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In today's episode of Market Foolery, analysts Chris Hill and Bill Mann celebrate Jack Bogle and what he did for the world. The founder of Vanguard and inventor of the hedge fund, Jack Bogle forever changed Wall Street, enabling innumerable families and individual investors to cheaply and easily make the S&P's returns on their savings.

He started the low-fee and no-fee investment movement, letting investors accumulate those savings into massive compound interest down the road. Click play and hear more about Vanguard, the man behind it, and the legacy he left behind this week, with personal anecdotes from the hosts.

A full transcript follows the video.

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This video was recorded on Jan. 17, 2019.

Chris Hill: It's Thursday, January 17th. Welcome to Market Foolery! I'm Chris Hill. Joining me in studio today, Bill Mann is here, and thank goodness! Good to see you!

Bill Mann: Hey, Chris! How are you? 

Hill: I'm good! Middle of the day yesterday, I said, "Hey, why don't you come on the show tomorrow? You haven't been on in a while." And then, five or six hours later, we all get the news that Jack Bogle has died. We come here today not to mourn Jack Bogle. I think we come here today to celebrate Jack Bogle.

Mann: You've started out the exact right way. You and I have had the opportunity to meet Jack a number of times. I did what one would do when you meet someone who is oh, I don't know, for example, pegged as one of the hundred most influential human beings on planet Earth -- I called him Mr. Bogle. And immediately, he was, "No, sir. No, sir. You call me Jack." So, you're starting off the right way. "You call me Jack." We're here to celebrate what Jack Bogle has meant to...really, to America.

Hill: I was just going to say, to every investor. I was jotting down some notes this morning and one of the things I realized when I was thinking about Bogle -- for those unfamiliar, I'll give a little bit of background in a second. Just know that you don't have to be a Vanguard investor to have benefited from Jack Bogle and his life's work. All investors have benefited from it. 

For those unfamiliar, or those, as I indicated on Twitter (TWTR) yesterday, who are just seeing this name trending on Twitter, and for some investors, it's like, "Oh, I think I've heard of that guy. Oh, yeah, I think I know what he did" -- here's the quick and dirty on Jack Bogle. 

Jack Bogle, as a young man, goes to Princeton. Graduates magna cum laude. Writes his senior thesis on mutual fund investing. I believe, if I have this right, he hints at indexing as a way to invest.

Mann: In his thesis in 1951.

Hill: Yes. Cut to 20-some-odd years later, where he's into his investing career, 1976. He starts Vanguard in Pennsylvania and creates the first index mutual fund, the first mutual fund, just saying, "We're going to follow this index." He's done the work, he's done the research, he's seen what the fee structure is. And he says, "You know what? Here's a low-cost way for people to do well, to match the market's return."

Mann: Yeah. It's one of those things that, when you hear it now, it doesn't seem revolutionary. This was completely disruptive. All the way down the line, everyone had always been told that you need a professional to manage your money, and the professional is going to make decisions that are going to help you. The problem is that the math didn't bear it out. 

You alluded to this, and I think that it's a really important thing to note about what Jack Bogle has meant to investors everywhere -- Jack Bogle wasn't an efficient market theorist. He didn't think that stocks, if you structured them this way, were going to do better than anything else. He had a very simple theory, which was this: costs matter. Everyone is going to do, across the board, the market average minus what they pay to have it done for them. 

Hill: As you said, it was completely upending at the time.

Mann: Disruptive. He wasn't called that at the time. This was a disruptive technology.

Hill: You and I were joking before we started taping this morning, Jack Bogle, as beloved as he is here at The Motley Fool, the outpouring of support, tributes coming in from all corners, not loved on Wall Street!

Mann: [laughs] No! 

Hill: Because Wall Street had created a business structure that was very beneficial, that included --

Mann: Yachts? [laughs] 

Hill: [laughs] Yeah. Decent-sized fees. The quote from Jeff Bezos that's been trotted out any number of times, where Bezos said, years ago, "Your margin is my opportunity." That was the approach that Bogle took. I don't think he came at it from a malicious standpoint or from the standpoint of, "I'm going to take down Wall Street!" He just came at it from the standpoint of, "I'm going to try and do right by investors. The way I'm going to do that is, one, here's this index fund; two, costs are going to be much lower." And over time, once you start to do the math on, not the compounding of returns, but the compounding of the costs, then you see, the difference in a 1% fee -- that's all it takes to matter -- if a fee is 1% higher --

Mann: Compound that.

Hill: Yeah. If you're a guy in a suit on Wall Street, you say, "Well, it's just a 2% fee. It's just a 1.5% fee." Yeah, but that adds up over time. 

