John C. Bogle
New topic 2019-01-18 20:25:47 description
|John C Bogle|
John C. Bogle, 89, who revolutionized the way most Americans save for the future, championing the interests of the small investor, and railing against middle-man greed and other excesses of Wall Street, died Wednesday at his home in Bryn Mawr, his family confirmed. Born a Quaker and educated as a boarding-school Princetonian, these two conflicted forces emerged at differing times and in differing ways. He died a rich man, but not as rich as others who surrounded him. He helped many millions of poor people, but never once saw himself as poor.
Mr. Bogle, a chipper and unpretentious man who invited everyone to call him â€œJack,â€ was a founder and for many years' chairman of the Vanguard Group, the Malvern-based mutual-fund company, where he pioneered low-cost, low-fee investing and mutual funds tied to stock-market indexes. These innovations, reviled and ridiculed at first, enabled millions of ordinary Americans to build wealth to buy a home, pay for college, and retire comfortably.
Along the way, Vanguard, which Mr. Bogle launched in 1974, became a titan in the financial services industry, with 16,600 employees and over $5 trillion in assets by the end of 2018, and Mr. Bogle earned a reputation as not only an investing sage but a maverick whose integrity and old-fashioned values set an example that many admired and few could match.
â€œJack could have been a multibillionaire on a par with Gates and Buffett,â€ 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 donâ€™t know any other story like it in American business history.â€
Mr. Bogle is the second financial titan from the region to die in the last three days. Raymond G. Perelman, the master deal-maker and philanthropist who gave away more than $300 million to the University of Pennsylvania and other causes, died Monday at his home in Philadelphia.
Like Perelman, Mr. Bogle carved a remarkable path. In 1999, Fortune named Mr. Bogle one of the investment industryâ€™s four giants of the 20th century, and in 2004, Time listed him among the 100 most influential people in the world.
Motivated by a mix of pragmatism and idealism, Mr. Bogle was regarded by friends and foes alike as the conscience of the industry and the sheriff of Wall Street.
â€œHe was like the last honorable man, a complete straight-shooter,â€ said Rick Stengel, former managing editor of Time and former president of the National Constitution Center, where he worked closely with Mr. Bogle, who then chaired the centerâ€™s board. He was fond of saying that â€œâ€˜so-and-so is all hat and no cattle.â€™ Jack was all cattle and not very much hat.â€
More than a successful businessman, Mr. Bogle was a capitalist with a soul.
John Bogle, founder of the Vanguard Group Inc., was chairman of the board of the National Constitution Center in 2006 when he stood beside one of his favorite singers, Alexander Hamilton, far left.
â€œWhatever moral standards I may have developed over my long life, I have tried to invest my own soul and spirit in the character of the little firm that I founded all those years ago,â€ he wrote in his 2008 book, Enough: True Measures of Money, Business, and Life.
While Mr. Bogle was facile with numbers, he was much less interested in counting than in what counts, and his intellectual range was broad. He revered language, history, poetry, and classical wisdom, and frequently amazed and delighted people by reciting long passages of verse. He was the author of at least 10 books, mainly about investing â€” all of which he proudly wrote himself.
He was a social critic, civic leader, mentor, and philanthropist whose generosity to the institutions that shaped his character, notably Blair Academy and Princeton University, far outstripped his legendary frugality.
In his 70s, he displayed the energy of men half his age, and his pace and ambition were the more remarkable because of his lifelong battle with heart disease, the result of a congenital defect that affected the heartâ€™s electrical current.
Mr. Bogle had his first heart attack in 1960 when he was only 30, and his heart stopped numerous times thereafter. When he was 37, his doctor advised him to retire. Mr. Bogleâ€™s response was to switch doctors.
Mr. Bogle outlived three pacemakers and kept a gym bag with a squash racket by his desk. In 1996, surgeons at Hahnemann University Hospital replaced his faulty heart with a strong one, ending a 128-day wait in the hospital. He reunited with his doctors years later.
With his new pump, Mr. Bogle experienced an adolescent surge of vitality that left associates panting to keep up.
â€œJack operated at only two speeds, as fast as is humanly possible and stop,â€ said Paul Miller, the late private investor and founding partner of Miller Anderson & Sherrerd, who was a close friend of Mr. Bogleâ€™s for decades.
