As you know, Thomas Paine's convincing and well-articulated arguments have won. The American Revolution gave birth to the US Constitution, which today defines the responsibilities of government, citizens, and society. Inspired by Payne's writings, I titled my 1999 book Common Sense on Mutual Funds and urged investors to free themselves from prejudice and generously pursue their thoughts well beyond the present day. In my new book, I use the same approach again.
If I "could only explain the true state of affairs to a sufficient number of people and do it thoroughly, deeply and comprehensively, then there is no doubt that everyone would understand everything and everything would be settled."
In Common Sense on Mutual Funds, I quote a contemporary journalist, Michael Kelly, so in tune with my idealistic nature: explain the true state of affairs to a sufficient number of people and do it thoroughly, deeply and comprehensively, then there is no doubt that everyone would understand everything and everything would be settled. " This book is my attempt to explain the principles of the financial system to those of you who are ready to listen carefully, thoughtfully and meaningfully enough to understand everything and solve all your problems. Maybe not all, of course, but at least - to answer questions related to personal financial well-being.
Some might suggest that as the founder of Vanguard in 1974 and the world's first index mutual fund in 1975, I am pursuing a personal interest in persuading you to share my views. Of course it is! But not because it will enrich me (I won't make a penny from it), but because the principles on which the Vanguard Foundation was founded many years ago (its values, structure and strategies) will enrich you.
In the early days of ETFs, my voice was like a voice crying in the wilderness. But gradually, authoritative and wise people began to appear around, from whose ideas I drew inspiration for the fulfillment of my mission. Today, many of the most successful investors strongly support the concept of index funds, and this approach has met with almost unanimous approval in the academic environment. However, you don't have to take my word for it. Listen to the opinions of independent experts who have no other goals than to convey the truth about investing. You will find their statements at the end of each chapter.
For example, Paul Samuelson (Nobel laureate and professor of economics at MIT, to whom I dedicated this book) said: “Thanks to Bogle's ideas, we millions of investors can become the envy of our neighbors in 20 years. Instead, we continue to sleep peacefully, oblivious to such impressive opportunities. "
You can put it differently, using the words of the shakers' anthem: "This is the gift of being simple, this is the gift of being free, this is the gift of being where you should be." Using this approach in relation to investment, we can formulate a rule: simple investing in an index fund liberates you from almost all the extra expenses associated with the functioning of the financial system, and as a result you get a kind of gift in the form of accumulated savings in the form in which it is and it should be, that is, no loss.
The financial system, alas, cannot remain unchanged for a long time. Nevertheless, all sorts of changes in the investment climate does not mean at all that you should abandon the pursuit of your own interests when investing. You don't have to take part in costly frenzies. If you choose the winning game, that is, you buy stocks and refrain from trying to beat the market, doomed to lose, then you can start simple: rely on common sense, understand the system and invest only in accordance with your own principles. This will avoid almost all unnecessary waste. Finally, no matter how much the company earns in the coming years (and this is not least dependent on their actions in the stock and bond markets), you are guaranteed to become the owner of a fair share. Once you understand this, you will find that everything is determined solely by common sense.
Greetings! We continue our acquaintance with legendary investors who have a lot to learn from. Meet: John Bogle is a successful entrepreneur and investor, creator and ex-fund manager of The Vanguard Group, and the author of the world's best-selling investment books.
John Bogle is credited with the idea of the index fund. He is also famous for his harsh criticism of management companies. From his point of view, the private investment industry cares little about the interests of clients. The task of management companies and investment funds is to earn maximum profit for themselves and only for themselves. Including, charging exorbitant management fees from clients.
Colleagues in the investment business gave him the sarcastic nickname "Saint Jack". And journalists dubbed Bogla "the conscience of the industry."
In 2004, Time included him in the TOP-100 of the most influential people in the world. In 2017, in his Annual Letter, Warren Buffett described John Bogle as an "investor hero."
Short biography
John Clifton Bogle was born in the crisis year 1929 in the state of New Jersey (USA). Graduated from college and entered Princeton University.