Mann: Here's how crazy and here's how revolutionary this was. When Jack Bogle decided with Vanguard that they were going to launch an index fund, they needed data. Maybe I'll get into the weeds just a little bit with this. When you run a mutual fund, you have to buy your stock quotes because there can't be a defect. And they're very, very expensive. Basis points out of the fees that you pay to a mutual fund goes to S&P (SPGI -0.94%) or MSCI (MSCI 1.37%) or Dow Jones or whomever manages the data that you're getting.

When Jack Bogle approached Standard & Poor's in the '70s and asked them for the data for the S&P 500, it was literally, "What do you want that for?" He said, "We're thinking about doing this product, so we need to get the data." And they said, "All right, we'll give it to you. Seventy thousand dollars a year, how's that sound to you?" And he's like, "That's great! Can I have a contract?" The contract for the Vanguard data feed from S&P, in perpetuity, is $70,000 a year because they didn't see any value in the data they were giving. They didn't get it. They've made up for it, charging everybody else! [laughs] 

Hill: I just love to imagine, when someone at S&P figured that out --

Mann: [laughs] "Noooo!"

Hill: As you said, it was like, "We're not making that mistake again."

Mann: That's right.

Hill: Just to put some numbers behind it, 1976, Vanguard begins. They start the index fund. In 1976, they've got about $1.5 billion under management. In 2018, Vanguard had $5.1 trillion under management.

Mann: That's kind of a lot. 

Hill: And Bogle walked the walk in terms of long-term investing. It's really remarkable to see. Also, just from a human standpoint, dies at the age of 89. I believe he was 65 or 66 years old when he got a heart transplant. 

Mann: Yeah. He'd had his first heart attack at 30. Had heart problems his entire life, was born with a heart defect. Got a heart transplant, I think it was, he was 65 or 66. And literally, after the heart transplant, ran the people who were around him into the ground because he had that much energy. [laughs] Remarkable man to be around.

Hill: Absolutely! Absolutely remarkable! Not a particularly big man. We'll get to our personal interactions with him in a second. As I said at the top -- and I own shares of Vanguard S&P 500 index fund -- you don't have to to have benefited. What he did in creating the index fund was, he creates the market for index funds. And people start to think, "Gosh, S&P 500? What about the Russell 2000?" And that sprouts up. But then, the unassailable attack on fees. The fact that fees have come down methodically over the last four decades, that's not by accident, that's absolutely because of what Jack Bogle started.

Mann: Absolutely in response. Obviously, we weren't exactly investing in the early '70s, you or I. What the culture was like at the time is hearsay to us. But it's inarguable that fees and costs are of much higher interest for the average investor than they used to be. The average investor used to be like, "Well, if I'm paying a little bit more, it's because I'm getting the good stuff." And that's true across the board, except maybe in investing. It's really, really hard for professional managers to beat the index.

Hill: Right. And the longer they go -- you know this from experience. You can beat the index one year, maybe you can do it a couple of years. It's really hard to do it over a long period of time. And the longer you go, the harder it becomes.

Mann: And it's structurally so. Buffett has said the same exact thing. Buffett, a lot of people treat as investing royalty. I would treat Jack Bogle as an investing saint. But Buffett will say the same thing. There's nothing that impacts your success like a fat wallet. When you run a fund, if you beat the index for a couple of years, what tends to happen is, money comes flooding in, and then it's really hard to beat it anymore.

I think one of the really other interesting things about Bogle is, he's very proud man, and he really worked hard to make sure that his legacy was cemented as the founder of the index fund. He was not in any way bashful about his contributions. But he lived in a modest house. He didn't get paid very much. It's really important to note how remarkable it is that Vanguard is today nonprofit. All of the money that they're saving, they pass on to their shareholders. They're truly shareholder first. 

Hill: You mentioned Buffett. Absolutely, to the extent that there's a Mount Rushmore of investing, people think Buffett is on there. And he probably is. In my book, he's not the first face. Bogle is the first face. Buffett's probably on there.

Mann: What are the other two?

Hill: I would say the other two are up for grabs. 

Mann: Caines, maybe?

Hill: Don't argue with me about Bogle being on there.

Mann: No. For people who are listening who are unfamiliar with Bogle -- Morningstar (MORN -0.88%) put out a wonderful package about Bogle today. Morningstar got their start recommending funds. That's their stock in trade in the same way that we tend to be more about stocks here at The Motley Fool. Their package about Bogle tells you everything you need to know about how important he was to individual investors, whether you've ever bought a fund, whether you've ever bought an index fund.

