John C. Bogle

John Clifton "Jack" Bogle (May 8, 1929 – January 16, 2019) was an American investor, business magnate, and philanthropist.

He was the founder and chief executive of The Vanguard Group and is credited with popularizing the index fund.

An avid investor and money manager himself, he preached investment over speculation, long-term patience over short-term action, and reducing broker fees as much as possible.

An ideal investment vehicle for Bogle was a low-cost index fund representing the entire US market, held over a lifetime with dividends reinvested.

John Bogle was born on May 8, 1929, in Montclair, New Jersey, to William Yates Bogle, Jr., and Josephine Lorraine Hipkins.

His family was harmed by the Great Depression.

They lost their money and had to sell their home.

His father fell into alcoholism, which resulted in his parents' divorce.

Bogle and his twin, David, attended Manasquan High School near the New Jersey shore for a time.

Their academic record there enabled them to transfer to Blair Academy on work scholarships.

At Blair, Bogle showed a particular aptitude for mathematics, with numbers and computations fascinating him.

In 1947, Bogle graduated from Blair Academy cum laude and was accepted at Princeton University, where he studied economics and investment.

During his university years, Bogle studied the mutual fund industry.

He spent his junior and senior years working on his thesis "The Economic Role of the Investment Company".

Bogle graduated magna cum laude from Princeton in 1951 and was soon hired by Walter L. Morgan, founder of the Wellington Fund, reportedly as a result of Morgan reading his 130-page thesis paper.

After graduating from Princeton, Bogle sought a position in banking or investments.

Hired by Morgan at the Wellington Fund, Bogle was promoted to assistant manager in 1955, at which time he was able to analyze the company and its investment department.

Bogle persuaded Wellington's to change its strategy of concentrating on a single fund and to create a new fund.

Eventually he succeeded, and the new fund became a turning point in his career.

The idea of passive investing in a fund that mirrors the entire stock market developed in the 1960s, mainly among researchers at the University of Chicago who found it was difficult or impossible to consistently pick winning stocks that will perform better than average.

These researchers also argued that transaction and management costs were a significant drain on long-term investing returns.

After successfully climbing through the ranks, Bogle replaced Morgan as chairman of Wellington's mutual funds in 1970 but was later fired for an "extremely unwise" merger that he had approved.

It was a poor decision which he later considered his biggest career mistake, stating: "The great thing about that mistake, which was shameful and inexcusable and a reflection of immaturity and confidence beyond what the facts justified, was that I learned a lot."

He was motivated to form an index fund partly as a result of the merger's aftermath, the terms of which prohibited him from managing money directly on behalf of clients.

Following an index created by Standard & Poor's allowed the creation of a fund that Bogle himself did not oversee.

The first index fund available to the general public was established in 1973 by Rex Sinquefield, who later went on to work at Dimensional Fund Advisors.

This fund had billions of dollars under management after a few years, indicating the public was open to the new investing concept.

In 1974, Bogle founded The Vanguard Group, which is now one of the most respected and successful companies in the investment world.

In 1976, influenced by the works of Paul Samuelson, Bogle created the First Index Investment Trust (a precursor to the Vanguard 500 Index Fund) as one of the first index mutual fund available to the general public.

It was not immediately well received by individuals or the investment industry but is now lauded by investment legend Warren Buffett, among others.

His successor was John J. Brennan, his handpicked heir and second-in-command, whom he had hired in 1982.

In 1984, Bogle met with the management team of Primecap to launch a fund together.

In November 1984, the Vanguard Primecap Fund was launched.

Bogle suffered heart issues in the 1990s, subsequently relinquishing his role as Vanguard CEO in 1996.

Bogle, who was then 66 and "considered past the age for a healthy heart transplant", had a successful heart transplant in 1996.

His subsequent return to Vanguard with the title of senior chairman led to conflict between Bogle and Brennan.

His 1999 book Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor became a bestseller and is considered a classic within the investment community.

In 1999, Fortune magazine named Bogle as "one of the four investment giants of the twentieth century".

Bogle left the company in 1999 and moved to Bogle Financial Markets Research Center, a small research institute not directly connected to Vanguard but located on the Vanguard campus.

In a 2005 speech, Samuelson ranked "this Bogle invention along with the invention of the wheel, the alphabet, Gutenberg printing".