John Bogle
American mutual fund manager (1929 - )
- || At The Bottom
1974 -- For the first time in his career, John Bogle felt the sting of failure. He was heartbroken, and his career was in a shambles. At the age of 44, the former executive vice president was unemployed. Bogle had spent more than two decades ascending the ranks of Wellington Management Company, which managed some of the most successful and respected investment funds in the country. At the tail end of a long bull market, Bogle had developed a new high performance fund and orchestrated a merger between Wellington and a Boston-based investment firm whose managers had enjoyed great success in the flourishing market of the early 1960s. Unfortunately, the merger worked out badly for everyone, especially Bogle. The stock market soured in the early 1970s, and the funds under Bogle's control lost millions for their investors. Meantime, the company's stock lost 80 percent of its value. In the midst of an emerging bear market, Bogle did not get along with the Boston group, and he rammed heads with other executives at Wellington, who blamed the company's ills on Bogle's merger. When the Wellington board asked for his resignation, he stubbornly refused, daring them to fire him. They did just that, turning him out on January 23, 1974.
- || At The Top
2004 -- Thirty years after the Wellington catastrophe, John Bogle could look back with satisfaction on his accomplishments. By now one of the most successful mutual fund managers in the world, Bogle was acknowledged as one of the world's "Most Powerful and Influential People" by Time magazine. That same year, Institutional Investor gave Bogle a Lifetime Achievement Award, a recognition he earned for developing the Vanguard Group, an immensely successful investment management company that he'd started in the wake of his firing. The author of seven books on investing and mutual funds, Bogle has attracted a popular following among investors who -- trusting his approach to money management -- loyally refer to themselves as "Bogleheads." His most important and lasting contribution was the creation of "index funds" -- mutual funds that try to match the rise and fall of market indexes like the Dow or the S&P 500. Prior to Bogle, few people in the financial business believed investors would settle for "average" returns. Bogle, however, recognized that most mutual funds hadn't beaten the market averages, and he suspected -- correctly -- that many ordinary Americans would appreciate the simplicity and low cost of index funds.
- || The Comeback
John Bogle's comeback began within hours of his firing in 1974. As he told Investor's Business Daily in the summer of 2009, "Probably my most dominating characteristic is determination." Unwilling to accept defeat, Bogle hopped a train to New York and convinced the directors of two Wellington funds to give him independent control of its assets. From these humble origins, Vanguard eventually controlled nearly a trillion dollars in assets held by nearly 20 million investors. Its funds were consistently rated among the best in the United States. Learning from his previous failures, Bogle's unique approach allowed Vanguard to offer extremely low fees. Over time, passively managed index funds have grown enormously in popularity, and research has shown that they usually outperform actively managed funds.
