry. And whereby there were previously only actively managed funds, the creation of that industry substantially lowered the cut money managers got from person wealth management. Thereby leading to generations of people with more control over their money and willing to take risks, where a professional money manager would have little incentive to invest in startups with wealth locked up in their funds.

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tptacek 8y ago

Bogle is remembered primarily for his role in launching index funds, but I think a more telling part of his legacy is the structure of Vanguard, the firm he started, now the world's most trustworthy (and among the very largest) investment firms. Unlike most firms, Vanguard's funds own the firm, rather than the other way around. The funds are owned by Vanguard's customers, who transitively own the company. Vanguard "pays cost" for all the work its management and staff performs. To illustrate how powerful this structure is, see Matt Levine's writing about "the fake moon landing of financial news stories": a claim by a former Vanguard insider that the savings accrued to the funds (and thus customers) as its result constitute billions of dollars of taxable income (under the IRS whistleblower rules, some percentage of those taxes would go to the insider!): https://www.bloomberg.com/opinion/articles/2015-11-25/calpers-fees-and-culture-consultants https://www.bloomberg.com/opinion/articles/2015-11-25/calper... Bogle is a giant and a good guy in a field not packed full of good guys. RIP.

bfdm 8y ago
Followed the link to read about the taxes, but the framing doesn't make sense to me: The Vanguard Group is a mutual fund company whose adviser is owned by the funds, rather than being an independent profit-seeking corporation, so it can charge its funds lower advisory fees than its competitors do. (Disclosure: I am a Vanguard investor.) But the adviser is a taxable corporation, while the funds themselves are not taxable (they just pass through taxes to investors). There is a theory that the adviser should be charging Vanguard higher management fees, to reflect the "arm's length" prices that an independent adviser would charge, rather than the "at-cost" prices that it does in fact charge. Or rather, there is a theory that Vanguard owes taxes on the fees that the adviser should have charged, which would have been profit to the taxable corporation. Why is there any fee that "should" be charged? The premise seems flawed that fees need to anything more than cover costs to pay the employees to do their work. "If this structure were different, they'd charge more and make a profit and pay tax" ... But it's not different, so it doesn't make a profit, so it doesn't pay tax. Pretty simple.
- drc500free 8y ago
  It depends on how well established the market price is. If I sell you a $300k house for $150k, I've given you $150k of value. I'm either incompetent or purposefully gifting you $150k. There's a price that should be charged based on similar houses. If I do that on behalf of a company by selling THEIR house, I'm either incompetent or embezzling money. If it turns out I sold it to a friend, it's clear I was embezzling. If I don't know the person (i.e. "arms length") I'm just incompetent. In this case there is a market price for advisory services that you can figure out by looking at all the other similar advisers out there. You could make the argument that there are not enough similar advisers to establish what the price "should" be, or that it's not sufficiently below them to establish how much of a discount there is. But mainly no one cares to go after the 401(k) balances of millions of middle class Americans on a technicality, so it's a non-starter.

winslow 8y ago

Anyone know why some sites are naming him as Jack Bogle while others use John Bogle? [1] https://www.cbsnews.com/news/jack-bogle-index-fund-pioneer-and-vanguard-founder-dead-at-89/ https://www.cbsnews.com/news/jack-bogle-index-fund-pioneer-a...

wharnal 8y ago
Jack is short for John.
- chirau 8y ago
  Lol. Really? How is it shorter? I think it's just a nickname, which does not necessarily mean shorter.
  - greglindahl 8y ago
    “Short” is short for “nickname”, in this case.
    - dceddia 8y ago
      Yeah, and if you say them out loud, "Jack" sounds a slight bit faster than "John" I think.
- pembrook 8y ago
  You'll hear the same with John F. Kennedy. Some people refer to him as Jack Kennedy. Here's why the names are interchangeable: https://dmnes.wordpress.com/2017/01/28/why-is-jack-a-nickname-of-john/ https://dmnes.wordpress.com/2017/01/28/why-is-jack-a-nicknam... "[Jack], the commonest pet-name for John, has caused a good deal of difficulty owing to the natural assumption that it must be derived from the French Jacques and should therefore logically represent James rather than John. The problem was cleared up by E. W. B. Nicholson in a little book entitled The Pedigree of Jack and of Various Allied Names (1892). He showed that there is no recorded instance of Jack, Jak, Jacke, or Jakke ever being used to represent Jacques or James, and that no statement in favor of the French connexion has been produced from any early writer. He then proceeded to elucidate and illustrate with examples the development of Johannes [the standard Latin nominative form] to Jehan [the standard Old and Middle French oblique form] and Jan [the standard Middle Dutch form], whence, by addition of the common suffix -kin [a uniquely English suffix], we get Jankin, which as a result of French nasalization becomes Jackin [this is the same nasalization that gets us Harry from Henry], and was finally shortened to Jack. There was a similar development from Jon to Jock (the Scottish form of the name)."

