Stay the Course The Story of Vanguard and the Index Revolution By John C. Bogle
Wiley. 320 pp. $34.95
Reviewed by Joseph N. DiStefano
Vanguard Group founder John C. Bogle, who turns 90 in May, has been America’s cheerfully barbed, plainspoken investment adviser for so long it’s easy to forget he’s been retired from the Malvern investment company — which now invests $5 trillion in clients' money, behind only BlackRock Inc. — for even longer than he ran Vanguard (1975-96).
There is a fan base for commonsense investment oracles, and Bogle fills that need (as does his admirer and contemporary Warren Buffett, still chairman and CEO at Berkshire Hathaway Corp., a very different kind of company).
Bogle’s mostly-free-media network includes his live-event business TV and occasional congressional appearances skewering Wall Street competitors; the “Bogleheads” fan chatrooms; his busy small staff at Vanguard headquarters (his old Wellington Management Co. mentor, Walter Morgan, kept coming in almost to his death at 100 in 1998); and the retail brokers who peddle the hot-money Vanguard exchange-traded funds Bogle once opposed, and who now cheerfully quote Bogle’s aphorisms and give away his books.
And now Bogle has written Stay the Course, his 12th book (if it sells like the others, it will push his lifetime sales over 1 million), in which he retells familiar Vanguard stories and industry questions with new detail. The emphasis is again against Wall Street greed and for low fees, market-index targets, and structural exceptionalism (Vanguard is owned by its funds, not its founders or outside shareholders; Bogle claims this aligns customers with bosses).
What’s new includes a Bogle A-Z glossary of life lessons and a compact section evaluating each of his three Vanguard successors — who are as Ivy League as Bogle but a lot lower-profile (quick, name them!).
The language is diplomatic but easy to parse. Bogle says John J. Brennan got “remarkably close” to him (they played lots of squash) and showed a singular “ability to get what he wanted.” As boss, Brennan was “competent,” “tough,” and pushed a “far more prominent emphasis on marketing” and “data-driven performance management.”
Bogle watched Vanguard evolve beyond him: Brennan plunged Vanguard into ETFs (the founder worried they encourage speculation); later, Brennan's successor, F. William McNabb, overrode Brennan's own skepticism to make big foreign bets. McNabb reversed Brennan's bullying, returning Vanguard "to my vision of a more personal, human place for our burgeoning crew" — while also pivoting from small investors to employer plans, advisory services for wealthy clients, and cheap "robo advisory" (mostly attracting old Vanguard customers, not new ones, Bogle notes).
And now comes Mortimer “Tim” Buckley, a onetime Bogle assistant he calls “poised” and “prepared.” But he then makes clear he sees Buckley’s job running a thriving concern as easier than Bogle’s in building it. Bogle calls on Buckley to “eschew hucksterism,” improve privacy, apply artificial intelligence — and to build on McNabb’s incipient shareholder activism in the name of higher profits now that Vanguard owns at least 8 percent of most U.S. companies.
Bogle quotes very smart people who have praised his ideas, including Buffett, former Fed chief and relentless Wall Street critic Paul Volcker, and mathy trader turned acerbic professor Nassim Taleb (Black Swan). He admits a few mistakes (he regrets that Vanguard sometimes increases fund fees; he says he should have gotten the SEC to allow only cuts) and engages a few Vanguard critics, accusing Yale law professor John Morley of “sneering” at Vanguard by arguing that its self-perpetuating management “is not meaningfully different” from that of its rivals. Bogle ignores another critic, ex-Vanguard lawyer David Danon, who says Vanguard evaded taxes; Texas paid Danon for helping collect.
He quotes Thomas Carlyle, Adam Smith, and Lin-Manuel Miranda, but he doesn’t point out that a favorite paean to himself by an old assistant is clearly based on World War I Canadian poet John McCrae’s well-known poem “In Flanders Fields.” There’s at least one more uncredited borrowing. (I told Bogle I expected his old masters at Blair Academy would want citations. He said he’ll consider it if there’s another edition.)
Bogle details the custom Lummi totem pole he had hauled across the country to his Adirondack compound; praises the heart doctors who keep him alive, his wife for how she raised their six kids (there are third and fourth generations), and his late mother for getting him and his brothers into Blair Academy on working scholarships during the Depression (without lingering over his father's absence, or emphasizing that his uncle was meanwhile commodore of the Greenwich Yacht Club; this poverty was mercifully transitory). Bogle has paid charity forward with hundreds of scholarships for Native American students and others at his alma maters.
He praises personal forgiveness and admits he applied it grudgingly; busts on his industry lobby, the Investment Company Institute, for putting firms before customers; euologizes old teachers (and some classmates) at Blair and Princeton; and puts a word in for Joe Torsella, who ran Philadelphia's National Constitution Center when Bogle was chairman.
That marks what Bogle hopes is his third legacy — family, Vanguard, and public duty. Torsella, now Pennsylvania’s elected treasurer, is one of the rising politicians who have adopted Bogle’s relentless call for cheaper, simpler indexed investments of government funds. It is, after all, the people’s money.