Hill: I'm going to be a little bit more self-promotional. The Motley Fool has also put together a package that people can read on

Mann: Thank you! Yes, it's really good. [laughs] I apologize to my colleagues. 

Hill: No, no, no. As I said, there are tributes pouring in, and rightfully so. I was watching a little bit of CNBC this morning. They were paying their respects, as well, as they should. I'm going to share an interaction, but I want to hear one interaction you had with -- and, by the way, when I met Bogle for the first time, it was the exact same thing. "Nice to meet you, Mr. Bogle." "Call me Jack." And I was like...I don't know that I can, but OK.

Mann: It's funny, especially as I'm entering my dotage, I guess, I feel the same way. I don't like being called Mr. Mann. But, yeah. In my interaction with Jack, the thing that's really most in my mind is when he came here, and he saw that we in this office had named one of our conference rooms after him. It's a very little thing. But it meant so much to him, that this was something we've done. For people who don't know, a lot of the conference rooms in this company are named after either famous investors or famous business leaders. And he was top of the list for us.

Hill: Oh, yeah!

Mann: Just, how much that meant to him, I thought was a really neat thing.

Hill: I met him for the first time in 1999. It was in Los Angeles. I was with David and Tom Gardner. The Los Angeles Times was putting on a two-day investment strategies conference, really the heyday of retail investing in the late 90s. A number of newspapers would put on these types of conferences. There were a bunch of keynote speakers. Andy Grove, co-founder and chairman of Intel (INTC 0.85%), was one of them, Maria Bartiromo from CNBC. Arthur Levitt, who was chairman of the SEC at the time. Bogle was one of the keynote speakers. And David and Tom had a keynote slot, as well. 

We're in the convention center. There are thousands of people attending this all-day event. I'm walking with David and Tom through one of these large hallways. I must have had a confused look on my face because --

Mann: Because you always do! [laughs] 

Hill: I kind of always do, actually. I come by it naturally. So we're walking along, and David Gardner looked at me and said, "Are you OK?" And I was like, "Yeah, I'm fine." He's like, "You don't look OK." I said, "I'm a little confused. We're here. There are all these investors around. How come no one's coming up to you? You guys are featured speakers. I'm just a little surprised that none of these people are coming up to you and introducing themselves or looking to get their book signed, or anything like that." 

When David and Tom speak, they will often put on a jester cap, a belled jester cap when they're speaking at events like this. So, as we're walking, Tom holds up the jester cap that's in his hand, and he just shows it to me, and he says, "It's because we're not wearing the hats. It's all about the hats. If we were wearing the hats, people would recognize us. We're not wearing the hats, so nobody's going to recognize us. Nobody ever recognizes us without the hats." 

And just then, coming at us from the other direction, this older, smaller gentleman points. And he's 50, 75 feet away. And he points in our direction, and starts yelling, "Fools! Fools! Fools!" And it was Jack Bogle.

Mann: [laughs] With his booming voice! Which you don't expect!

Hill: You don't expect it. And I was just like, "Oh my God!" And he came over, they knew each other, they were very excited. And they introduced me. Iron grip of a handshake. And then the obligatory, "Nice to meet you, Mr. Bogle." "Oh, please, call me Jack." And I was like, "I don't..."

Mann: "I can't." [laughs] 

Hill: "I don't think I can do that."

Mann: You know, the other interesting thing about Jack Bogle is -- although his intellect was something else -- in any of my interactions with him, he never really tried to show off. He didn't feel the need to be the biggest guy in the room. Although, once again, as you said, $5 trillion in assets under management. It's pretty good.

So I asked him one time -- you and I speak quite a bit to the public. There's an art to it. So I just asked him a question about his art. He said, "The good news for me is that I get to give the same exact speech. I say the same exact thing, and I've been doing it for 40 years. So all I need to do is take that and make it interesting for the person who's hearing it for the second or the 632nd time."

Hill: I guess we'll just end on this. We've been talking about the legacy for investors, the incredibly positive impact. As I said, Jack Bogle made us all richer. Whether we invested in Vanguard or not, we're all richer because of Jack Bogle. But, as you said, could have made a lot more money, chose not to, but had a very rich life. He leaves behind a wife, six children, 12 grandchildren, six great-grandchildren. What a life!

Mann: And a huge legacy! Thank you, Jack Bogle, for everything that you did and you've meant to all of us!

Hill: Thanks for being here!

Mann: Thank you, Chris!

Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of Market Foolery. The market is closed on Monday for the MLK holiday. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you on Tuesday!