Good afternoon.

A new book by a Bloomberg ETF reporter, Eric Balchunas, seeks to size up the late Jack Bogle, founder of Vanguard Group, as a historic figure.

In The Bogle Effect: How John Bogle and Vanguard Turned Wall Street Inside Out and Saved Investors Trillions, Mr. Balchunas concludes — correctly, I think — that Mr. Bogle's "success wasn't in playing the game well but rather in changing the game for the better."

As I've argued, Mr. Bogle didn't just invent the index mutual fund; he also invented total return as a practical objective.

By offering the entire stock market in a dirt-cheap package without commissions, he made it possible for any investor to earn the full return of stocks — including the reinvestment of dividend income — for the first time.

For Jack Bogle, lowering costs was more than a mission; it was a fiery crusade.

But the revolution that he started in 1974 took decades to hit home. It took more than 10 years for Vanguard's first index fund to reach a paltry $500 million in total assets. 

The costs of investing have fallen something like 90% since Mr. Bogle started bashing his competitors. In the 1990s, mutual funds' expenses commonly exceeded 1.5% annually — before brokerage costs.

It's easy to forget how hard and how long he had to fight before he forced the financial industry to start giving investors a fair shake.

Twenty years after he introduced them, index mutual funds finally hit 2% of total market share:

What drove and sustained Mr. Bogle during this decadeslong drive? Why did he never give up preaching the virtues of indexing and the virtues of low cost, even when no one seemed to be listening?

Mr. Balchunas's book does a nice job of bringing Mr. Bogle to life from many angles. (Disclosure: I'm quoted in it several times.)

I knew Jack Bogle well, and I think his ferocious drive came from three forces:

He wanted to right what was wrong. Jack's father, William Yates Bogle Jr., who had been an executive at American Can Co., fell on hard times during the Great Depression and became an alcoholic.

That trauma and turmoil "toughened me up," Jack Bogle told me years ago. It also fired him up to try to fix whatever was broken.

He wanted revenge. In 1974, fund firm Wellington Management Co. fired Mr. Bogle as president. (In 1999, Vanguard itself forced him to resign from the firm's board.)

Being pushed out gave Mr. Bogle the freedom to blaze his own trail — and a righteous sense of rage that never let him rest. 

He knew he could die any day. Mr. Bogle had congenital coronary disease. He suffered at least seven near-fatal heart attacks, received several pacemakers and a heart transplant, and survived a life-threatening bacterial infection. He called me more than once from his hospital bed.

When I first met him in 1993, his eyes were yellow, his face was harrowed with wrinkles and his hands were as gnarled as driftwood — although his mind was sharp and his voice boomed.

I remember thinking, "This guy might not live six more months." He died in 2019 at age 89.

In 2007, I asked Mr. Bogle what it had been like living with the specter of death hanging over him every day.

He replied:
     I didn’t think about it. I just got on with what needed to be done. Even as a little boy, I had determination and focus. If there was a job to be done, then that is what I would think about, going through life with blinders on. You can look ahead, but you have no peripheral vision.
     That focus is an unbelievable asset when you’re confronted with a life-threatening disease, and it was also terrific for a kid who was determined to succeed in business.
     The awful thing is, it was easy. It’s amazing how easy life becomes when you realize that your job is not to deal with what might have been but with what is. It’s all about attitude....
     How could I complain? When you have a narrow escape, the operative word is not “narrow,” it’s “escape”!

We need more people like him.

In our last newsletter, I asked:
What's the most concentrated investment position you've ever had? (In other words, what single investment made up the greatest proportion of your portfolio?) Did it work out well or poorly? What did you learn from it?

     I worked at GE, had half of my retirement savings plan in GE stock, and was collecting some incentive stock options....For many years the stock appreciated nicely (during the Welch era) until it didn’t....I sold most of the stock in my retirement plan at $45 [and] most of my options between $45 and $23. I was laid off in the most recent downturn and still have a worthless option.
     I learned a few things. No company is a sure bet...when the company struggles, both the stock value and your salary are at risk. Analysts don’t really know where a company is heading. Management is hugely important to a business.
—Jim VanWormer, Ballston Spa, N.Y.

     As a young artist in the 1980s...I acquired my own [Apple MacIntosh] and it became one of my most essential creative tools....I didn’t start thinking about investing in anything until the mid-1990s when my mother...gave me $400 worth of IBM. I...promptly sold half and bought AAPL.
     ...AAPL has paid for two college educations and it still represents my largest single position. I periodically try to trim it back but it keeps growing. It’s almost frustrating.
      What I learned is that while it wasn’t a dumb call because I sincerely believed it was the better product and I had little to lose, it was a ridiculously, absurdly lucky one. I have zero illusions about my investing prowess because of that one purchase.
—DS Bakker, Baltimore

     Oh boy, I really ate it on my concentrated investment.
     [In the early 1990s] I...took an offer to work for Cisco Systems with stock options. Small company then....Adjusting for splits, stock price was around $.50 in late ’93. I exercised my stock options as they vested and kept them in Cisco stock. Left in ’99, still kept it all in Cisco stock, a few million. And in 2000-2003, it tanked. Lost a ton of money. A software manager I worked with...ALWAYS diversified after exercising options. I should have listened.
—Robert Vellios, Gilroy, Calif.

The most concentrated investment position I ever had was my own company. It required all my savings to get going, provided wonderful rewards both financially and otherwise. Other people seem to agree as offers to buy a piece [allowed me] the eventual diversification that was needed.
—Paul Besterveld, Austin, Texas

     During the dot-com buildup in the early 2000’s, as an early 40-ish long-term employee with a sizable amount in my 401(k), I foolishly invested in Fidelity Growth Fund — nearly my entire portfolio — and loved watching it grow.
     ...when I lost 2/3s of the value — or something like that — I learned the hard way that diversification is even for the mid-career types.
—Robin Hurley, Highlands Ranch, Colo.

My most concentrated investment position to date is my mind, and I don’t plan on selling anytime soon. All jokes aside, the most powerful investment a person can make (often with the best financial returns) is the betterment of their own mind....The most important thing I have learned is that there is much that I do not know.
—Jon Rhodes, Atlanta

What do you hope to achieve as an investor? Are you looking to build long-term wealth or get rich in a hurry? Are you driven to make the world a better place, to learn new skills and techniques, or just to have some fun?

Just reply to this email to share your thoughts. Please remember to include your name and city. Replies may be lightly edited for brevity and clarity.

Be well and invest well,

Jason

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The more that our financial system takes, the less our investors make. 
—John C. Bogle