m0zg 8y ago

It is quite possible that thanks to John millions of people today enjoy financially secure retirement. A huge VOO position (+some BRK.B) has certainly served me well as a volatility attenuator.

dhfromkorea 8y ago

RIP, Mr. Bogle. Does anyone know how Bogle concretely thought of the existence of samples like Warren Buffett who have outperformed the market over decades, granted the outperformance may not continue in the future [1]. I presume Bogle's view on this would be nuanced. [1]: https://qz.com/1216260/warren-buffett-doesnt-beat-the-market-anymore/ https://qz.com/1216260/warren-buffett-doesnt-beat-the-market...

santoshalper 8y ago

I admire John a great deal and have been a lifelong, very happy Vanguard client. RIP.

mruts 8y ago

Bogle was certainly a visionary, though I always find it odd that he never got on the ETF bandwagon. They are the next logical step in his vision for finance. Granted, they carry some risks that index funds don’t (liquidity and market risk), but they provide many advantages (like taxes). They also can be repurposed for any kind of investment vehicle as they essentially are just an “API.”

lr4444lr 8y ago
Bogle said in an interview that I cannot find but i's probably on YouTube that he saw nothing wrong with ETFs as an investment product, simply that they encouraged non-passive behavior for most investors, and he thought temptation to time the market or liquidate/buy at the wrong time were tremendous stumbling blocks or get hoodwinked by grandiose promises of some arcane sector, and ETFs made that easier to give in to. (I'm paraphrasing.)

lr4444lr 8y ago

Wow. Thus passes a legend. Deserves the black bar IMHO, if you consider the debt owed to him by roboadvisors and such.

RickJWagner 8y ago

Very sad to see this. Bogle spent a lot of time (and gave up the opportunity for a lot of money) preaching to people about how wealth can be accumulated. He really had a heart for helping people. Watch some of his interviews on YouTube. He speaks very clearly, but it's easy to see he was a brilliant man. Unless you're already a 'Boglehead': If you get ONE thing out of today's Hacker News, take an hour and learn the simple message John Bogle preached. Your future self will thank you profusely.

mudil 8y ago

It is important to note that John Bogle or Vanguard did not invent ETFs. They popularized it. The first rudimentary ETF was probably Toronto 35 Index Participation Units (TIPs 35) traded on Toronto Stock Exchange. The first fully mature ETF was State Street Global Investors's S&P 500 Trust ETF (SPDR). State Street company is still a major player in the ETF space today.

asimjalis 8y ago

Why is there no black bar on the HN main page? I thought it was an algorithm that searched for the word “died”.

grzm 8y ago
AIUI, the black bar is a manual process, not automated.

avar 8y ago

For those who want to hear Bogle's voice and a summary of his career in his own words check out this 2007 interview of EconTalk: http://www.econtalk.org/bogle-on-investing/ http://www.econtalk.org/bogle-on-investing/

jasin 8y ago

Due to his heart transplant, he was sometimes dubbed as the only man in Wall Street with a heart. Rest in peace.

debbiedowner 8y ago

This being a coding community, has anyone ever created an ipython notebook or similar that uses historical data to see how these passive investing products perform over all possible long intervals? I'm curious what are the conditions for doing well with passive investing depending on your buy/sell strategy and times? I suspect it can't just be a long enough interval of holding the indexes, it also depends on when you retire, or at what rate you buy indexes over your lifetime, or some other things that perhaps is just dependent on your life schedule and not really under your control. This is what some traders tell me, and I've never done the work myself to prove them wrong. How much chance is there in doing well with passive investing over a whole lifetime?

xapata 8y ago
I don't understand what you're contrasting with. The evidence is that passive investing works over a lifetime. It may not perform well over a particular decade. The strategy is simply buy and hold. Somewhat better is to buy small amounts periodically, to average the cost. Don't sell. This may change in the future, of course, but that's not really actionable knowledge.
- debbiedowner 8y ago
  Okay, great, so link me to some of this non anecdotal evidence please :) What are best numerical values for lifetime, how slowly can you withdraw money when you retire, what are the best lengths of retirement etc. I want to see which passive investment strategies work. We can all think of examples where someone buys indexes over time, and then chooses to retire in the wrong decade. I want to know how many good and bad outcomes there are over our known historical data, and see what percentage of the time passive investing works. How much better fo some passive investors do versus others, how much luck is involved? If you must compare to say buying and holding a commodity like gold. But really I'm just interested in how varryingly successful passive investing strategies can be. I was hoping for code, just because I wanted millions of examples, not just a couple success and dud stories.
  - xapata 8y ago