Bogle with Ed Rendell (left) and President Bill Clinton (right) in Philadelphia about 20 years ago. He said of the economy: "The disparity in income is deeply regrettable. I don't know what we do about it exactly."
â€œHe was fiercely competitive when it counted, more intellectually alert than any person Iâ€™ve ever met, willing to face â€” indeed, almost court â€” controversy and criticism, stubborn but willing to compromise when absolutely necessary, and most importantly, loving, sentimental, kind, charitable, and courageous."
His greatest accomplishment, Mr. Bogle often said, was â€œputting the â€˜mutualâ€™ back in mutual funds." His most important innovation was the index fund.
Mr. Bogle had long argued that a mutual fund representing a broad range of businesses â€” for instance, the Standard & Poorâ€™s 500, an index containing the stocks of 500 large publicly held U.S. companies â€” would not only match the marketâ€™s average return but also generally surpass the performance of actively managed funds.
â€œYou want to be average and then win by virtue of your costs,â€ Mr. Bogle said. â€œCost is a handicap on the horse. If the jockey carries a lot of extra pounds, itâ€™s very tough for the horse to win the race.â€
That philosophy attracted a following, including a group of grateful devotees who called themselves the Bogleheads, and convened annually to swap investment advice and pay homage to the man who had done so much to nourish their portfolios.
Vanguard founder John "Jack" Bogle signed copies of his book at the 2017 Bogleheads conference, Desmond Hotel, Philadelphia.
â€œWhat impressed me most about Jack was his humility and approachability,â€ said Mel Lindauer, a leader of the Bogleheads and coauthor of The Bogleheadsâ€™ Guide to Investing. â€œHis zeal for his mission of helping investors get a â€˜fair shakeâ€™ was legendary. He worked tirelessly toward that goal, and his message never changed with the investing climate. The world wonâ€™t be the same without Jack. He was a true American hero.â€
Mr. Bogle had hoped that the Vanguard model â€” â€œstructurally correct, mathematically correct, and ethically correctâ€ â€” would goad other investment firms to give customers a fairer shake. While index funds have become widely popular, Vanguardâ€™s competitors often have been less than keen about following the companyâ€™s penny-pinching lead.
Nevertheless, Mr. Bogle, to use a pet phrase, â€œpressed on regardless.â€ After retiring as Vanguard's chairman and CEO in 1996 and its senior chairman in 2000, he became president of the Bogle Financial Markets Research Center, quartered in the Victory Building on the Vanguard campus.
When he was not touting the advantages of the Vanguard mode of investing, Mr. Bogle, a self-proclaimed â€œbattler by nature,â€ was lambasting his professional brethren for â€œrank speculation,â€ reckless assumption of debt, â€œobsceneâ€ multimillion-dollar paychecks, and golden parachutes, and saying they had abdicated their duty as stewards in favor of self-interested salesmanship.
The life-size statue of John Bogle, the founder of the Vanguard Group, is shown Oct. 20, 2005, at the headquarters in Malvern, Pennsylvania. Bogle, then 76, had written his fifth book, The Battle for the Soul of Capitalism.
Along the way, Mr. Bogle attracted his share of critics. He was called a communist, a Marxist, a Bolshevik, a Calvinist scold and zealot, a holier-than-thou traitor and subversive who was undermining the pillars of capitalism with un-American rants.
Mr. Bogle characterized his pugnacious relationship with the financial industry as â€œa loverâ€™s quarrel.â€ His mission, he said, was simple: to return capitalism, finance, and fund management to their roots in stewardship.
â€œHe held our industry to a higher standard than it held itself, and I think a lot of people took umbrage at that,â€ said Arthur Zeikel, a former Merrill Lynch & Co. CEO who knew Mr. Bogle for decades.
â€œHe never failed to mention, in speech after speech and talk after talk, that money managers had failed miserably to earn their high fees,â€ said Miller, the investment manager, and longtime friend. â€œThat he was correct in calling them the â€˜croupiers at the gambling tableâ€™ did not endear him to the profession.â€
â€œSimply put, Jack cared,â€ said William Bernstein. â€œHe cared enough about his clients to personally answer their letters; he cared enough about his employees to be on a first-name basis with thousands of them, and to pitch in at the phone banks when things got busy; and in the end, he cared enough about his country that he spent much of his last two decades away from home tirelessly crusading against an increasingly elephantine and dysfunctional financial system.â€
John C. Bogle, then chairman and president, Wellington Fund in 1974.
