Thank you, Jack

A very special Issue #6

Image: Barrons/Bloomberg

Passivefool here:

It’s been a year since our personal superhero Jack Bogle unfairly passed and It’s a good time to remember the message he spent his life preaching.

Jack was a true revolutionary. The revolution he started - the Indexing revolution has made low-cost investing accessible to millions around the world. In a profession where doing the right thing is frowned upon, Jack was a beacon of irreproachable honesty and integrity. Jack almost single-handedly made it hard if not impossible for the Wall Street fat cats to continue ripping off the average investor.

Jack Bogle in one chart

Source: Howard Lindzon/361 Capital

When most people talk about Jack, they talk about him forgoing a chance to be a billionaire. Because Jack set up Vanguard as a mutual company which was owned by the funds of the company, and in turn, the investors. Any profits that Vanguard generated were passed back to the investors in the form of lower expense ratios. True, who in their right minds would forego billions? And people justifiably laud this.

But to me, the greatest thing Jack ever did was remaining true to his mission to always put the average investor first in the face of insurmountable odds. Think about it, he was fired, and his career in the mutual fund industry seemed like it was over right when he was getting started, he launched Vanguard in the middle of a brutal bear market, the underwriting of the first index fund was a failure, he had to survive brutal and scathing attacks from his mega competitors like Fidelity, he had numerous heart attacks and had to get a heart transplant. He built Vanguard in the face of such odds. And yet even after he retired, Jack spent the rest of his life preaching the importance of costs, diversification and staying the course. He kept saying the same damn thing over and over again until his message was firmly rooted in the minds of a vast majority of investors and advisors, both in the US and around the world. Would a mere mortal survive those treacherous odds just to put less in his own pocket and more in the pockets of others? Hell no!

Even though Vanguard doesn’t operate in India, you and I owe an immense debt of gratitude to Jack. Because, without him, a 10bps Nifty 50 index fund wouldn’t have been a reality.

I can say with absolute certainty that the investing world has never seen nor will it ever see someone who has done so much for the average investor.

We already started the year by publishing a tribute to Jack. So to honour his memory, we asked other people:

Sanjiv Shah, co-founder of Benchmark which launched the first ETFs (NIFTYBEES, JUNIORBEES) in India in 2001. 

John bogle took an academic idea and made it practical. Initially, the idea was considered to be Bogle’s folly and was doomed to fail. It took a lot of time for the idea to catch attention, but when it did, there was no looking back. From generating returns, he turned the focus on costs. He made the end investor feel important than the fund manager or the distributor. What happened in America was exactly replicated in India. I remember a time when so many people told me that this idea will not work in India. Indian markets are not efficient, and in a way, Indian fund managers will always do better than the market. Over a period they were all proved to be wrong. Bogle believed in his idea and stayed the course. We did the same.

Anish, Managing Partner and Principal Officer at QED Capital 

Jack Bogle is an inspiration and guiding light for me. His positivity and determination among extreme trying circumstances that he faced personally and professionally showed what one can achieve and do for others if one just “stays the course”. If I can do a small fraction of what he did for investors, I will consider myself fortunate. May his “index” of words and deeds continue to inspire investors and more importantly, fiduciaries for decades to come.

Avinash Luthria, Fee-Only (Advice-Only) Financial Planner & SEBI Registered Investment Adviser

Jack Bogle changed the direction of my career. In 2010, my then colleagues and I came close to becoming Private Equity majority shareholders in Benchmark Mutual Fund, India’s first and only MF house focused on Index Funds. However, eventually, that did not happen; now there is no MF house focused on Index Funds, and Indian investors have largely been too deluded and gullible to understand the benefits of Index Funds (details in the postscript). Then in 2018 and after 12 years in Private Equity, I decided to become the first, and probably still the only, Fee-Only (Advice-Only) Financial Planner & SEBI registered Investment Adviser to recommend only Index Funds. 

There is no one in the US to fill Jack Bogle’s shoes of championing the interests of investors. I think the closest that Indian investors ever came to getting a Jack Bogle was C B Bhave.

The US celebrates Jack Bogle. We, as investors in India, paid a hero like C B Bhave back by harassing him. As Edmund Burke probably said ‘The only thing necessary for the triumph of evil is that good people do nothing ‘. Almost all of us investors in India (myself included) did nothing. 

So sometime in the next several decades, another hero will emerge in the US to fill the giant-sized shoes of St. Jack. But Indian investors won’t get another hero till good men start doing something. 

Pravin Palande, Editor - Markets and Finance ET Prime 

In the 1990s, alternative music hardly had any market share. Then Nirvana came in. The band got in a new idea of grunge sound that went international. At one point in time, the band was bigger than Michael Jackson. Their album Nevermind topped the billboard charts. Mainstream music was disrupted forever. Index funds are like Nirvana. Even Jack bogle did not know how big it would become. Active managers were like Michael Jackson, who never thought that any random band or a fund would come and break their back. But it did happen.

Now agreed that Nirvana was at the top for a short time on the charts, but it killed the industry as we know it. Similarly, index funds are having a sunshine day, and maybe there will always be someone who will be beating the index fund. But the industry is now broken forever. Bogle taught us to concentrate on risk, returns, and costs. Just like a low-cost three-member band that created a whole lot of noise and changed the world forever.

Secondly, after dealing with countless fund managers who thought they were invincible and ridiculed indexers, this is a fun moment. Indexers have a black sense of humour, and active has no sense of humour. Anyone who takes life seriously is perfect meat. And yes indexers are the hyenas and vultures of the market. They eat alpha that someone has worked hard to kill.

An anonymous Indian Jack Bogle disciple

The investment business has hardly any role models, however, to quote Warren Buffet, “If a statue is ever erected to honour the person who has done the most for American investors, the hands-down choice should be Jack Bogle.” Investors across the globe have benefited from the wisdom of Jack Bogle and his creation the classic index fund stands like a rock in the “volatile” investment seas.

Jack’s tumultuous journey in the investment business can be best summarised in the following words of David Swensen: “Jack Bogle’s remarkable career spans the spectrum from lonely iconoclast to a celebrated rock star. His conception and development of index funds transformed the investment world for individuals and institutions alike. Countless millions of investors have purchased index funds because of Jack.” It is thanks to him that innumerable investors across the globe have been able to (in his own words) “stay the course and press on regardless!” The world will not see another Jack Bogle, but his creation the “classic index fund” will remain “king of the hill” in the investment industry!

Passivefool, Boglehead

Jack, thank you for giving millions of average ordinary people like me an investment avenue that even the biggest geniuses on the planet have a tough time keeping up with and that too for almost free. Having said that, the single biggest lesson I’ve learnt from Jack is to put the investor first, no matter what and this newsletter is a reflection of that. You are my hero, and I love you!

🙏 Thank you for reading all the amazing and moving tributes to Jack. You can keep the conversation going on the Indexheads Facebook group.

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