MacNicol’s Monthly Commentary-February 2019
The Death of Indexing?
Thankfully the word “giant” is not used liberally in the investment world and that’s a very good thing. These days it seems that everyone in our industry is either a Vice President or a Director, so it can be difficult for investors to know who to listen to. Yet “giant” is entirely appropriate for describing the late John Bogle (who went by “Jack”). Jack Bogle was a giant in the investment world and his name belongs right up there with other industry luminaries like Warren Buffet and George Soros. But Bogle’s gigantic status in the investment world came from a small and challenging beginning. Bogle was born in 1929 and he experienced 1st hand the pain that the great depression inflicted upon the state of New Jersey and other places. Bogle’s family lost much of their money back then and led to his father’s struggle with addiction and his parents’ eventual divorce. Perhaps those early (and painful) years taught Bogle the value of hard work. As a boy, Bogle was an ace student, especially when it came to mathematics. Bogle’s early success in academics allowed him to transfer from his original New Jersey high school to Blair Academy, a highly respected preparatory institution for today’s young leaders of tomorrow.
Bogle graduated from Blair with distinction and set off for Princeton University, which was only about 90 minutes away. Bogle’s hard work and talent paid dividends at Princeton too. His senior thesis was entitled The Economic Role of the Investment Company was not only a wickedly intelligent and biting exposé of the then contemporary American mutual fund industry but a window to the future. It was an instant hit with his Professors and classmates. The Princeton years thus offered a glimpse into the future of one the worlds top money managers, but they also offered a glimpse of the seminal “disruptive technology” in finance.
After Princeton, Bogle set off to work at the Wellington Fund where he quickly impressed his colleagues and Wellington Founder Walter Morgan. Morgan, for his part, holds the distinction of being the manager of America’s first balanced fund, an achievement in its own right. Not surprisingly, Bogle’s accomplishments at Wellington were like those in other aspects of his career: elegant and substantial. It wasn’t always perfect though. In his later years at Wellington during which he led the firm Bogle approved an unfortunate merger that ultimately cost him his job.
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