Jack Bogle – A lion in winter, but his roar should be heeded

Over the course of a life, you make a host of financial decisions, some less dumb than the others.

I’ve only made one unequivocally smart one: While still young, I started investing what dollars I could spare in mutual funds run by Vanguard Corp.

As set up by John C. Bogle, Vanguard was a very different kind of investment firm – much mocked by the smart alecks of Wall Street in the early going.  

It focused on index funds, which tracked the performance of the markets, rather than trying to beat them.

It was owned by its investors, and it charged you next to nothing to become one of those investors.

The index fund was dubbed “Bogle’s Folly.”

Yep, the wise guys sure had that one pegged.  Today, Vanguard by itself pulls in about 40 percent of the cash flow of the entire mutual fund industry.

Jack Bogle has been as important an innovator in his field as Steve Jobs and Bill Gates have been in theirs.

You can read about this and other of his accomplishments in a great profile that appeared in the Sunday Money section of the New York Times.

I was tickled to see it, and not just because Jack Bogle is the man most responsible for whatever comfort my possible retirement some day might afford me.

You see, I have had the great privilege to get to know the man and count him as a friend.

Seizing a second chance

The Times‘ profile captures Jack’s personality, the grateful joie de vivre of a man who was saved from the grave by a heart transplant and wants to use each remaining day to the fullest. It also displays this paradox of his nature: He combines a genuine humility with a stubborn drive to air his (usually well-wrought) opinions and an almost childlike delight at what he’s been able to achieve in life.

Jack is 83, but he’s still showing up for work in his cluttered den of an office at the Vanguard campus in Chester County. He’s retired from the financial colossus he created, but he heads the Bogle Financial Markets Research Center, where he still regularly churns out books with sound advice both for the individual investor and the Republic as a whole.

Here’s a key thing to know about Jack.  Though he founded one of the globe’s fiscal powerhouses, he’s not a fabulously wealthy man — a millionaire, not a billionaire. Other financial-sector CEOs claimed more compensation in short runs that took their institutions to the brink than he made in a lifetime of steady stewardship of growth.

He’s not a taker; he’s a giver, a generous philanthropist, and one of the prime movers behind the creation of the National Constitution Center.

His is an upbeat spirit, but as the Times profile reports, he’s deeply concerned that the financial services industry has learned few of the lessons it should have learned from its mistakes and sins of the last decade. He’s worried that the fundamentals of the global economy do not provide the smart investor with the diversification options that always have been the key to his investment philosophy.

I had the chance to sit next to Jack at a lunch one time, and before the salad course was done, he’d boiled his financial advice to the lowly schmoe such as myself down to three simple rules: 

Invest for the long haul, not the short-term score.
Invest in diversified, low-cost mutual funds, not in individual equities.
Match the percentage of bonds and other stable investments in your portfolio to your age. In other words, at 30, only 30 percent in bonds and seek bigger gains with 70 percent in stocks. When you get to be my age, the balance should tip to a majority of your money in stability — though current low bond yields have him fretting.

Capitalist with a conscience

Jack, while a capitalist through and through, knows that both fools and scoundrels will always plague the financial sector.  He believes in smart regulation to keep the wages of ego, folly and greed in check — stronger rules than are now the fashion with our libertarian Congress.  He calls himself a Roosevelt Republican, as in Teddy Roosevelt, scourge of the trusts.

No one, he told the Times, should assume that the swift, cascading woes of 2007-08 can’t be repeated: “The risk of a black-swan event — of something unlikely but apocalyptic — is small, but it’s real.”

A final note of disclosure: The website you are now reading exists in part because Jack backed it with a donation in 2009, when NewsWorks was only a gleam in WHYY’s eye.

Among the honors I’ve received in a career in journalism, this is one of my cherished: I had an idea that John C. Bogle deemed worthy of an investment.