Mr. Bogle is a man of many dimensions, but with a deep-running moral core and steadfast long-term convictions in the power of passive stock market investing. Born in the same year that started the 20th Century’s Great Depression, he has lived through lean years and bull runs, wars both cold and hot, inflation and other economic crises.
Decades after founding Vanguard and introducing the first index fund in the mid-1970s (then titled “Bogle’s Folly by critics), these videos show just how sharp-as-ever the man remains today, enthusiastically discussing his thoughts on volatile markets, new investment vehicles and the future of equities.
First, a flashback. In the video above (from an interview in late 2008) Jack “blasts Wall Street” but also shows his optimism toward a recover. The recent dip notwithstanding, he was quite right – even including it, we have come a long way since those darker market-bottom days.
Of his own philosophy, he is succinct and clear in this Diehards conference interview with Christine Benz of Morningstar: “Investment is a pretty simple thing … investment is owning businesses … or owning every business [via an index]“. And perhaps particularly relevant to today’s again-choppy markets: “How can I keep investing the day the market goes down 600 points? That’s the best day to invest!”
Asked to predict the (or: a potential) future at a later Bogleheads reunion, he is adamant that “there is no point in looking at a day, week month or year period” and that he will only consider periods of five years and long, thanks to short-term volatility (and irrationality). Using dividend yields and corporate earnings projections based on GDP, he projects a surprisingly optimistic view about equities – even before they recently got cheaper.
In this interview, Jack expresses his frustration with the hyper-active trading of recent years. He notes that when trades are tossed back and forth so frequently and on speculative bets, “Wall Street wins” as the market maker, rather than the investors it supposedly serves. “There are triple-leveraged, up-or-down market funds … [these] are purely speculative things.” As always, he suggests we all “tune out the noise”.
Ultimately, while hopeful, his skepticism is also clear, evidenced in this segment suggesting the economy needs time to heal. It amounts to a surprisingly prescient look forward from around the time of the US debt downgrade, defending Treasuries as not being in a bubble and still functioning, as always, as a buffer in a flight to safety situation. Sure enough, they have once again acted exactly that way in recent weeks and months.
So what do we have to look forward to? Perhaps neither terribly extreme if one takes the long view – a decade of average returns (not bad, perhaps, after a decade of sub-par ones) for equities, and below-average returns for bonds, but what can you do?
“The odds are very very much in favor of stocks” for the next ten years, Jack suggests – but warns as well that more risk comes with more potential reward. There is no free lunch.
For all his wisdom and conviction, though, there are still points on which this author, at least, disagrees with Jack Bogle. One of those happens to be his attitude toward international investing. He states: “I don’t happen to use international because I think the market will be a kind of equalizer … emerging markets and international returning about the same as the US in the next 10 years,” but also admits “I could easily be wrong on that” and concedes that someone wanting international could add, say, 10% in developed markets (ex-US) and 10% in emerging ones. Still, history suggests this may be a sub-par allocation should the worst happen, and perhaps reveals one of the few (but endearing) biases this grandmaster of indexing yet retains: a special love for his home country.