Warren Buffett and I think the same…. Bogle our hero…
Sunday, February 26th, 2017
This year’s annual Berkshire Hathaway letter from Warren Buffett published this weekend included the following comment about John Bogle, founder of Vanguard:
“If a statue is ever erected to honor the person who has done the most for American investors, the hands- down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value.
In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.”
I wrote something very similar for the Sunday Times in November after interviewing John Bogle and excepts from the interview also ran on a Money Box Live I presented.
My opening paragraph: ” I have met my hero. He isn’t a celebrity and most of you will never have heard of him. But John Bogel has made my retirement and most probably yours, a lot more comfortable than it would otherwise have been. If you have a private pension, Mr Bogel has ensured you may be able to afford Waitrose and not Asda, Champagne not Asti Spumante, Pizza Express and not Pizza Hut.”
I pointed out that by putting clients’ interests ahead of his own had come at a financial cost. Vanguard was set up as a mutual whereas most fund managers own the companies they set up…
“He doesn’t own the very valuable business that Vanguard has become: “I didn’t expect Vanguard to get this big. And maybe it would never have gotten this big if it wasn’t organised as a mutual.” And if he had owned it? “Maybe I’d be worth a few billion. But by normal standards I am quite well to do. I am not wondering where the next meal is coming from. And I have what I want, and the key to it is that I’ve never wanted much.””
And taking on the active fund management industry and pointing out quite how much money they made from savers had made him enemies:
“He may be unbothered by losing out financially, but there’s been a personal cost too. Vanguard is not popular in the industry – unsurprising given it has highlighted quite how much money competitors make at the expense of ordinary investors.
I asked him how much he was hated and he laughed “We don’t have a good measure of hate. But I am told I am respected.”
But clearly it does hurt a little: “The last time I spoke at the Investment Company Institute Annual Meeting – the General Membership meeting – was about 1975. They haven’t asked me since. It is extraordinary. The reality is that this is my 65th year in the business, the fortieth anniversary of the first ever index fund (that I launched) and my 60th wedding anniversary. And so I thought I would write to them, saying how about inviting me to speak this year?””