John Clifton Bogle early realized the value of a penny. His grandfather, a prosperous merchant, founded a company that became part of the American Can Co., and Mr. Bogleâ€™s early years in Montclair, N.J., were affluent. But the Great Depression eventually erased the family fortune. Mr. Bogleâ€™s father, an improvident charmer, was ill-equipped to cope. The Bogles lost their home and were forced to move in with relatives.
Mr. Bogle was proud of the many jobs he held in his youth â€” newspaper delivery boy, waiter, ticket seller, mail clerk, cub reporter, a runner for a brokerage house, pinsetter in a bowling alley.
â€œI grew up in the best possible way,â€ Mr. Bogle said in 2008, â€œbecause we had social standing â€” I never thought I was inferior to anybody because we didnâ€™t have any money â€” but I had to work for everything I got.â€
Mr. Bogle attended Blair Academy in northwestern New Jersey, where he blossomed academically. From there, he went to Princeton, which offered him a full scholarship and a job waiting tables in the dining hall. At first, Mr. Bogle floundered, and his low grades in economics, his major, almost cost him his scholarship. But he applied himself and slowly mastered the demands.
In December 1949, while leafing through Fortune, he happened upon an article about the embryonic mutual-fund industry, and Mr. Bogle developed the topic for his senior thesis.
Mr. Bogle produced a scholarly opus that proved to be a blueprint for his career. â€œThe principal function of mutual funds is the management of their investment portfolios,â€ Mr. Bogle wrote. â€œEverything else is incidental... Future industry growth can be maximized by a reduction of sales loads and management fees.â€
The thesis earned Mr. Bogle a top grade, and he graduated magna cum laude. After he sent a copy to Walter Morgan, Class of 1920 and founder of the Wellington Fund, based in Philadelphia, Morgan hired Mr. Bogle. In short order, Morgan became Mr. Bogleâ€™s mentor. In early 1965, when Mr. Bogle was only 35, Morgan anointed him his successor.
Headstrong and impulsive, Mr. Bogle arranged a merger with high-flying investment managers in Boston. For six go-go years, the partnership flourished, but when stock prices plunged in 1974, Mr. Bogle was fired.
Refusing to surrender, Mr. Bogle persuaded the board of Wellington to split from the management company that canned him and appoint him to administer the funds at cost, thereby saving a bundle in fees.
Inspired by the 1798 Battle of the Nile, during which Lord Horatio Nelson sank the French fleet, snuffing Napoleonâ€™s dream of world conquest, Mr. Bogle chose the name Vanguard after Nelsonâ€™s flagship.
â€œI wanted to send a message that our battle-hardened Vanguard Group would be victorious in the mutual fund wars,â€ Bogle wrote in Enough, â€œand that our â€˜vanguardâ€™ would be, as the dictionary says, â€˜the leader in a new trend.â€™â€
Now one of the worldâ€™s largest investment management companies, Vanguard vies with BlackRock and Fidelity Investments for the title of biggest mutual-fund group.
John Bogle, Vanguard
If Vanguard runs a tight ship, itâ€™s a direct reflection of its founder. When traveling, Mr. Bogle usually took the train or flew coach. From the station or airport, he walked to his destination rather than taking a cab, or hailed a cab rather than riding in a limo, even in his 70s.
When he was president of the Constitution Center, Stengel regularly met Mr. Bogle for power breakfasts at one of Mr. Bogleâ€™s favorite eateries, Bennyâ€™s Place at Fourth and Chestnut Streets. There, Mr. Bogle ordered his customary breakfast of two eggs over easy, fried potatoes, two slices of rye toast and coffee, all of which he consumed, Stengel recalled, in an â€œincredibly systematicâ€ way. Price: $3.60. Said Stengel: â€œI often felt compelled to leave an extra tip so the waitress wouldnâ€™t feel shortchanged.â€
Bill Falloon, an editor at John Wiley & Sons, remembers when Mr. Bogle visited the publisherâ€™s Park Avenue office for a marketing strategy meeting about Mr. Bogleâ€™s The Little Book of Common Sense Investing.
