The Hindu Business Line : Investment Nuggets

John C.Bogle is the founder and former CEO of Vanguard Group. He started his career in Wellington Management Company. Today, Vanguard manages $1.3 trillion and more than 150 domestic products are available.

The Vanguard 500 index fund is one of the largest index funds. Bogle believed in low-cost mutual funds and was the pioneer behind no-load mutual fund. He also believed that investing in index funds was superior to actively-managed funds.

He is the author of many books including: Bogle On Mutual Funds, Common Sense On Mutual Funds: New Imperatives For The Intelligent Investor, John Bogle On Investing: The First 50 Years, The Little Book Of Common Sense Investing: The Only Way To Guarantee Your Fair Share Of Stock Market Returns.

Bogle argues for an approach to investing defined by simplicity and common sense. He has consistently recommended that individual investors focus on the following themes:

The primacy of investing simplicity;

Minimising investment-related costs and expenses;

The productive economics of a long-term investment horizon;

A reliance on rational analysis and an avoidance of emotions in the investment decision-making process;

The universality of index investing as an appropriate strategy for individual investors.

Some quotes by John C. Bolge:

“How much do costs matter? A ton! Indeed, fund costs have played the determinative role in explaining why, for example, during the quarter-century from 1980–2005, when the return on the stock market itself averaged 12.5 per cent per year, the pre-tax return on the average mutual fund averaged just 10 per cent.

“That 2.5 per cent differential is about what one might have expected, given our 3 per cent rough estimate of fund costs. (Never forget: Market return, minus cost, equals investor return.)”

“The courage to press on — regardless of whether we face calm seas or rough seas, and especially when the market storms howl around us — is the quintessential attribute of the successful investor.”

“A percentage point added to your long-term return is priceless. A percentage point added to your standard deviation is meaningless. To equate the meaningless to the priceless one for one strikes me as being absurd.”

“If you have trouble imagining a 20 per cent loss in the stock market, you should not be in stocks.”

“Time is your friend; impulse is your enemy. Learn every day, but especially from the experiences of others. It’s cheaper!”

“Index funds eliminate the risks of individual stocks, market sectors, and manager selection. Only stock market risk remains.”

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