We have a program, which is really a lot of fun, because now we're going to get down to serious questions. Jack likes to take the majority of the questions from the audience, but because we don't have the mics in the ceiling like we did last time, I've collected questions from a lot of the attendees.

So when I call your name out and ask the question, would you stand so Jack can address you and respond to your question. The first question is from Victoria, and she said, "Jack, we know that you're applying significant effort on educating policy makers on prudent regulation of the financial industry.

How can we help you?" Victoria? Are we there? The political system is such a mess, and I don't know how to talk politics, so I'm sorry. But even I- You need a special dispensation Jack. Even I have very little impact on it. I can talk, and talk, and talk, and I sometimes don't think anybody is listening.

I have had a number of people interested in the retirement plan system, and happily for me I gave a very extensive, this would also be on the website, a very extensive analysis of what had to be done to fix it in my testimony before Congress, and this is like a probably 20 page paper.

But of course when you go down to the Congress, they want you to summarize it in two minutes. And you do, and they were all fine, but nothing happens. So getting through the thicket down there is very difficult. I would say the best grassroots methodology you can use is to go to your local congressman, write to your local, visit your local congressman if you can, and try and do it in the hope that all of us together can make a difference.

It's a little bit like people saying, "They're not going to vote anymore because their vote doesn't count." Well, it doesn't matter, and if everybody observed that rule, we would have even more chaos than we have now in our democracy. But the fact is, we're in a testing time where the issues of which I speak are not particularly interesting to anybody in Washington.

I have talked to a couple of guys on the, lower guys, on the President's Council of Economic Advisers. I did talk a little bit to Jared Bernstein, who was Vice President Biden's economic policy guy and fairly high up in the economic policy circles in the White House, but now he's left to do something else.

So I think it's just speaking out and being totally prepared to say, and to be ignored. I mean, I think if we're at a time, like those kids up on Wall Street, where the mere fact of protesting at least gets in the papers, and politicians will often listen to the papers more than they'll listen to anybody else, because that's what they think everybody's going to be basing their decisions on.

So it's hard to help, but it's hard for me even to help myself. So that's the best I can do as a Vice President. Jack, the next question is from Mel Turner. Mel, would you stand so Jack can address you? He says, "What will be the regulatory response if money market funds break the buck?" Well, we have a really difficult issue in money market funds.

They're still, as I understand it, have the Treasury guarantee of a couple of years ago. So there's obviously policy makers are worried about what would happen. There is going to be more regulation in money market funds, and I just don't see that it's even remotely possible that we'll keep the same structure that we have now.

You know, we have free market capitalism, and people can do a lot of things. I mean, not all rating services are created equal. You buy one bad bond and one bad money market instrument, a commercial paper, as a reserve fund did, and they're gone, wiped off the face of the earth, the first mutual fund, and they're paying the penalty.

This is not really a problem anymore, but their mistake, as I would explain it to people, is they wanted to be the highest yielding institutional money market fund, and it's the easiest thing in the world to do when you look at the man. One, you can slash your costs.

Two, you can slash your quality. Guess which the manager did, and that's what cost them. He wasn't about to cut his revenues, and so there's a fundamental conflict of interest in that area, and if we're going to be bailed out by the government or have this Treasury Guarantee continue, we're going to have to pay for that, and I had an idea many, many, many years ago, probably in the mid-80s, that we should start an insured money market fund, but the cost of private insurance was like 75 basis points.

We started, actually. We started it. It was the first and only insured money market fund, and it didn't work because the commercial portfolio, that 75 basis point insurance cost, made the commercial portfolio yield less than the Treasury portfolio. I mean, the mathematics are all important here, and so that was one, but everybody says it will be the end of the industry as we know it if we go to a floating asset value.

That may be. I said we have some people at Vanguard working on this and who sit right near me in the office there, the legal department, and I stopped in one office and said, "You know, they're trying to protect the present system as anybody who's in the system now would do," and I said, "You know, you've really got your work cut out for you because you look at the Wall Street Journal and the Federal Reserve is against you, and Paul Volcker is against you, and I don't want to fight those two.

