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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
by 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 agoFrom 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 agoBogle'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 agoIf the private market gives index-funds at no cost to the state, why state owned index funds :S.
- djrobstep 8y agoI'm not sure what you mean.
- chucksmash 8y agoCan't get around paywall to read TFA right now, but Vanguard funds are famously cheap in terms of fees.
- conanbatt 8y agoWhat is the interest in having the state manage something at a cost when it is already free for its citizens.
- djrobstep 8y agoIt wouldn't provide index fund services, it would literally own the funds and thus the assets.
- deleted 8y ago[deleted]
- nicky0 8y agoAn index fund without customers is not really an index fund. It's just a private investment trust. Basically you are saying the state should just slowly buy stock in every company until it owns every company.
- djrobstep 8y agoIt would have a customer: the public. > Basically you are saying the state should just slowly buy stock in every company until it owns every company. That's right. The goal is full public ownership of the means of production.
- mertd 8y agoIt is unclear how index funds would function without someone doing price discovery (i.e., active investors).
- OscarCunningham 8y agoI'm not convinced by the index-funds-socialism thing, but I did once have a fun realisation about index funds owning the market. Because of short-selling, index funds could own all the market or more and active funds could still exist. For example we could imagine that index funds grow until they're 105% of the market, and active funds own 5% of the market long and 10% of it short. That adds up: 105% + 5% - 10% = 100%. And the active funds would still be doing all the price discovery. Of course the index funds wouldn't have all the assets-under-management, those would be split in the ratio 105:15 (with 10 of that 15 being collateral for the shorts). In other words: it doesn't matter if index funds own all the shares, active funds can just make side bets with each other.
- nostrademons 8y agoHmm. I wonder if the same thing could happen in the cryptocurrency markets, where literally 100% of Bitcoin holders lose their private keys and yet we still have active, liquid price discovery consisting of speculators making side bets on BitMex.
- dfischer 8y agoGamblers gonna gamble.
- pbreit 8y agoIsn’t a mere 51% effective ownership?
- discodave 8y agoNot for SNAP, Facebook, Google and others with gerrymandered share classes.
- omegaworks 8y agoDon't say this too loud. US policy has been to[1] undermine[2] socialism[3] abroad[4], what's to say it won't do the same with my retirement savings :D 1. https://en.wikipedia.org/wiki/Salvador_Allende#Presidency https://en.wikipedia.org/wiki/Salvador_Allende#Presidency 2. https://www.investopedia.com/terms/l/lia.asp https://www.investopedia.com/terms/l/lia.asp 3. https://en.wikipedia.org/wiki/Iraq_Petroleum_Company https://en.wikipedia.org/wiki/Iraq_Petroleum_Company 4. https://en.wikipedia.org/wiki/PDVSA https://en.wikipedia.org/wiki/PDVSA
- pm90 8y agoYou will be downvoted to hell but this is mostly true. I would argue though that it isn't necessarily malice that has driven this kind of policy on the part of Americans. Its mostly the abdication of Foreign policy to the hands of "economic experts" who were always very wrong. And the fact that foreigners don't vote for US politicians and thus there is no political price to be paid for being that way to non-Americans. Oh wait that does sound like Malice. But on the part of American representatives not necessarily the people. But I guess that distinction is kinda irrelevant.
- Kalium 8y agoAren't those called Sovereign Wealth Funds?
- toomuchtodo 8y agoThey are. Think of Vanguard as a US sovereign wealth fund that hasn’t reached full participation yet (and without the natural resource extraction bootstrapping). If that’s a strange thought, consider that the Bank Of Japan is a significant owner of equities on the Nikkei. Disclaimer: Vanguard customer
- pm90 8y agoWow. I never thought of it that way, but this is so true. I'm interested in this question: would the US economy be where it is today without index funds? Or is it the index funds like Vanguard that allowed millions of Americans a cheap, safe way to predictably grow their wealth? The reason I ask is that throughout American history, its the banking sector that was responsible for financial crises and a loss of wealth for most Americans. Have index funds plugged this hole and allowed the US to grow? Yeah yeah I know about 2008 etc. but that _was_ caused mostly by active investors.
- toomuchtodo 8y ago> would the US economy be where it is today without index funds? Or is it the index funds like Vanguard that allowed millions of Americans a cheap, safe way to predictably grow their wealth? Yes.
- closeparen 8y agoAn investor’s ownership of Vanguard is proportional to his investment. So no, not at all.
- jjeaff 8y agoI'm not sure I see a connection between Bogle's work and putting public funds into index funds. You could out public funds into any investment and end up with all the capital. The way index mutual funds work is to distribute returns to everyone according to how much capital they have contributed. The socialist version would be a find that everyone is required to contribute all their capital too. And then each citizen receives an equal share of the returns.
