HEROES-John Bogle

When I first started investing and learning about stocks and finance, I was a value investor and trying to emulate Warren Buffett. It did not take me to long to realize that I was not Warren Buffett and neither was anyone else. In my efforts to find a mutual fund to invest in and save myself all the time and trouble researching and buying my own stocks entailed, I learned how few of these mutual funds actually beat the market and how foolish it was to try and pick a winning fund. With more mutual funds than stocks out there, it was going to be about the same as being a stockpicker. I also read Malkiel's A Random Walk Down Wall Street, and I came to the conclusion that beating the market was a fool's errand.

The answer to my problems was passive investing, and one man made that possible for me. That man was John Bogle, the founder of Vanguard and the first one to offer an S&P 500 index fund for investors such as myself. I moved my holdings to index funds, and I have never looked back. It was a good decision.

John Bogle is a rare individual. He is an honest man in SlimeWorld. He calls out his own industry and excoriates it for the exorbitant fees that it charges investors. It is these fees that cause investors to do poorly against the market. It doesn't much to realize that the huge profits financial service firms make are from milking their clients through every fee they can charge. This would be justifiable if these firms actually rendered value for these fees, but they don't. I am glad I have Vanguard.

John Bogle is the best friend the average investor can have. His wisdom is timeless and works. He knows what he is talking about, and Vanguard carries on the legacy of his wisdom.

Collected Bogle Wisdom:

Time is your friend; impulse is your enemy.

If you have trouble imaging a 20% loss in the stock market, you shouldn't be in stocks.

When reward is at its pinnacle, risk is near at hand.

Time is your friend; impulse is your enemy.

The most important thing is for investors to have a realistic idea of what future returns they can look forward to in the stock and bond markets, and not in a day or a week or a month, which is idle and futile, but looking ahead to the next decade and seriously considering what rational expectations might be for market returns.

The stock market's day-to-day is actually a distraction to the business of investing.

Don't assume your retirement provider or money management firm espouses a standard of honesty, full and fair disclosure, or putting its clients' interests first.

Don't try to time your entry.

Mutual funds can make no claim to superiority over the market averages.

Indeed, the evidence is compelling that when decade-long real stock returns are inordinately high by historical standards, returns in subsequent decades are likely to tumble; when past returns are exceptionally low, future returns are apt to rise. What it's all about, it seems, is reversion to the mean.

The boom and the bust were normal—just two more swings in stock returns over the past century. Reversion to the mean is the iron rule of the financial markets.

On balance, the financial system subracts value from society.

The mutual fund industry has been built, in a sense, on witchcraft.

As I have earlier noted, the most important things in life and in business can’t be measured. The trite bromide 'If you can measure it, you can manage it' has been a hindrance in the building a great real-world organization, just as it has been a hindrance in evaluating the real-world economy. It is character, not numbers, that make the world go ‘round. How can we possibly measure the qualities of human existence that give our lives and careers meaning? How about grace, kindness, and integrity? What value do we put on passion, devotion, and trust? How much do cheerfulness, the lilt of a human voice, and a touch of pride add to our lives? Tell me, please, if you can, how to value friendship, cooperation, dedication, and spirit. Categorically, the firm that ignores the intangible qualities that the human beings who are our colleagues bring to their careers will never build a great workforce or a great organization.

There's far too much self-interest. We used to talk about stewardship; now, it's all about salesmanship. It's the triumph of marketing over management. Nobody has joined me in this debate because they simply can't walk the walk. There are billions of dollars at stake. If the industry's whole reason for being is to rake in more and more fees from investors, it's pretty hard to say, "I think we should be more responsive to investors."

They don't like my ideas at all. But I maintain that the point of the mutual fund business is to help shareholders capture their fair share of the market's return.

If we've learned anything from this last decade, it's that costs are the only predictable thing in investing.

It's absurd to think that buy-and-hold is dead. I've made this case many times and I'll make it again. A buy-and-hold group holds 50 percent of every stock in the S&P 500. The other 50 percent is held by those who trade-I call them speculators-who trade among themselves. At the end of a period, the holders will have captured 100 percent of the return while the other group, tossing stocks back and forth, has given away much of the return through fees, fees, and more fees. The simple truth is that long-term investors win as a group and short-term investors lose as a group. It's pretty black and white. The math is on my side.

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