As a student, John read Boston's Big Money (Fortune Magazine) article about the Wellington Fund. From that moment on, Bogle knew for sure that in the future he only wanted to deal with mutual funds.
After graduating from university, he was taken to a mutual fund to work. Moreover, in the same Wellington Fund. At 35, he was already an executive vice president. In the mid-1970s, the fund experienced a strong decline, with shareholders massively withdrawing funds. Bogle was fired from his post. But the next day, he returned to the company and offered management a "rescue plan."
The plan was to reduce client fees and completely overhaul the Wellington Fund. Unfortunately, the fund was never saved. But Bogle did not abandon the idea of "investor orientation".
On December 30, 1975, the first index fund, the Vanguard 500 Index Fund, was born. John Bogle proposed a revolutionary idea at that time. A fund should not try to beat the market, but only copy its performance using an index.
John Bogle books
Common Sense Mutual Funds
In my opinion, "Mutual Funds ..." is one of the best textbooks for investors (especially for passive investors).
The author reveals in the book many "secrets" of investment funds (which can easily be attributed to Russian mutual funds). For example, Bogle explains "on his fingers" how to figure out an unscrupulous management company. The one that uses dubious methods in working with assets makes money for themselves, and not for clients, and provides poor quality services.
I will cite some interesting thoughts from the book (each author "chews" in detail in the text). Note! This is not about index funds, but about actively managed funds.
- "Always choose low cost funds."
- "Don't buy too many funds." According to Bogle, the optimal number of funds for a private investor is one or two. If there are more than four of them in a portfolio, this ceases to somehow affect the level of risk.
- "Don't be fooled by the fund's past performance." What John Bogle means is that it is useless to choose a fund based on information about previous results.
"The Prudent Investor's Guide"
The book is a lightweight version of the previous book, Mutual Funds from a Common Sense Perspective. But it no longer contains information overload, excess volume and an emphasized focus on American markets.
Here are a couple of reviews of the book from legendary investors.
Warren Buffett: “A low-cost index fund is the most profitable option for the vast majority of investors. Why? Read the book by John Bogle and you will find out. "
William Bernstein: “Wall Street is taking away your future. If you want to stop the financial scammers, read this book. "
"Don't believe the numbers!"
To begin with, the book has a surprisingly long title: “Don't believe the numbers! Reflections on investor misconceptions, capitalism, mutual funds, index investing, entrepreneurship, idealism and heroes. "
Why is the title more like a summary? Because the book is a collection of essays, lectures and articles by Bogle on completely different topics. The materials have been written by him for ten years since 2000.
In general, the book "Do not believe the numbers!" on how to make adequate decisions in business and the financial and investment sphere. And, of course, that this very adequacy is sorely lacking today. John Bogle writes about how we deceive ourselves and what the consequences are.
The book clearly shows how the financial "kitchen" is arranged from the inside. The author can be trusted - in the field of investment, he "cooked" for over 50 years. John Bogle writes a lot about the work of the management company. In particular, about how the managers of the management company do not care about customers, but about their own bonuses.
The work is written in a lively and accessible language, with a bunch of illustrative examples and numbers. Of the minuses, I would note the following. Like other books by US authors, Don't Believe the Numbers! designed for American readers. Analysis of the financial sector of the United States, references to American books, films and episodes from history. If all the material of the book were transferred to Russian realities, there would be no price for it.
A few rules of entrepreneurship from the book by John Bogle:
- "Don't underestimate the obvious."
- "You can catch luck by the tail many times."
- "Take the least hackneyed path."
“Investors against speculators. Who Really Runs the Stock Market "
John Bogle wrote this book relatively recently: in 2012. Key message: Nowadays, the culture of long-term investing is being supplanted by short-term speculation. But you cannot be both a speculator and an investor at the same time. You have to choose: greed or fear, restful sleep or a beautiful life for a couple of years?
Have you read the books of John Bogle?
You will have to spend a lot of time to properly understand the investment tricks, market realities and the business world. Of course, you can't do without books. But what to read and where to start? Yahoo! Finance have compiled a list of the best books on investing.
