John Bogle and Vanguard: The Index Fund Wall Street Called Un-American

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John C. Bogle built a firm that handles trillions of dollars and died in 2019 with about $80 million, a rounding error by the standards of finance. That gap was by design. This episode follows Bogle from a family ruined by the 1929 crash, through work scholarships at Blair Academy and a 130 page Princeton thesis on mutual funds that got him hired at the Wellington Fund. He rose to chairman by 1970, pushed a merger with aggressive Boston stock pickers, and was fired when the 1973 to 1974 bear market wrecked the fund's performance.

His exit terms barred him from managing clients' money directly, so he found a loophole: a fund that picks nothing and simply tracks the Standard and Poor's 500. Vanguard, founded in 1974, was owned by its own funds, so it charged only what it cost to run. Rivals mocked the first retail index fund as Bogle's Folly. The arithmetic proved him right, even as he fought a failing heart, feuded with his chosen successor, and came to fear the power his invention had concentrated.

• Bogle called the Wellington merger that got him fired shameful and inexcusable, a product of his own immaturity and arrogance.
• William Sharpe's arithmetic of active management shows why indexing wins: before costs active investors as a group match the market, so after fees they must trail it.
• Bogle had his first cardiac arrest at 31 and received a heart transplant in 1996 at age 66 after more than 100 days in the hospital.
• During the dot-com mania the champion of buy and hold moved much of his personal portfolio from stocks into bonds and sidestepped the crash.
• Late in life he warned that Vanguard, BlackRock, and State Street now hold concentrated proxy voting power over nearly every major American corporation.