As we stumble our way through life, we are confronted on occasion with a hero that shows up out of nowhere. There was a man that was my hero AND he showed us how we can become a hero too. John Bogle is the hero of this story. He showed courage when confronted with difficulty and ended up changing the lives of billions of people all over the world. Let's take a look at one amazing man.
John Bogle was born in 1929 and soon after, his family lost their money and their home as many did during the Great Depression. He did not quit. He performed well in school and made it into Princeton University where he wrote his Senior thesis on the mutual fund industry. This got him noticed by Walter Morgan, a big shot on Wall Street at the time. Young John was offered a job by Mr. Morgan and he took it.
John did wonderfully, and then catastrophe hit. He convinced Mr. Morgan they needed to merge with another company. It went badly and John got fired. He thought he was making the right decision and instead, ended up making a very bad decision. He was devastated, but he didn't give up. By some clever maneuvering, he was able to start The Vanguard Group from this debacle. Hear his description here.
He started over. He decided to stick his neck out and do things differently than anyone else on Wall Street. He created Vanguard as a non-profit investment company that would serve its investors first as he created the first publicly traded index fund. He set up the company in such a way that when more money came in, the fees that we pay as investors go down. Wall Street laughed at him. Listen to him here.
They called it Bogle's folly. He proposed to get rid of the helpers and have investors go straight to Vanguard, eliminating the middle man and the loads (commissions) they charged (8.5% at the time). This index fund (500 Index) would own the market without trying to pick winners and without trying to time the market. Blasphemy was the response from Wall Street. They were sure he would fail.
He and Vanguard struggled during those early years. The money barely came in, but John Bogle stood his ground and cheered on his team. They were doing right by the investor providing a product that served them first instead of Wall Street and its army of financial "experts." Gradually, folks started to wise up to the fees Wall Street took from their investments. They started to embrace the low fee index fund.
Little by little the industry that scoffed at Bogle and his index revolution started to change. Why? Money was flowing out of their high cost funds and into the low cost index funds. The trickle became a flood and that is when the industry changed dramatically. Everyone started providing low cost index funds and ETFs to "benefit" the investor. They changed because they had to.
Fast forward to 2024, Vanguard has over $8 Trillion that they manage for people like you and me and we have one man to thank for this opportunity and that is John Bogle. He took a risk and changed an entire industry. They didn't like it. There was way too much money at stake. Little by little, Bogle won and they lost. The industry changed and now there are many low cost index funds and ETFs.
Why do I tell this story? It shows what one person can do when met with adversity. It demonstrates how one person can change the world if they have the courage to challenge their fears and are willing to fail if necessary, doing what they believe is the right thing. It is an example of how one person can change the lives of billions even when many do not know who he was and what he did.
Here are John Bogle's 8 basic rules for investing. 1. Select low-cost funds. 2. Consider carefully the added costs of advice. 3. Do not overrate past fund performance. 4. Use past performance to determine consistency and risk. 5. Beware of stars (chasing 5-star mutual fund managers). 6. Beware of asset size. 7. Don't own too many funds. 8. Buy your fund portfolio and hold it.
John Bogle could have been a billionaire, but he chose a different path. He knew all that money wasn't necessary. He made a nice income and many of his working years, he gave away half of his income to private charities and institutions. He knew what was important. He understood what was enough. He showed us how to build something that serves the community while still doing well for ourselves.
John Bogle was able to shift billions of dollars out of the hands of the Wall Street helpers and into the hands of the average investor like you and me. He showed us the power of knowledge, consistency, and the courage to stick with it through good times and bad. He is a hero based on how he lived his life, not how much money he accumulated. He was a Superhero that lived in the real world!
John Bogle died in January 2019. He lived a long life and the reality is, he will live forever (or as long as us humans are walking around). The foundation he built at Vanguard lives on today and that of course, had a big impact on changing the culture of Wall Street as they were forced to deal with the low fee options delivered by Vanguard. They ended up getting less as the average investor got more. Job well done!
You can be hero. Yep, YOU. It starts with the idea and then the courage to follow your heart with the knowledge and persistence to make things happen over time. Will it be easy? Nope. Will people think you have gone mad? Maybe. There is a price to pay to live a life well lived. You can and should become the hero of your own journey. Take some time out of your life and watch this. It can change how you see life.
Let's wrap this up. Hero's show up everyday even when no one is watching. They are not concerned about what others think. They are too focused on what needs to be done and they are busy doing it. Be bold. Be courageous. Do not be afraid to live a different life than those poor souls playing it safe in the world. Think different and ultimately become the hero of YOUR journey. YOU are the answer!
