The Apprentice

Andy Clarke

WE MET IN THE GALLEY, the cafeteria in Vanguard Group’s nautical lexicon. Jack Bogle shook my hand. My pulse raced.

I’d learned about Vanguard’s founder while working at Morningstar. I’d read about him in Jonathan Clements’s Wall Street Journal columns. And I’d devoured his first book, Bogle on Mutual Funds.

“Where’d you go to college?” he asked. “Good board scores?”

We sat down, tucked into our meals—some sort of industrial casserole for me, a peanut butter and jelly sandwich for him. “I need someone to help me organize material for a new book. Would you be interested?”

Before I could say “yes,” Bogle proceeded to talk for 45 minutes, with pauses to ask for my thoughts on the investment management industry. I contributed maybe 10 words to the conversation. I think he just wanted to make sure that he could stand me.

I got the job. What did I learn? Lessons piled up in three domains: investing, humor and leadership.

Investing: Cost is almost everything. I reported for duty at 7 a.m., surprised to find a list of tasks on my desk. I checked with Bogle’s assistant. “He’s here,” she said. I poked my head inside his office.

“You need a coffee?” he said. “I could use a heater.”

We grabbed cups of Vanguard’s break room coffee, shaking nondairy cream crystals into the brew. We repaired to his office.

I expected the job to be easy. After all, I’d worked at Morningstar, a research powerhouse. I held the CFA charter, which was unusual at Vanguard in the late 1990s. And I was an indexing believer.

I knew that indexing’s power derived from future Nobel laureate Eugene Fama’s efficient market hypothesis, or EMH, the theory that stock prices reflected all available information, which made it difficult—if not impossible—for active managers to outperform the market by anything but chance.

Bogle peppered me with questions. What did I consider reasonable earnings-growth estimates for corporate America over the next decade? How would changes in stock-market valuations interact with my earnings-growth estimates to determine stock market returns? And which poet best captured the American experience—Whitman, Dickinson or Frost?

I faced a painful reality: I didn’t know anything about anything.

In Bogle’s office, I performed perhaps 200 analyses demonstrating that the lowest-cost funds outperform their higher-cost counterparts. We published many of these analyses in Common Sense on Mutual Funds. I discarded Fama’s EMH for Bogle’s CMH—the “costs matter hypothesis.” My takeaway: Whatever the investment opportunity, keep costs low.

Humor: Wit makes the world go round. As I worked with Bogle, politicians, celebrities and business leaders stopped by his office to discuss investment strategies.

The leader of a private bank arrived at Vanguard’s headquarters to prep Bogle for a speech on tax-efficient investing at a conference in Palm Beach, Florida. The buttoned-up banker, some 20 years Bogle’s junior, was intimidated. Bogle put him and me at ease. “Andy, take notes.” He directed me to a collapsing armchair with pilled upholstery.

Bogle asked the banker about his clients. “These are families,” he said, “with assets in the neighborhood of $100 million.”

Bogle nodded. “Well, that’s a pretty nice neighborhood to be in.”

I chortled. The buttoned-up banker’s mood lightened. Planning proceeded. My takeaway: A sense of humor is an underappreciated aide to collaboration and commerce.

Leadership: Push hard but recognize a person’s limits. Bogle pushed hard. Sometimes the pushing was trivial. For example, I felt like we drag-raced every morning down Lancaster Avenue in suburban Philadelphia to see who could get to the office five seconds before the other.

Sometimes, the pushing was consequential. I met him at his home late on a Sunday afternoon. He handed me extensive revisions to the 448-page galleys of Common Sense on Mutual Funds. I needed to return the manuscript to the publisher in 15 hours. I drove to the office, brewed a pot of coffee, and revised charts and text through the night.

And sometimes the pushing chafed. Bogle held an annual dinner for current and former assistants, people who’d assumed leadership roles at major asset managers or achieved entrepreneurial success. As I took my seat, the table’s average net worth collapsed.

Our waiter opened the first bottle of wine. Bogle held court. He told a story that concluded with “a cornucopia of possibilities.” He turned to me. “Don’t worry, Andy. I’ll tell you what ‘cornucopia’ means later.” Everyone laughed.

I was the new guy and, according to the dinner’s traditions, due for some ribbing. But my face fell. Bogle saw this. “No, Andy is actually pretty good with the language.” The laughter subsided. “And I want to give him this.” He presented me with a watch. The table raised a glass.

As Bogle recognized my thin-skinned distress, I saw him not only as an investment icon to be revered, but also as a human being to be admired. My takeaway: Great leaders push people to their limits, but also recognize each individual’s idiosyncrasies and what it takes to get the best from him or her.

I suspect HumbleDollar’s writers and readers can identify people who have shaped their approach to investing, work and life.

I can, too. And as I brace for the future, Jack Bogle is first among them.

Andy Clarke is a financial writer and editor in Pennsylvania. He worked for three decades in investment communications and research. Andy is a CFA® charterholder and CFP® certificant. He blogs sporadically at Andy’s previous article was French Connection.

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