Weary from the train trip, Mr. Bogle asked where he could catnap. There was no bed or couch, he was informed. Not to worry, Mr. Bogle said. Just find me a room.
â€œSo, he walked into this little office and pushed a chair over so its back was on the floor,â€ Falloon recalls. â€œAnd then he stretched out and put his head on the backrest.â€
Before nodding off, Mr. Bogle issued instructions: â€œIf anybody wonders what Iâ€™m doing, tell them Iâ€™m dead.â€
Mr. Bogleâ€™s children recalled growing up in a drafty house in Haverford where the thermostat was set low in winter and they piled into their parentsâ€™ bedroom on steamy summer nights because it was the only spot with an air conditioner.
John Bogle, Vanguard chief inside the corporate office in Chesterbrook in 1989.
â€œHe wore the same wool ties and suits forever,â€ said son Andrew Armstrong Bogle. â€œHe had no desire to be ostentatious, and he didnâ€™t hang out with just investment titans. He was just as comfortable, if not more so, with someone whose cab he happened to get into, talking to people in the subway or to a waiter at the Princeton Club. He genuinely liked talking to people and hearing their stories.â€
While Mr. Bogle may have been cheap in the transactions of daily life, he was remarkably generous in a grand way. 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.
At Blair, Mr. Bogle chaired the board of trustees, chose the headmaster, and helped finance the construction of several buildings.
â€œHe was like a surrogate father to me,â€ said former headmaster Chan Hardwick. â€œHe told me the most important thing in a relationship is trust, and trust is based on honesty. After he hired me, he said, â€˜Youâ€™re going to make mistakes. There will be things youâ€™ll do that youâ€™ll wish you hadnâ€™t, and things you wonâ€™t do that youâ€™ll wish you had. If youâ€™re honest with me, Iâ€™ll support you fully.â€™ â€
At Blair and Princeton, Bogle endowed the Bogle Brothers Scholarships, which enabled scores of budding scholars to further their education. His twin brother David died in 1995.
â€œHe took chances on people because someone took a chance on him,â€ said Stengel. â€œMuch of his own altruism stems from the fact that he was a scholarship kid.â€
â€œIt will surprise no one who knew Jack that he directed his support to financial aid and promoting community service,â€ said former Princeton president Shirley Tilghman. â€œHe served his university on many occasions â€” from leading the Class of 1951 at its 25th reunion to advising the Princeton University Investment Co.â€
Mr. Bogleâ€™s philanthropy reflected his belief that to whom much is given, much is expected.
Two of his children followed his example of service in an obvious way. His daughter Barbara Bogle Renninger served on the board of the Gesu School in North Philadelphia, where she was also a volunteer math tutor; his son Andrew was a patron of Robin Hood, a philanthropic organization established by investment bankers and hedge-fund managers to alleviate poverty in New York City.
â€œWhen we were growing up, we were told that weâ€™re very fortunate in so many ways and that we were expected to give back,â€ Andrew Bogle recalled. â€œWe could choose our own way of contributing, whether it be time or money or just our thoughts, but we knew that the default option is that you're going to give back.â€
Disengaging himself from guiding Vanguard and forging a new role for himself was challenging for Mr. Bogle, who was dismayed by the rift that developed between him and the man he had groomed to succeed him, John J. Brennan. Mr. Bogle was incapable of retirement.
Although he played no role in managing Vanguard after 2000, he continued to show up every weekday, usually in suit and tie and shined shoes, to discharge his duties as president of the Bogle Financial Markets Research Center. He wrote articles, speeches, and books, answered questions from investors, granted interviews to reporters, and continued to cultivate and encourage members of Vanguardâ€™s â€œcrewâ€ while keeping a three-person staff busy.
â€œIn a lot of ways, the last decade, an extra decade of my life, has been the happiest of my life,â€ Mr. Bogle said in 2008. â€œIâ€™m contributing to society. Iâ€™m doing what I want to do. Iâ€™m writing what I want and saying what I want, and I think my name and reputation, for whatever thatâ€™s worth, have been enhanced.â€
Mr. Bogle wasnâ€™t afraid to criticize his own index fund creation â€” which he wrote may have grown too large. In an op-ed for the Wall Street Journal in 2018, he warned that the concentration of ownership created by indexing firms presented a threat to the markets. Three index fund managers dominate the field with a collective 81 percent share of index fund assets: Vanguard has a 51 percent share; BlackRock 21 percent; and State Street Global 9 percent.
