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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 TheSecondPaycheck.com. Andy’s previous article was French Connection.
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Great post – so many lessons in there.
Bogle built a great culture at Vanguard – hopefully it will survive without him. Feels like they could do more around innovation.
I interviewed Jack Brennan the handpicked successor to Jack Bogle and he had some great insights too.
https://www.newretirement.com/retirement/podcast-episode-58-jack-brennan-straight-talk-on-investing/
There were (and are) giants walking among us, and Jack Bogle was certainly one. Thank you for sharing your story.
Andy,
I think I enjoyed this article (story) more than almost any other on HD.
I am a big Bogle fan and I have all his published books in my library.
I have had all my money at VG since 2013, but I have to admit, it’s getting harder to keep it there these days. As I am sure others have noticed, client services has diminished greatly over the past 11 years, and they are making it more difficult to “stay the course.”
While it’s possible I may move my money, it will remain invested in VG ETFs, wherever I go.
Thanks again for a tremendous story.
I’m not too surprised the company looked outside for its new CEO. I do hope he energizes employees without hurting the owner/investor-centered culture Bogle created. They do seem invested in upgrading their technology. Over the past year they’ve made good progress on rewriting big sections of their web site and improving their mobile app experiences. Still more work to finish these herculean tasks, though.
Thank you for the kind note, Kevin.
Great article.
My only question is why discard the EMH for the CMH when the two are compatible? Investing in low cost index funds is consistent with both hypotheses.
Parkslope,
Great observation and question, but I don’t have a great answer. “Discard” is probably too strong. I guess all I can say is that “CMH” displaced “EMH” as my first investing instinct.
Andy
Andy, thanks for a great article. There are legions of Bogle fans here on HD so to read about your personal experiences with him is a treat. And you have a true family heirloom with that watch!
Thank you, Andrew. I’ve enjoyed and learned a lot from your HumbleDollar contributions.
Andy
Hi Andy,
I enjoyed reading about your time with Jack. I can only imagine how much you learned from being in his presence. I never met him, but I have learned a little about him through books (e.g., The Little Book of Common Sense Investing, Bogle Effect, and Enough), watching interviews of him, and via people’s comments here and on Bogleheads. I can’t thank him enough for how he helped change the financial industry via index investing and giving people like me a chance to become wealthy. I feel most (not all) financial advisors are expensive (>0.7% AUM) and create portfolios for their best interest and not the investor. Thus, Jack comes along and provides hope for the individual investor through lost cost index funds that do better than active funds over time (see SPIVA report). What more can I ask for other than say, “Thank you, Jack”.
I hope you share more “Jack” wisdom here at Humble Dollar. I look forward to reading it.
Thank you, Fred.
Good job of conveying the moods of your meetings with Jack Bogle. and the lessons you passed along, as well. Thanks for taking the time to share an enjoyable and educational article with us. I hope you’ll continue to do so!
Thank you, Edmund. Look forward to your future HumbleDollar contributions.
Andy
This is a classic article! The term ‘leadership’ stood out with great meaning.
As someone who fancy’s watches and clocks, I really like the inscription on the dial!
Thanks very much, Olin. Yes, a prized posession.
I laughed out loud at this: “As I took my seat, the table’s average net worth collapsed.” What a great line!
I wrote a letter to Mr. Bogle and he responded. I was always impressed by that.
He is also the only person (to my knowledge) that Warren Buffett has ever “saluted” at an annual meeting. He got quite an ovation.
I don’t think we’ll ever “reform” Wall Steet but with competition from a firm like Vanguard they will certainly have to change their ways to survive.
You wrote “I wrote a letter to Mr. Bogle and he responded.” Very cool; thanks for sharing. I remember watching an interview years ago of the gentleman who took over Vanguard after Mr. Bogle retired. He told a similar Bogle story of the time when Vanguard increased the minimum account amount to $3000 across all their funds. Jack Bogle got 1 letter from an account holder complaining of the change that asked “what about the little guy”. Bogle then changed the Star fund back to a very small minimum amount. In response to 1 letter. Clearly Mr. Boyle was a caring soul.
Thank you. I can laugh, too . . . in retrospect.
Andy
As a CFP now, do you work for individuals and do you recommend index funds for them? I just received a call from Empower/Personal Capital and he was extolling the virtues of giving him my money and *only* paying 0.8% to do so and promised that he would beat the indexes that I’m currently in.
It sounds pretty convincing, but I am a boglehead at heart, albeit a pretty unknowledgeable one.
Your article to re-encourage me to stay the course was good for me, thanks.
If you are a true Boglehead my suggestion is to make sure you are in broad stock and bond index mutual funds/ETFs with an allocation based on a target fund of your choice. Then “stay the course” while you continue to read and learn. Most likely you will learn there is nothing else to do but rebalance occasionally. No need to pay someone else. As Jack Bogle taught me years ago, and I have taught my children, investing is not that hard, and the less you do the better your results!
Exceeding the sky-high expectations of Jack Bogle is a rare accomplishment. That book left lasting marks on our investing world, in two crucial moments. Thanks for your contributions and for this fine HD piece.
Thank you for the comment, David.
I too enjoyed your words about Jack Bogle. He was my investing hero and all my investments follow his council. Jack was obviously a great leader as well as an investing genius. During my career, I was fortunate to have a great leader and mentor to follow, and his example was priceless. Thank you for writing and please keep telling your Jack stories.
Thank you, Tim.
What a great story – thanks for writing. That sounds like a wonderful experience, and as others have said, please share more.
Yes, Jeff, a great and formative experience.
Andy
What a nice morning read! I second the thought that we need to hear more Bogle stories. Please share some more with us.
Thanks for the comment, OldITGuy. Agree, Mr. Bogle was a uniquely inspiring–and witty–teacher for those of us who flock to HumbleDollar.
Andy
Please keep writing for HD, Andy. We need more of what you personally learned from Bogle through your quantitative and qualitative CFA/CFP perspective.