Reflections on John Bogle

Sam Ngooi Comments

John Bogle, retired founder of Vanguard and champion of low cost index funds, passed away on January 16th, 2019 at age 89. Two separate articles in the NY Times Business section (NYT, 1/17/19, page B1 & NYT, 1/16/19, page A23) pay deserved homage to Bogle’s contribution to the world of individual investors. The articles cite his emphasis on keeping investment costs as low as possible, and not trying to either beat the market’s long-term results or time the market’s ups and downs. These basic principles should be familiar to you as clients of Park Piedmont Advisors.

Since those articles contain many individual recollections of interactions with Bogle, we thought you might be interested in some of the history of how PPA came to be adherents of Bogle’s investment principles.  The first major influence was a book written by Burton Malkiel, a Professor at Princeton University who was a major influence on Bogle. As the title suggests, Malkiel’s book, A Random Walk Down Wall Street, took the position that the results of investing are random. As a corollary, investors should try to control what they can, which are costs and the allocation into and out of the stock market.

Along came the crash of 1987, when in one day the major stock averages declined by more than 20%. This event suggested to Vic (the only one working in the investment business at that time), that there had to be some better ideas and methods for investors to grapple with uncertainty, the tradeoff between risk and reward, and investing to meet clients’ specific long-term goals, rather than engaging in the apparently fruitless and possibly dangerous short-term trading of stocks.

After reading Malkiel’s book, and discovering Vanguard’s low-cost index mutual funds, Vic grew convinced that a sensible approach to investing could be established for families and individuals. The overall downside risk in the markets will always exist, but lower costs and appropriate asset allocations can buffer some of the downside. Thus was born Park Piedmont’s approach to investment advice. Over thirty years later, the approach is still going strong, into another generation, for which we thank all of our clients and John Bogle.

Even with no personal interaction, Bogle has been a major influence in the thinking and methodology of PPA, for which we are most grateful.  He will be missed.