â€œMost observers expect that the share of corporate ownership by index funds will continue to grow over the next decade. It seems only a matter of time until index mutual funds cross the 50 percent mark. If that were to happen, the â€˜Big Threeâ€™ might own 30 percent or more of the U.S. stock market â€” effective control. I do not believe that such concentration would serve the national interest,â€ he wrote.
Another institution that benefited tremendously from Mr. Bogleâ€™s involvement was the Constitution Center, whose board he chaired from 1999 to 2007. â€œIntroducing the center to the nation with Mr. Bogle as chairman was a huge advantage,â€ said Joe Torsella, the centerâ€™s president at the time and now Pennsylvania treasurer. â€œIt declared to the outside world that we were national and bipartisan, and aspired to the highest level of excellence.â€
Mr. Bogle served on numerous boards during his career, including the board of governors of the Investment Company Institute, which he chaired from 1969 to 1970. He was also a fellow of the American Philosophical Society and the American Academy of Arts and Sciences. He received honorary degrees from a dozen universities, including his alma mater, which also bestowed on him its highest accolade, the Woodrow Wilson Award, for â€œdistinguished achievement in the nationâ€™s service.â€
In addition to squash, Mr. Bogle enjoyed tennis and golf, sailing, and summering at Lake Placid, N.Y. He kept his wits sharp by daily attacking the New York Times crossword puzzle, which he was known to complete in less than 20 minutes.
Mr. Bogle especially loved to write. Most recently, he published Stay the Course: The Story of Vanguard and the Index Revolutionâ€ (Wiley, 2018).
â€œI donâ€™t think thereâ€™s an author who spent greater care on the words he chose,â€ said Falloon, the Wiley editor who worked with Mr. Bogle. â€œWhen he did a book, he was so meticulous; heâ€™d rewrite and rewrite. He always went the extra mile to make sure there wasnâ€™t a single person who could not understand what he was saying.â€
Despite the heavy demands on his time, Mr. Bogle put his family first. When his children were growing up, he was almost always home for dinner. â€œThis was our time to talk to each other and find out what was going on in each otherâ€™s lives,â€ Andrew Bogle recalled. â€œLooking back now, I find it remarkable that he was able to work as hard as he did but still say, â€˜This is a priority and what Iâ€™m going to do â€” be home every night.â€™â€
Another family rite revolved around the Fourth of July, a holiday that evoked Mr. Bogleâ€™s strong sense of patriotism. Children and grandchildren gathered at the family camp on Lake Placid. They sang patriotic songs (Lee Greenwoodâ€™s â€œGod Bless the USAâ€ was a favorite), and Mr. Bogle raised a toast to the country of which he was so proud.
â€œMy dad may have seemed like a hard-charging businessman, but underneath there was real emotion and care and concern and empathy,â€ said daughter Barbara. â€œEven as he became more prominent, he did not change within the family. He remained a man without pretense and pomposity.
â€œWhen he had the heart transplant, it changed him dramatically. He became much more connected to the family. He was very emotional and teared up easily over things. He was literally reborn, and he really appreciated the chance of having a second go at life.â€
A man who believed in the value of introspection and who was always questioning his own motives and behavior, Mr. Bogle sought to define what it means to lead a good life. It was not about wealth, power, fame and other conventional notions of success, he concluded.
â€œItâ€™s about being a good husband, a good father, a good colleague, a good member of the community. Everything else pales by comparison. The accumulation of material goods is a waste â€” you canâ€™t take them with you, anyway â€” and the waste is typified by our financial system. The essential message is, stop focusing on self and start thinking about service to others.â€
In addition to his son and daughter, Mr. Bogle is survived by his wife, the former Eve Sherrerd, whom he married in 1956; children Jeanne Bogle England, Nancy Bogle St. John, Sandra Hipkins Bogle, and John C. Bogle Jr.; and at least 12 grandchildren.
A private service will be held next week.