Jack Bogle and the Bogleheads

Bogle's Folly

Back in 1946 Ben Graham, doyen of value investors, opined thus:

"Furthermore, there is nothing to prevent the investor from dealing with his own investment problems on a group basis. There is nothing to prevent the investor from actually buying the Dow-Jones Industrial Average, though I never heard of anybody doing it. It seems to me it would make a great deal of sense if he did."

It was to take another thirty years before Graham’s "great deal of sense" was heeded when Jack Bogle set up the Vanguard Fund tracking the S&P500. Bogle’s contention was that by keeping costs down, avoiding unnecessary transactions and avoiding the behavioural biases associated with active trading an index tracker would outperform the majority of active funds over time.

Unsurprisingly the fund industry labelled Vanguard as “Bogle’s Folly” and "UnAmerican". Funny guys . Who's laughing now?

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Don’t Give Index Trackers the Bird

Shoe Fetish

You want to buy a pair of shoes but due to the Great Shoe Shop Recession of ’09 there are only two outlets left to choose from, right next to each other. To the left you have a simple, dressed down stand. To the right there’s a glitzy emporium, covered in flashy signs. The former sells cheap shoes that last for years. The latter sells expensive, fashionable footware that falls apart in months. If all that concerned you was to be well-shod for a low price for a long time, which would you choose?

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