Outside-IN

Jack Bogle: Capitalist rock star

Bogle's impact on investing, investors and the markets place him among the most important political and business actors globally in the last half century

Jan 23, 2019 @ 2:09 pm

By Knut A. Rostad

Jack Bogle richly deserves the huge accolades he's receiving. Actually, he may deserve more. Vanguard's low-cost index funds improved the bottom lines of tens of millions. Vanguard's annual reports and Mr. Bogle's books and lectures raised investors' financial IQ. As president of the Bogle Research Center over the past 22 years, Mr. Bogle and a staff of two became investors' superhero.

Opinions of the Vanguard founder's greatest contributions have poured in from all corners. Burton Malkiel, former Princeton professor and a Bogle confidante, wrote about the enormous impact of the index fund. WSJ columnist Jason Zweig called him "the great democratizer" of capitalism for making stocks and bonds so accessible; he also cited his mental and physical toughness. The WSJ editorial board pegged its commentary, for the benefit of younger readers, by saying, "Investing used to be expensive," and said even more by closing with, "Jack Bogle was a capitalist for the common man."

Disclosure: I compiled "The Man in in the Arena," a volume published in 2013 that details the legacy of Jack Bogle. In addition, Mr. Bogle served on the board of advisers of the Institute for the Fiduciary Standard, where I serve as president. Last year, he led the institute in a meeting with Securities and Exchange Commission chairman Jay Clayton about the proposed conduct standards.

Jack Bogle's passing, at 89, raises the question of how history will lay him to rest come his 100th birthday, May 8, 2029.

The "Vanguard effect" on mutual fund costs industrywide is well-developed and generally accepted. But the "Jack Bogle effect" on capitalism and, more broadly, the public good, has barely been discussed. Given Mr. Bogle's demonstrable impact on investing, investors and the markets, shouldn't he fairly be viewed as among the most globally important political and business actors in the last half century?

Mr. Bogle should be a candidate for top billing. His record crosses conventional metrics and categories. It starts with the index fund's commercial and investment success, then adds the public good of tens of millions of more secure retirement savers, a better-informed investor class and his service as a powerful counterweight to the widely distrusted conventional Wall Street "wisdom."

Finally, Mr. Bogle's candidacy is also based on his unique relationship with Main Street America. His straight talk about investing, costs and his views of Wall Street won investors' hearts, minds and retirement savings. Clearly, "investors love Jack." This is evident in the personal stories people tell.

The correspondence and tales of Vanguard shareholders, crew members and leaders in finance, academia and public life that I compiled in "Man in the Arena" speak loudly. They speak to the vision of Jack Bogle and its meaning, as implemented by the crew members at Vanguard. They speak of Jack Bogle with an affection and adulation more befitting a rock star than a mutual fund company chief.

In 2012, a Vanguard shareholder wrote, "You have been on a journey with me in my mind and in my heart for a decade ... when I first opened up 'Common Sense on Mutual Funds.' It was as if the heavens opened up and the investing angels sang. Your words, your wisdom, your wit came flying through those pages and they changed my life and those of my family forever."

In 2006, a West Point cadet wrote that he was most impressed with Jack Bogle's remarks on the importance of "honor, integrity, devotion to family, selflessness, personal courage, sincerity and humility." The cadet added, "Mr. Bogle you were the only civilian speaker I've seen in my four years receive a standing ovation."

Vanguard crew members could fill a volume with their sentiments. They are powerful, and one recently retired crew member may have spoken for many when he wrote in 2001, "I wanted to say thanks for making me who I am today. I started in 1984 when we were about 600 crew members. I rose through the ranks and became an officer. One of the greatest days was when you spoke at the partnership picnic after your heart transplant. I was so happy to see you and hear your words of inspiration and the courage you displayed. I cried like a baby … We loved Vanguard because of you. Thank you for all you have done over the many years to teach me, guide me, challenge me, stretch me, inspire me and support me."

Luminaries in finance and public life were no less emphatic. They include Paul Volcker, Arthur Levitt, Alan Blinder, Warren Buffett and Bill Clinton.

Mr. Buffett wrote, "You are doing a real service for American investors by carrying on your crusade. The fellow who wrote Luke 16 would be proud of you." And the 42nd president, in his forward to Mr. Bogle's 2008 book, "Enough?" wrote, "Bogle is a brilliant and good man."

Mr. Bogle joined the industry in 1951 and left it last week. Among the business and political leaders on the stage during this time, can any other leader post like achievements? His business successes, public service leadership and investor superhero status are hard to beat.

Jack Bogle, capitalist rock star, we thank you.

P. S. Notwithstanding the mark that Mr. Bogle left, in recent years he added notes of reflection to his remarks. He highlighted his mistakes, not to reverse his core principles, but to say he knew he erred along the way. As Mr. Bogle discussed his foibles, what had executives of the nation's largest broker-dealers and banks to say about their mistakes, Mr. Bogle's "crusade," or their regulatory failings? We're still waiting to find out.

Knut A. Rostad is president of the Institute for the Fiduciary Standard.

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