Tuesday, 10 March 2015 - 20:00
Seed Weekly - Investment Greats: Jack Bogle
John Clifton “Jack” Bogle is most famous for creating the world very first index fund – the Vanguard 500 in 1976. Bogle founded The Vanguard Group in 1974 which currently operates as one of the world’s largest mutual fund and Exchange Traded Fund (ETF) providers.
Jack Bogle, currently 85, graduated with a cum laude degree in economics from Princeton University in 1951. He studied mutual funds in depth during his university days, which grew into his senior-year economics thesis which laid the conceptual groundwork for the index mutual fund. He started working for an advisory business, climbing the ranks up to chairman. In 1974 he was fired for an “extremely unwise” merger decision he approved. "The great thing about that mistake, which was shameful and inexcusable and a reflection of immaturity and confidence beyond what the facts justified, was that I learned a lot." He started Vanguard that same year.
It's nearly 40 years since Bogle pushed long and hard to get Vanguard to introduce the first low-cost index mutual fund. At the time, some people dubbed it Bogle’s Folly. Now, there's almost $2 trillion invested in U.S. index-based funds and exchange traded funds.
Bogle pioneered the no-load mutual fund and low-cost index investing for millions of investors. Known for putting the interest of the investor first, he has constructively criticized the US fund management industry for charging too high fees.
His investment style is simple - capture market returns by investing in broad-based index mutual funds that are characterized as no-load, low-cost, low-turnover and passively managed. He is famous for his insistence, in numerous media appearances and in writing, on the superiority of index funds over traditional actively managed mutual funds.
He contends that it is folly to attempt to pick actively managed mutual funds and expect their performance to beat a low-cost index fund over a long period of time, after accounting for the fees that actively managed funds charge. Bogle argues for an approach to investing defined by simplicity and common sense. Below are his eight basic rules for investors:
1. Select low-cost index funds
2. Carefully consider the added costs of advice
3. Do not overrate past fund performance
4. Use past performance to determine consistency and risk
5. Beware of stars (as in, star mutual fund managers)
6. Beware of asset size
7. Don't own too many funds
8. Buy your fund portfolio - and hold it.
In a recent interview he mentions that one primal role of one’s financial adviser should be to keep the investor from making bad decision. "If you have trouble imaging a 20% loss in the stock market, you shouldn't be in stocks." "When reward is at its pinnacle, risk is near at hand."
Again it comes down to keeping your investments strategy simple, minimize costs, invest for the long term and make rational (not emotional) decisions. "Time is your friend; impulse is your enemy.”
Jack Bogel is the author of a few investment related books, his most famous being the bestselling Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (1999) which is considered an investment classic. Bogle retired in 1999 from the Vanguard group but continues as president of Vanguard's Bogle Financial Markets Research Centre to write and lecture on investment issues and is widely recognized as "the conscience" of the mutual fund industry.
Even Warren Buffett recommended Vanguard for his estate, in his 2013 letter to shareholders: My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.
Investopedia; Bloomberg; Wikipedia
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Tue, 10 Mar 2015
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|JSE Top 40||17:00||46148.91||-495.44||-1.06%|
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|Index Name||RP||Move||% Move|
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|Non-life Insurance ||55,842.59||267.98||0.48%|
|Life Insurance ||42,917.21||-223.52||-0.52%|
|General Financial ||4,003.61||-58.27||-1.43%|
|SHARIAH TOP40 ||3,567.15||-47||-1.30%|
|FTSE/JSE SHARIAH ALL||3,820.01||-45||-1.15%|
|FTSE JSE Fledgling ||6,886.14||-47||-0.68%|
|FTSE/JSE Alt X ||1,501.64||22||1.51%|
|SA LISTED PROPERTY ||640.99||0.28%|
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|FTSE/JSE RAFI 40||9,770.21||-89||-0.90%|
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|JSE TABACO ||8,726.13||2||0.02%|
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Latest Consensus Changes**
|EXX||EXXARO RESOURCES LIMITED||HOLD||09/03/2015|
|SBK||STANDARD BANK GROUP LIMIT...||BUY||09/03/2015|
|BVT||THE BIDVEST GROUP LIMITED||BUY||09/03/2015|
|MRF||MERAFE RESOURCES LTD||BUY||06/03/2015||
|Expected||Company Name||Fin. Date|
|11/03/2015||ASCENDIS||December 2014 (Interim)|
|11/03/2015||BOWCALF||December 2014 (Interim)|
|11/03/2015||EOH||January 2015 (Interim)|
|11/03/2015||PINNACLE||December 2014 (Interim)|
|11/03/2015||RMBH||December 2014 (Interim)|
|DSY B PREF||19/02/15||06/03/15||16/03/15||ZAR 4.6500|
Stock Exchange News Service
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