“The Peter Lynch Method. The strategy and tactics of the individual investor ", Peter Lynch
This book will teach you how to think in market and investment terms, and maybe even write about business. Peter Lynch was the head of the legendary Fidelity Magellan Foundation during its heyday mutual funds... Lynch has had incredible success buying shares in leading companies whose performance he had no doubt about - for example, he saw crowds of diners at Dunkin Donuts - so he bought their shares.
Lynch also invented the terms two-bagger and three-bagger (for assets that double and triple in value since purchase, respectively). The book is written in simple language and is full of funny stories, so that even a beginner in the investment field will read it without difficulty.
The Intelligent Investor by Benjamin Graham
The Reasonable Investor is every investor's reference book. It was written by Benjamin Graham, professor at Columbia University and mentor to the greatest Warren Buffett. Despite the fact that the book is about 70 years old, Graham's advice is relevant to this day - especially on the topic of psychological mistakes of investors.
My Neighbor is a Millionaire by Thomas Stanley
Essays on Investment, Corporate Finance and Company Management by Warren Buffett and Lawrence Cunningham
Many books have been written about Buffett, but this one is perhaps the best - after all, Buffett himself wrote it. The book itself is a collection of letters to shareholders, but all these messages together have become the bible for investors.
Common Sense Mutual Funds by John Bogle
John Bogle laid out in simple terms the idea that active investment is notoriously a losing cause, and the only effective strategy is investing in a low-cost, diversified mutual fund (such as the Vanguard 500 Index fund). Was he right? At least I was not mistaken.
Warren Buffett called Bogle the "hero" of the investment world. The book is similar to its author: it is frank and there are no superfluous words in it.
Portfolio diversification and rebalancing, reinvestment dividends and tax accounting - and the financial aid turns into an interesting story.
Prepared by Taya Aryanova
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John Clifton Bogle (May 8, 1929) is an American entrepreneur, well-known investor, founder and former CEO of The Vanguard Group, one of the largest mutual funds in the world. Author of the bestselling book Mutual Funds from a Common Sense Perspective. New imperatives for the smart investor. "
John Bogle and his twin brother David were born in Montclair, New Jersey, USA. The family suffered from the effects of the Great Depression. Bogle attended the private boarding school of Blair Academy on a full scholarship, earned his BA from Princeton University in 1951, and attended evening and Sunday classes at the University of Pennsylvania. Bogle's thesis, The Economic Role of an Investment Company, in which he described the principles of newly emerging mutual funds, influenced an entire industry by changing the approach to investing.
After graduation, John Bogle took a job at the Wellington Management Company, where he worked under its founder Walter L. Morgan.
After a successful career with the company, John Bogle became executive vice president in 1965 at 35, but in 1973 the returns on funds that Wellington had taken over with Bogle's approval plummeted. As a result of the decline in the value of shares, the total assets of the company decreased from $ 2.6 billion to $ 2 billion. In January 1974, Bogle was fired.
Bogle founded The Vanguard Group in 1974. Under his leadership, it has become the second largest mutual fund in the world. In 1975, influenced by the work of Eugene Fama, Burton Malkiel and Paul Samuelson, John Bogle founded the Vanguard 500 Index Fund as the first indexed mutual fund available to the general public. The fund's assets increased from $ 1.8 billion to $ 600 billion from 1975 to 2002, respectively.
John Bogle is a member of the Board of Trustees of the Blair Academy and a member of the advisory board of the Millstein Center for Corporate Governance and Performance, Yale School of Management.
Bogle is also a member of the Board of Trustees of the National Constitution Center in Philadelphia, a museum dedicated to the US Constitution. He was the chairman of the board of directors of this fund from 1999 to 2007. In 2007, he ceded this post to President George W. Bush.
Books (2)
The battle for the soul of capitalism
In this book, John C. Bogle, legendary investor and founder of the world's second largest index-based mutual fund, Vanguard, offers the story of the transformation of American capitalism in recent decades. It shows how the change in the corporate governance structure turned out that their management stopped caring about the interests of the owners and began to pursue exclusively their own interests.
Going beyond mere criticism of the actions of executive directors, financial intermediaries, and lawyers, Bogle charts directions for important reforms that could lead to a revival of corporate responsibility.
