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"Investments perform better than investors." -- Jack Bogle

To call Jack Bogle a legend may be understating the stature of a man that's arguably done more for the individual investor than anyone else.

Is that high praise? Sure, but in a world of shockingly overpriced mutual, hedge, and private equity funds, Bogle's championing of low-cost index funds has undoubtedly made the world a safer place to invest. And he's been doing this for a heck of a long time -- in late September, Vanguard celebrated its 39th anniversary.

If you're wondering what's changed for Bogle in recent years, the answer is, not a whole heck of a lot. At 84 years young, the godfather of low-cost indexing is still on the warpath to help retail investors see the light, even as the market continues its gut-wrenching churning. In a recent interview with CNBC, Bogle said that he does watch the market on a day-to-day basis, but, as he put it, "the trick to what I've done in investing is I don't do anything." He continued, "I look, and watch, and observe, and laugh."

It's this kind of a cool head in hot markets, along with a razor-sharp focus on what really matters in investing -- notably costs and fees as well as long-term economic and business growth -- that have given Bogle such staying power. Consider what Bogle said to our own Robert Brokamp in December 2008 -- right in the depths of the financial crisis:

Today, the dividend yield is 3%... and I think from these somewhat depressed levels, over the next decade, earnings could grow. I am not saying they will, but I think it is not unreasonable to expect earnings to grow at about 7% a year, which of course means they will double in 10 years. So we have a 3% dividend yield and a 7% earnings growth and I don't look for that dividend to be cut a lot. It might be cut a little bit, but there are many companies that are doing quite well in America, outside of the financial area. So that would be a 10% investment return.

The S&P 500  (SNPINDEX: ^GSPC  ) is close to a double since that conversation.

Tomorrow, Motley Fool co-founder and CEO Tom Gardner will sit down with John Bogle, and we want to know what you want to hear from the Vanguard founder. In the comments section below, submit your questions, and after the interview, we'll post the Q&A right here on

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Read/Post Comments (30) | Recommend This Article (26)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 02, 2013, at 4:32 PM, ffbj wrote:

    I am 62, 80% stocks 20% bonds or cash. After 5 years of run-ups I sold 20% of my stocks early August and then took 10% of that put it into short term bonds, and the other 10% into an actively managed fund. I know Jack would hate that, timing the market, and light bonds, but I wonder isn't there a time when you just have to take some profits? I returned on average over 20% the last 5 years, getting a little scary.

  • Report this Comment On October 02, 2013, at 4:53 PM, Podolskylaw wrote:

    Capitalization-based indexing has been criticized for overweighting on "hot" stocks. In 1999, the S&P 500 index was overweighted with "dot coms" and in 2008, the S&P 500 index was overweighted with banks and other financials. Are there better criteria than capitalization upon which to base an index fund?

  • Report this Comment On October 02, 2013, at 4:58 PM, JohnCLeven wrote:

    1) How do you evaluate a business's long-term competitive advantage?

    and a similar question

    2) What is the best criterion for searching for businesses that you can reasonably rely on to grow EPS, year in and year out, for the foreseeable future (10 or more years)


  • Report this Comment On October 02, 2013, at 5:19 PM, TMFBos wrote:

    In your book Enough, you talk about building a great business and rule number 7 is about how Vanguard recognizes individual achievements with quarterly award of $1000 (500 for a charity and 500 for the recipient) and a plaque.

    As the company has grown in size has Vanguard continued to adhere to this practice and how influential do you think rule #7: recognizing individual achievement, has been to the success of Vanguard?

  • Report this Comment On October 02, 2013, at 5:26 PM, Hukleberry wrote:

    Jack, Not investor savy but have 50,000 shares of BGB bought at $20.00. Down to $17.60 now. Do you see any sign of it going back up to the original price?

  • Report this Comment On October 02, 2013, at 5:41 PM, sagitarius84 wrote:

    Aren't you afraid that if the majority of market participants adopt indexing strategies, this would create inefficiencies in the market?

  • Report this Comment On October 02, 2013, at 5:46 PM, kmet312 wrote:

    I have won and lost by not setting stops on my investments. Do you subscribe to any investing "rule", where you exit a position when it turns negative, or do you have a "mental stop", depending on the company and the environment?

