In his last book, “Stay the Course,” Jack Bogle left investors and professionals a warning about a coming battle in investment management.
He had been watching closely over the past few years as a growing number of academics raised questions about the size of big passive fund managers, such as Vanguard, BlackRock and State Street Global.
As they grow, will they control too many of the voting shares of America’s largest corporations to the extent that they tamp down competition? It’s a question that could shape regulation of the mutual fund industry over the next decade or longer. Some proposals are already calling for rules that would determine which funds could own shares of which company, which would, Bogle pointed out, defeat the very idea of an unmanaged fund — the index fund.
He was deeply worried that in trying to solve the structural problem, regulators and industry would forget about the main beneficiaries of index funds: the people he called “the little guy,” middle-class investors.
“In the years ahead, all of those interested in the future of investment management must join the fight against largely unsupported theories that would … destroy the single best option that our families have for investing to accumulate wealth: buying and holding shares in a broadly diversified, low-cost stock market index fund,” he wrote.
I interviewed Bogle, who died on Wednesday, Jan. 16, about a half-dozen times over the past five years. I’ve interviewed hundreds of CEOs over the course of my career; Bogle towered above most every business leader. He was a lion of the investing world, one of the 20th century’s most influential people. But what stood out about Jack personally was his sense of values, the nuanced way he thought about them and how hard he worked to maintain them.
Jack was always standing up for the little guy. Under the exterior of the world-famous CEO, I found him a kind and thoughtful man.
I interviewed him first when I was newly divorced, with two kids, no job, very little money and a scrap of an idea that I could make it as a freelance writer. Jack and I did a good phone interview — he laughed and reminisced about the bike he’d saved for as a kid. Then I took courage into my hands and asked if he’d sit down for an in-person.
I arrived at the office and immediately discovered I’d forgotten to bring a pen. “What kind of writer are you?” he rasped, sounding grouchy. The low coffee table in his office was covered with papers. He’d been calculating how low fees correlated to higher returns.
But somehow we wandered into personal territory. He hadn’t grown up rich, he told me. In fact, his mom worked in a gift shop to put food on the table during the Great Depression. “You just can’t imagine the burden she had day after day,” he said. “I don’t ever recall her complaining. Life has a lot of burdens. She never showed them.”
I teared up, thinking about the way mothers try to hide their pain from their children and how the children almost always know. “I’m a single mom, too,” I said, aghast at my own lack of professionalism. “I’m so sorry.” The grouchy CEO melted way. He started to cry, too.
We went on to talk about his parents, his father’s alcoholism and how Jack had forgiven his dad. It set the tone for all the follow-on interviews I had with him over the years. He was almost always willing to jump on the phone during a sudden market downturn, because he knew a headline from him: “Stop. Do nothing” would keep many Americans from panicking and selling as the market was falling.
He worked hard to maintain a sense of priorities and to tamp down his own hubris. This was no easy feat, given that the adulation directed at him could sometimes be embarrassing, as he once told me. One of his surprising tactics was poetry.
Yes, you heard that right: poetry. He read it and memorized it, in part to give himself the space for introspection he believed it takes to preserve good judgment. He knew how easy it is for a world-famous CEO to become insufferable. He kept a copy of “Ozymandias” in his office. I asked him why.
“The first thing that comes to my mind is, ‘Play down the arrogance, pal. What you’ve built will not last forever. Nothing lasts forever,'” he told me by email. But he tried to build Vanguard and the index revolution to last. That meant tying both their identities to an altruistic mission. “People matter, and caring about the human being with whom we serve — and whom we serve — must be the soul of any institution worth its salt,” he wrote. “I’m guessing that Ozymandias wasn’t much into caring, except about himself and his works.”
“You didn’t ask for an essay,” he added. “Take what you need.” In my last interview with him, a little over a year ago, we talked about “staying the course” and how he intended to keep going on his mission of serving individual investors until his life ended. He did, just finishing his last book, with that warning from the man who’d evolved from an arrogant young CEO into the conscience of the investment industry.
He’ll be remembered for launching the index revolution and the world’s largest mutual fund company. But he believed the reason the revolution and the company succeeded was because of the value he made sure they embodied: helping middle-class investors. His last warning to the investment industry: Don’t forget who you serve.