- intuitionist 8y agoMatt Bruenig has a joke that the reason he named his company Vanguard is that it’s the vanguard of socialism.
- pbreit 8y agoI don’t get it.
- pm90 8y agovan·guard /ˈvanˌɡärd/ noun noun: vanguard; plural noun: vanguards a group of people leading the way in new developments or ideas.
- intuitionist 8y agohttps://en.wikipedia.org/wiki/Vanguardism https://en.wikipedia.org/wiki/Vanguardism (The company is actually named after Lord Nelson's flagship at the Nile, but who's counting?)
- lewis500 8y agoWhy would a country want to buy up only shares of companies in that country? You could have a large sovereign wealth fund, but most countries are very small and it would not make sense to only buy domestic stocks.
- QML 8y agoCan't mention this without posting an article by Matt Levine on this topic [1]. [1] https://www.bloomberg.com/opinion/articles/2016-08-24/are-index-funds-communist https://www.bloomberg.com/opinion/articles/2016-08-24/are-in...
- erbium 8y agoIt's not socialism if the government isn't necessarily involved.
- asdfasgasdgasdg 8y agoThis makes no sense whatsoever. The state does not have sufficient resources to provide the services it has already committed to. The annual deficit is more than a trillion dollars. Suppose we were willing to double this to purchase securities, and further suppose that this had no knock on effects for security prices. It would still take half a decade to buy just the assets held by Vanguard. Although this is large, this is still far smaller than the assets in the public markets overall. At best you'd have achieved ownership of a small fraction of the means of production. But in exchange your sovereign debt would be staggering. It probably just wouldn't be possible, because nobody would be willing to lend enough money for such a project.
- djrobstep 8y agoNo need to borrow, just nationalize.
- asdfasgasdgasdg 8y agoOf course you could do that, but you can do that with or without index funds. The two are orthogonal.
- JBSay 8y agoSomething tells me you don't understand financial markets.
- djrobstep 8y agoSomething tells me your comment is motivated by class politics, rather than the mechanics of financial markets.
- gxs 8y agoThis almost made me teary eyed. Everything I've read about the guy says he was a stand up guy that put a real dent in the world. I hope his legacy lives on and his mission continues to be carried out.
- mdasen 8y agoIs this really true? Both Buffett and Gates' money didn't come from salaries or fees. For Gates, it was his ownership of Microsoft. For Buffett, it was his stewardship of Berkshire Hathaway. However, Buffett's Berkshire Hathaway never sought to gain an edge over shareholders. Buffett didn't compensate himself with lavish options or salary. Bogle could certainly have been a multi-billionaire. He could have founded Vanguard as a for-profit company and charged high fees. However, that wouldn't be like Buffett. Berkshire Hathaway doesn't operate on a percentage of the company's value going to Buffett every year. In fact, Bogle took a similar path to Buffett: an investor-friendly path that meant little salary or fees going to them, but a great value for investors. It seems like the difference between them would be attributed to difference in starting point and differences in returns. Since 1964 (when Buffett took over Berkshire Hathaway) through 2017, Berkshire had an overall gain of 2,404,748%. By contrast, the S&P 500 only hit 15,508%. If Buffett and Bogle both started out with $1,000,000, Buffett would have ended up with $24B while Bogle ended up with $155M. I don't think Bogle could have been a multibillionaire like Buffett unless he either 1) charged a lot of fees for Vanguard; or 2) actively managed his money to do significantly better than the S&P 500. Don't get me wrong: Bogle has done amazing things for society by pioneering low-cost index funds and offering investors the investor-owned Vanguard. I just think it's fair to point out that Buffett's billions don't come off the back of fees or salary. The thing that made Buffett richer was the fact that Berkshire Hathaway has hugely outperformed the S&P 500. If Berkshire had gotten the returns of Bogle's S&P 500 index fund, Buffett would be rich (as Bogle was), but not a multibillionaire.
- anonu 8y agoVanguard is owned by its funds. This is sometimes referred to as "mutualized". It's a unique ownership structure. As you point out, Gates and Buffett became wealthy due to their ownership in their respective companies. I don't know how much Bogle "owned" of Vanguard - but I suspect the structure he set up made his ownership no larger than his actual investment in Vanguard mutual funds and ETFs. Probably not good to compare Bogle to Gates or Buffet. Better to compare him to Larry Fink of Blackrock or Charles Schwab. Blackrock manages slightly more assets - around $6.5tr vs $5 for Vanguard. Blackrock is a $65bn market cap company. Point is, as a founder of a comparably large asset manager, he didnt leave this earth as a billionaire. All the better, you can't take it with you.