  • Report this Comment On October 02, 2013, at 7:26 PM, dallaslonghorn wrote:

    Hey Mr. Bogle - when do you think the panda cam will be live again?

  • Report this Comment On October 02, 2013, at 7:30 PM, duuude1 wrote:

    I think ffbj's first comment on this article is a great one... at what point do you step off the gas, slide gently out of stocks...

    My thoughts are that ffbj probably has at least 2 decades perhaps if lucky even 3 or 4 decades of kicking around and playing with the gr,gr,grandkids. Jack Bogle is 2+ decades older than ffbj....

    My opinion is that we should never - ever - get out of a stock-heavy portfolio - just keep it cranking. So what did Jack do when he approached and passed through retirement age? Did he change his investing, his asset allocation?



  • Report this Comment On October 02, 2013, at 7:45 PM, TMFVicki wrote:

    As individual investors , we prefer to have the officers of the company have skin in the game (e.g., a significant stock ownership).

    Shouldn't we want the same from our mutual funds whether they be index funds or managed funds?

    Shouldn't companies share that information with their potential customers?

  • Report this Comment On October 02, 2013, at 8:04 PM, CoreAndExplore wrote:

    Mr. Bogle, we exchanged emails a few years ago, and being somewhat of a Boglehead, your response really made my day.

    Anyway, I wanted to ask you for some clarity on the active vs. passive debate. When you compare active funds to passive ones, you typically do so by highlighting broad-based industry averages over time, from the books and papers of yours I've read. While your results certainly serve as an indictment of the average active fund, what about the truly quality offerings? I'm not simply talking about top past performers, but also funds with comparatively low expense ratios, reasonable asset turnover, long management tenure, solid corporate governance, asset-bloat prevention, and persistent positive risk-adjusted metrics (alpha, sharpe, treynor, sortino, etc.).

    T. Rowe Price, for example, is a fund family whose performance record seems to somewhat belie the notion that actively-managed outperformance can't persist and can't be reasonably/practically predicted. Aside from the fact that 75% of T. Rowe's funds beat their Lipper Average, more importantly, a significant number of their funds beat their respective benchmarks on a risk-adjusted basis over 10, 20, and 30-year trailing and rolling periods, essentially providing a persistent "free-lunch" to investors.

    While said funds are, obviously, quite rare in the industry as a whole, the phenomenon of such sustained outperformance at T. Rowe Price, Dodge&Cox, Oakmark, and Vanguard itself (active funds), would seem to advocate for more of a core-and-explore approach than a completely passive approach to portfolio construction. And as David Swensen posits in "Pioneering Portfolio Management," the marginal utility for actively-managed vehicles may be much higher in less liquid markets/asset classes. In any event, such long-sustained superior risk-adjusted return would seem to fly in the face of the notion of a totally efficient market and reversion to the mean (at least in regards to fund returns).

    I have posed this very concern to Rick Ferri, although I'm not sure he lends much credence to my thesis. Thank you for your time and all that you have done for the little guy, whether you choose to respond to me or not.

  • Report this Comment On October 02, 2013, at 8:13 PM, lanzar wrote:

    First, as a long-time Vanguard 401k investor I would like to thank Mr, Bogle for building Vanguard into the great company it is today. I would like to ask Mr. Bogle to discuss the management and ownership structure of Vanguard, as compared to other fund companies, and their strengths and weaknesses.

    I would also like to ask Mr, Bogle his thoughts on what role, if any, fund companies should play on the issue of executive compensation of companies that the funds invest in. .

  • Report this Comment On October 02, 2013, at 9:25 PM, R0BM wrote:

    Why are most Vanguard bond funds actively managed funds, rather than less-costly index funds?

    Do you believe the compensation of Vanguard's officers should be disclosed to Vanguard's owners?

  • Report this Comment On October 02, 2013, at 10:29 PM, buffalostars wrote:

    What sectors/industries will provide growth over the next 12 months?

  • Report this Comment On October 02, 2013, at 10:56 PM, Sizone wrote:

    Oil producers Eg WLL (Whiting petroleum) and DVN (Devon) seem to be on a roll, yet others such as Homeland resources (Hmla) are being crushed.

    how do you see this run playing out, and will small players and explorers catch their coat-tails ??

