Last week, in addition to sharing a few of my personal thoughts about John Bogle, I asked those of you who either met or were otherwise influenced by Bogle to share your remembrances. We received many responses with praises and personal experiences. (Thank you. If you have remembrances of Bogle you’d like to share, let us know.)
Below is a sample of the responses. Keeping with the Bogle theme, I’m also including links to AAII Journal interviews with two proponents of index investing: Charles (“Charley”) Ellis and Burton Malkiel. The doodle on the right is a graphical representation of a response Bogle gave to a question about his personal portfolio allocation at the 2017 Morningstar Investor Conference. He said that while he had a 50% stock/50% bond allocation, a good allocation range for most investors lies somewhere between 70% stocks/30% bonds and 30% stocks/70% bonds. Now, onto the emails we received.
“From my point of view as an individual investor, John Bogle’s greatest achievement by far was his structuring and running of the Vanguard group of funds in a way that gives its funds’ shareholders a fair deal. The business model of quite a lot of mutual fund management companies is that we investors are ripe oranges, and the fund management companies and their distribution networks are juice machines. They squeeze [juice] out of our bank accounts with sales commissions followed by the highest expense ratio that the market will bear. Then to squeeze out some more juice, they create fad-stock specialty mutual funds, just when the market for the underlying securities is at its top. And an alarming number of well-known fund companies have gone one step further, to squeeze out the last few drops of juice. They allowed big-time sharpies to skim some of the profits from individual investors in exchange for management fees. Bogle created the very opposite type of mutual fund management company. He designed and ran Vanguard in a way that minimized expenses.”
—Gerald Levin, AAII Philadelphia Chapter secretary, introducing Bogle before he spoke to the chapter in 1999
“I/we are extremely grateful and deeply indebted to John (‘Jack’) Bogle. As ‘small’ individual investors, we have benefited considerably from his idea and subsequent implementation initiative of creating low-cost index-based investment vehicles/funds. Utilizing these funds through a disciplined saving/investment plan and a small inheritance, we have been able to achieve—over a 30-year-plus time period—a level of personal financial wealth that permits us to live ‘comfortably!’”
—Allan P. Rahn
“I never met Jack, but I do remember a great story that must be part of any remembrance. I read an article written by a Vanguard shareholder, perhaps 30 years ago. She was next in line behind him at the check-in desk at a hotel. She didn’t recognize him at first and was shocked that the man in hard negotiation to get the best rate for the night was the Vanguard CEO. I’m guessing that there are probably many stories like this about the man who made his life’s work advocating for his investors.”
—Broc Hite
“Guess one might say I am somewhat of a Boglehead. My retirement portfolio is basically four index funds: two total stock funds (one domestic and one international) and two total bond funds (one domestic and one international). All Admiral Share class. Bogle’s strategy makes a lot of sense: Set your allocations, check it from time to time, adjust as goals or allocations change and hang in there for the long term. I started with AAII back in approximately the mid ’80s. AAII gave me the fundamentals, but Bogle got me to quit chasing last quarter’s or last year’s horse race. He was a guy who actually looked out for the little investor. The passing of an icon.”
—Dennis Wagner
“In financial matters, I paid close attention to the comments of Bogle. Perhaps most important to me was his view that one ‘should stay the course.’ I followed this and other advice of his, much to my benefit. Bogle was a wise and good man.”
—Arthur Getis
“I never met Mr. Bogle, but he had a huge impact on my life. I discovered him reading Money magazine. I discovered the Vanguard fund family there, and the low-fee approach to investing, as well as indexing, which was rare in those days.”
—Charles Hooper
“I met Mr. Bogle when I was just a teenager working as a messenger for my father’s financial advertising firm back in 1974. He impressed me as a nice and kind gentleman that I thought I would like to become when I got older. Rest in peace, Jack, and thanks for all that you have done for investors over the years.”
—Brian O’Reilly
“I was never fortunate enough to meet or hear Mr. Bogle in person, but his ideas greatly influenced my investment decisions over the past 30 years. As a result, my husband and I are able to enjoy a financially secure retirement. Thank you, Mr. Bogle. May you rest in peace.”
—Linda Boelter
- Competition Has Made Indexing a Winner’s Game – Charley Ellis explained why better security analysis, more trading and more professional investors have made it even easier to lose at active investing and win by indexing.