I mean, they're too powerful," and so a lot of very intelligent people say the system has to change, and I would say the system will be changed, and I don't see what's the bad about a floating asset value, and I can see it's not as attractive to investors, but with our tax statements that we do, you know, I do most of my short-term investing in limited-term muni, and so I get a tax statement every year, and I either have $275 -- this is a big account -- $275 in short-term gains, and $111 in long-term gains or losses, whatever the case may be, and it's very easy to take care of the tax thing, and we've got systems that take care of that, and so I don't see -- I mean, I know it's not attractive from a marketing standpoint, but at some point, we have to say we're in the investment business and not in the marketing business, and that's a discipline that's going to be very difficult to voice in this industry, so I think change is coming, and money market funds -- almost certainly, by the way, I don't know if you can follow me -- will be designated -- oh, they've got some initials -- nationally risk -- nationally important to our financial system, and then this new committee that the Treasury and the Federal Reserve are part of is going to come into play.

Significant financial institutions have to be -- yeah, I'm sorry -- significant financial institutions have to be -- have certain controls, and they will be tough controls. So I'd look for change, but I would look for change as being a positive. It won't seem like that to the managers, and it won't seem like that to the investors.

Of course, with yields where they are now, I think I used a tenth of one percent. It doesn't really matter what you do. An awful lot of people are waiving their fees, and so they even have a tenth of one percent, and the yields are just terrible, and we're all required to have -- I think it's 40 percent.

Don't hold me to this because I'm going into detail, but 40 percent in Treasury -- short Treasuries, anyway -- 30 or 40 percent. So it's -- I'm not worried about money markets going down. I think the industry is worried, and the ICI represents managers, not shareholders, is going to fight until their last breath to keep the system the way it is.

But I don't think the system is sound the way it is, to be honest. Okay, this question is from Dan Smith. He asks, "What do you think of Louis Brand's book, 'The House of Oglebill'?" You're among friends, Jack. Well, first of all, I haven't read it. And we did as kind of a check.

I did ask Kevin to read it, and he did read it. And he said, "I would like a lot of it and would hate a lot of it." I guess that's okay. And I think he did find some egregious errors in there, which were eliminated in the final draft.

But he couldn't get them to change the tone. And I think many of the commentators, many of you -- some of you who are here in the room, by the way, it's an interesting kind of book because I check it on Amazon periodically every other month or something. And he has these glowing five-star reviews from everybody.

Everybody loved the book, which I guess is nice. But the selling, you know, basically nothing. It would make anything I wrote seem like going with the wind or something. But it apparently has a cynical tone to it, which is okay. A lot to be cynical about in life, in Vanguard and in Bogle.

But I think the thing most people have observed, those readers -- and Kevin mentioned this, too -- he just doesn't have any credibility when he talks about the future of Vanguard and the future of indexing in saying new forms of indexing are going to supplant the old. I mean, I don't know what his standing is for making that kind of a statement.

He doesn't know anything about it. And it's -- obviously -- it must be obvious to you all, it's simply not possible for new ways of indexing to supplant the old. Maybe for a minute, maybe for an hour, maybe for five years. But in the long run, the idea is to have a return that captures the market return.

And the market is valued in dollars. And so if you match it like we do in the S&P and then to a lesser extent -- or to a greater extent, the total stock market, that's the only guarantee out there. And some of the ETS that I mentioned have done -- proclaimed to be much better, have proved not to be much better, because how could they?

I mean, when you look at the portfolios, they're all in pretty much the same stocks, and just different weightings. So there are never going to be huge variations, although the Arnon Fund, as I mentioned, is so much more volatile. So the guy had fun writing the book. I like the picture on the cover.

I did get that far. And, you know, I will probably look at it at some point. My brother said -- they said -- quoted him as saying some things he didn't say that he didn't say to Sam. But apparently a lot of kind of nasty stuff. And that's okay.