  • Report this Comment On October 02, 2013, at 11:39 PM, ffbj wrote:

    I think Jack is around 70% bonds and has been at that level for a while, and he manages other family trusts, which are around 60% in bonds or equivalents. (Thanks for the kind comment on my comment Duuude1.)

  • Report this Comment On October 02, 2013, at 11:53 PM, ffbj wrote:

    Sorry to monopolize the comment section but reading over the queries concerning consistent market outperformance,while possible, it is neither likely nor sustainable, is something I would think Mr. Bogle might say in regards to those type of questions. Along with the fact that fees, overtime will decrease realized gains at a compounded rate.

    Additionally he precedes most his comments on investing by saying for most investors, or for the average, or the everyman.

    In regards to some of the other questions regarding individual stocks you guys do realise this Jack Bogle we are talking about?

  • Report this Comment On October 03, 2013, at 12:17 AM, dm2000dm wrote:

    Why isn't their better corporate governance. Many corporate boards don't recognize they even have shareholders. With the majority of shares voting rights held by the big mutual funds companies why haven't we seen better corporate governance?

    I feel the shareholder at many companies still are not being taken care of?

  • Report this Comment On October 03, 2013, at 1:51 AM, CoreAndExplore wrote:

    @ffbj, you said:

    "reading over the queries concerning consistent market outperformance,while possible, it is neither likely nor sustainable, is something I would think Mr. Bogle might say in regards to those type of questions. Along with the fact that fees, overtime will decrease realized gains at a compounded rate."

    Several things:

    That assumption is all entirely dependent on fund industry averages, which I go to great lengths to point out is a rather specious comparison at this point in the discourse on the active vs. passive debate. That is why it is paramount that we now shift the discussion to "quality" funds and fund families - ones which provide below average costs, score high stewardship grades, protect investors from asset bloat and excessive turnover, and various other metrics which affect return and conflicts of interest.

    Many of T. Rowe's funds, for example, belie the presupposition that "consistent outperformance is neither likely nor sustainable." Check out a few funds that simply put the lie to that: PRWCX, RPMGX, PRHYX, PRDGX, PRHSX, PRMTX, PRFHX, TRVLX, PRVAX. Among the many long-term high-flyers which beat the pants off their respective benchmarks/indices, the aforementioned funds did so with comparable or less risk as measured by alpha, treynor, sharpe, r-squared, sortino and other ratios. Each one of those has done so with startling consistency for 10, 20, even 30 years.

    Now, if you can stress the inordinate burden of 50 basis points in cost over a 30-year investment horizon to investor fund returns, then surely a 50, 100, or 200 basis point excess return after costs is equally as deserving of praise and further scrutiny/study. I am tired of seeing this kind of "anomaly" simply swept under the rug of supposed "luck" or happenstance. The data for funds such as these suggest quite the opposite: namely that funds with attributes such as solid management, long manager tenure, lower than average cost, long-term fund mandates, lower than average asset turnover, and above all excellent corporate governance/stewardship, with above average risk-adjusted return metrics, have a tendency for more persistent outperformance.

    As Bogle has taught us, over such long time-horizons, a difference in return of only 1-2% per year can lead to massive differences in total return, thanks to the miracle of compounding. While I am all for stressing the importance of costs to investors, I think it would be intellectually dishonest to just write off such phenomena of persistent outperformance as pure anomaly. Bogle's research on the relationship between costs, asset-bloat, asset-turnover, etc. and fund returns was ground-breaking, and proving the superiority of passive funds/strategies over time, on average, is now well established, but I personally feel that an incremental shift in the focus of the debate is warranted.

    To clarify: This is coming from an avid passive investor (well, I self-identify as a "core-and-explore" investor, but most (the core) of my portfolio and that of my clients is invested in index funds).

  • Report this Comment On October 03, 2013, at 2:05 AM, FundamentalsMan wrote:

    Second dm2000dm. I'm concerned that as more of the market is represented by giant mutual funds board and management accountability has diminished as shareholders are a step removed from the companies they own.