- Stock Price Movements Are Unpredictable – Burton Malkiel presented his argument for why investors should put at least the core of their portfolios in index funds.
- Mighty Minis: Tiny Titans Stand Tall in 2018 – One year made a big difference for this AAII screening strategy, which went from being among the worst performers to being the best in terms of calendar-year performance.
- Active Traders, Not Novices, Fall for Scams – Experienced and affluent investors tend to be the most likely to participate in pump-and-dump schemes, with some even seeking these scams out.
Fourth-quarter earnings season will start to hit full stride with 127 S&P 500 index companies scheduled to report. Included in this group are Dow Jones industrial average components Caterpillar Inc. (CAT) on Monday; 3M Co. (MMM) and Apple Inc. (AAPL) on Tuesday; and Boeing Co. (BA) and McDonald’s Corp. (MCD) on Wednesday.
The Federal Open Market Committee (FOMC) will hold its first meeting of the year starting on Tuesday. The meeting statement will be released at 2:00 p.m. Eastern Time on Wednesday, followed by a press conference with chairman Jerome Powell at 2:30 p.m. No change in interest rates is expected.
The week’s first economic reports will be the November Case-Shiller home price index and the Conference Board’s January consumer confidence survey, which will be released Tuesday. Wednesday will feature the January ADP employment report and the December pending home sales index. The January Chicago Purchasing Managers’ Index (PMI) will be released on Thursday. Friday will feature January employment data—including the change in nonfarm payrolls and unemployment—the January PMI manufacturing index, the January Institute for Supply Management (ISM) manufacturing index and the University of Michigan’s final January consumer sentiment report.
Reports potentially delayed because of the ongoing government shutdown include December international trade (scheduled for Tuesday), fourth-quarter gross domestic product (Wednesday), December personal income and spending (Thursday) and December construction spending (Friday).
The Treasury Department will auction $40 billion of two-year notes and $41 billion of five-year notes on Monday and $32 billion of seven-year notes and $20 billion of two-year floating rate notes on Tuesday.
- The Mathematics of Retirement Portfolios
- Six Questions With John Bogle
- A Do-It-Yourself Approach to Target Date Retirement Investing
Pessimism among individual investors about the short-term direction of stock prices remains above average in the latest AAII Sentiment Survey. Optimism rebounded while neutral sentiment was slightly changed.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.1 percentage points to 37.7%. Optimism is below its historical average of 38.5% for the 17th time in 20 weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined by 0.2 percentage points to 30.0%. Neutral sentiment is below its historical average of 31.0% for the 11th time in 13 weeks.
Bearish sentiment, expectations that stock prices will fall over the next six months, declined by 3.9 percentage points to 32.3%. Pessimism is above its historical average of 30.5% for the 18th time in 20 weeks.
At current levels, all three sentiment indicators are within their typical historical ranges.
Market volatility remains on the minds of many investors, with some still anticipating larger losses. Others are focused on trade and the outcome of ongoing negotiations. Also having an influence are Washington politics (including President Trump and Democratic control of the House of Representatives), corporate earnings, the Federal Reserve, valuations and concerns about the pace of economic growth.
This week’s special question asked AAII members what impact Brexit is having on their outlook for the financial markets. A little less than half of all respondents (47%) say it is having little or no impact. An additional 5% don’t expect it to adversely affect U.S. stocks. Nearly 21% of respondents believe Brexit will adversely affect British and European stocks. An additional 5% think it will have a globally adverse impact, while 4% describe themselves as being more cautious. Approximately 6% of respondents are uncertain what the impact will be.
Here is a sampling of the responses:
- “At present, there is very little impact.”
- “Brexit will be a major negative for the U.K. and bad for the European Union.”
- “Watching and worried but I suspect it will not affect the U.S. market as much as the European markets.”
- “Uncertainty can only make the markets more volatile.”
- “Maybe it should but it is not. Not certain what the impact might be.”
Bullish: 37.7%, up 4.1 points
Neutral: 30%, down 0.2 points
Bearish: 32.3%, down 3.9 points
Bullish: 38.5%
Neutral: 31.0%
Bearish: 30.5%
Local Chapter Meetings
January 17, 2019 A Few Personal Thoughts in Remembrance of John Bogle
January 10, 2019 Brokers Announce New Stock Exchange: What We Know
January 3, 2019 The Stretch of Low Optimism Continues
December 27, 2018 21 Investing Resolutions for 2019
