Jack Bogle, Index Investing and BestCashCow

Jack Bogle pioneered the investing world and the mutual fund industry. He taught the world that they should not be paying fees for performance, and that seeking to be average will outperform over the medium-term and the long-term. He was correct that the extraordinary performance of a single manager is seldom, if ever, sustainable and that their fees will exact major damage for the investor.

I have been amazed that the best business schools in the country – Columbia, Harvard and Stanford – are still full of aspiring analysts and money managers in the post-Vanguard era. all still seeking to open their own funds. More amazing is that many of these folks are still successful in raising capital (many aren’t).

Ever since I co-founded BestCashCow, I have frequently been asked if it is my view that people should avoid the stock market. That has never been my view. Over the long-term, investing in a broad and diversified stock market portfolio, and only just matching the stock market is the single best way to build wealth. My view is that you should never be 100% in the stock market and that you will never know when you will require liquidity. I’ve now lived long enough to know that many who were overinvested and forced to sell in October 1987, early 2001 or early 2009 were, without exaggeration, slaughtered.

So, while you should never be 100% in the market, you should be in the market in some form. And, for those who don’t know how to build their own portfolio through an online broker, an extremely low fee fund like the Vanguard S&P 500 Index is a much better way than to pay fees upon fees upon fees to invest with someone who has put together a couple of good years at the track. And, running parallel with forays into the market, of course, must be the wisdom to keep resources out of the market and in savings and CDs. It’s that dual strategy that will always be a winning strategy.