Friday, December 29, 2000
John Bogle on Investing: The First Fifty Years
John Bogle created the Vanguard Group, the world's largest no-load mutual fund company with more than US$500 billion in assets held by twelve million unitholders. This book, an assortment of his views on efficient investing, drives home the point that a diversified portfolio of tax and fee-efficient funds will make a patient investor prosper.
Mr. Bogle is a savant of methodical, low fee investing. He notes that while one cannot pick the winning mutual fund from past performance [because funds don't persist in performance], picking a winning fund that is composed of a widely based, low fee market indices should work.
In fact, much of his investment concepts have worked better than he forecast. In this passage, from a professional investment journal in 1992, Mr. Bogle wrote, "if the stock market in the 1990s offers annual returns well below those of the 1980s...." which is an extraordinary underestimate of what would happen in the next eight years when U.S. and most world market indices broke all former records. The Dow went from 3,000 on April 17, 1991 and teased the 12,000 level several times at the end of the decade.
The experienced mutual fund investor should find hours of enjoyment in Mr. Bogle's memoirs and collected writings. More than any other person, he brought the power of equity investing to the masses. Today, he remains not just an industry insider, but a radical critic of the industry.