  • Report this Comment On October 03, 2013, at 2:24 AM, AnsgarJohn wrote:

    Thanks Fools,

    I have been hoping to ask Mr. Bogle this for a long time. Does the article Superinvestors of Graham and Doddsville make sense to him and if so how is it relevant?

  • Report this Comment On October 03, 2013, at 2:28 AM, dschleicher wrote:

    Mr. Bogle, what should the current Obama administration and Congress be doing today to help individual investors?

  • Report this Comment On October 03, 2013, at 8:01 AM, rd80 wrote:

    Mr. Bogle - Many thanks for taking questions and all you've done for individual investors over your career.

    I know you advocate index funds for individual investors, but ... Is there a level of interest, portfolio size and willingness to commit research time where you think it makes sense for an investor to hold a portfolio of individual securities rather than index funds?

    Basically, how would you assess whether to make a shift from funds to individual holdings, if you'd make the shift at all?

  • Report this Comment On October 03, 2013, at 9:14 AM, BAOwens wrote:

    Mr. Bogle

    How did you handle the stress of so many critics that thought you were crazy when you first began? And at what point did you know that your strategy was going to work.

  • Report this Comment On October 03, 2013, at 9:29 AM, jabez1 wrote:

    Mr. Bogle

    We are 100% in stocks. The average yield is about 3.4%. All we need in retirement is 2.9% increasing in sync with inflation - no selling required.

    I don't plan on getting back into bonds until I can get around 4% +.

    Retiring in about 1.5 years.

    What do you think?

  • Report this Comment On October 03, 2013, at 11:19 AM, whejna10 wrote:

    >> On October 02, 2013, at 4:53 PM, Podolskylaw wrote:

    Capitalization-based indexing has been criticized for overweighting on "hot" stocks. In 1999, the S&P 500 index was overweighted with "dot coms" and in 2008, the S&P 500 index was overweighted with banks and other financials. Are there better criteria than capitalization upon which to base an index fund?

    I support this question. Particularly as capitalization based investment becomes more and more popular, thus, leveraging on this effect.

    Best, Werner

  • Report this Comment On October 03, 2013, at 1:20 PM, ffbj wrote:

    Core and Explore: Yeah I am more like your name anyway..have a core and explore. I was trying to be devil's advocate in that 'what Jack might say, theme'. So also I see you left out something rather important which I stressed. Jack's advice is for the average investor.

    I just took the the first fund you mentioned and scoped it: PRWCX

    Looks fine and I'm sure the others are fine too. So it beats the Lipper average consistently over time, though so does the S&P, but since we are talking about it (PRWCX) vrs. the S&P that does not matter much and actually supports Bogle's philosophy.

    It is not expensive and it beats the S&P over 10 years by 2% or so. Though the S&P is beating it this year, by 4% and also beat it over the 3 year.

    So maybe having a bit of both would not be bad.

  • Report this Comment On October 03, 2013, at 3:58 PM, CoreAndExplore wrote:


    The problem is that Bogle's advice for the average investor that passive investing is a more dependable strategy has gotten twisted by his faithful followers into a general indictment of active management, period. I think it's disingenuous for many "Bogleheads" and passive investing zealots to insinuate that the odds are so stacked against you, that it's a fool's game (no pun intended). My contention is that you can't simply use broad-based industry averages for that assumption, since slightly more sophisticated fund investors can at the very least screen out the poorly-run, exorbitantly-priced candidates practically guaranteed to lag their respective benchmarks.

    As for your response about PRWCX, comparing it to the S&P 500 doesn't make sense. If it were simple equity fund that would be one thing, but it is a moderate allocation (balanced) fund, with 60% in stock and 40% in bonds and cash. Regardless, despite all of our semantic quibbling, I think we are in general agreement: a core and explore approach, so-called, can be a very prudent way to construct and manage a portfolio.

  • Report this Comment On October 05, 2013, at 2:31 PM, whejna10 wrote:

    hi guys,

    where can I find the interview?


  • Report this Comment On November 09, 2013, at 12:22 PM, CoreAndExplore wrote:

    Was this interview scrapped or something? I'm eagerly awaiting the transcript, whether Bogle answered any of these questions or not. I can't imagine it takes over a month to roll out.

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