I mean, there's a lot of nastiness in life. So what else can I say? It will come and go. And the idea that I would be dwelling on it in some horrifying, wonderful way -- well, I'm protected by that by not reading it. But the main reason I didn't read it was honestly.

And Kevin told me about it when someone called up and said -- the press or something said -- which they never did -- "What do you think of it, this nut?" And I could say, "Sorry, pal, I haven't read it." So it will come and go. And it will be part of history, I guess.

A number of people have observed to me that the first book was much better. And the idea -- by the way, I want to be very, very clear on this. I had no idea it was sponsoring a thing. McGraw-Hill came to me and said, "Would I cooperate and talk to this writer?" And I said, "Sure." Because the first book, called "John Vogt and the Vanguard Experiment," ended 15 years ago.

And I thought they were going to keep that and then add what happened in the last 15 years. But they went quite a bit beyond that. And I know there's some repetition of that earlier book. But -- and it was a nice, friendly book, mostly. So we have what we have.

How many of you read it? How about that? Well, that proves what I said about not shooting the lights out. If you guys don't read it, who's going to read it? >> I think what happens, Mike, is some of the early readers did some reviews on the form, and it didn't sound too flattering.

So I think that turned a lot of people off. So the next question is from Joe Dugan. You've touched on this a number of times before, but he'd like an answer. How important is an international holding in the stock portion of a portfolio? >> Well, I mean, I talked about that at some length.

He's saying, first, look, what is an international? I'll just repeat my views, not repeat them from the speech, because I didn't use it there. But my skepticism about international, my idea that international will not add a huge amount of value to your returns, is based on, first, financial markets are a great arbitrage -- great way to arbitrage between the present and the future.

So if emerging markets are going to grow much faster in America, that's not going to be news to people that own Brazil and China and Russia and South Korea and Taiwan. It's in the price. Everything is in the price. So that's number one. It's hard for me to see what would be totally different in return.

And if it produces, say, a return of, let me say, 3% a year, which would be huge in the next decade over U.S., and you have 20% of your money in it, that's 6/10 of 1%. Well, there's so many better ways to save 6/10 of 1%, including buying Vanguard funds instead of somebody else's, where it's a guaranteed 6/10 of 1%, and not a speculative one.

So that's number one. Number two is, when things are hot -- well, number two really is, I should put this number one. America is an international nation. 50% is the number IOT is. 50% of the revenues of the companies in the S&P 500, and presumably in the companies comprised of the total stock market, are in revenues and profits.

50% of their revenues, 50% of their profits come from outside the U.S. So you're already 50/50. Do you need to make that higher? I leave that to you. It used to be said that the big value was -- and I mentioned this slightly briefly before -- the big value was that it diversifies because foreign markets don't react in the same way to things that U.S.

markets do. And that's no longer true. It will probably be true again because these things revert to the mean back and forth and back and forth. Next, when does international get popular? Investment advisors will often say, "Well, you need this as an additional diversification." But they almost always look for additional diversification in the things that are the hottest.

No one's going to tell you to buy, I don't know, pork bellies to diversify. And gold is the ultimate diversifier. It's the best diversifier you can possibly find. But people weren't talking about diversification 10 years ago by using gold. They're talking about it now. So it makes me skeptical.

And the same thing is true of international. Although with a bad year for international, it will be interesting to see, which I don't think we see yet, if money is going to go out of emerging market international funds back into the U.S. Investors must be clearly disappointed. I think we had, what, a 25% drop in the emerging markets last year.

In the U.S. market, it's almost unchanged now. And that may be, by the way, the perfect time not to get out of it, not to get into it, but not to get out of it. So I don't have any easy answers to that. And I'm me and you're you.

And I would say you probably won't hurt yourself a lot if you use it modestly. I just don't see the point of having an international portfolio in which the U.S. is about 40%. In developed markets, a little over 40%. In emerging markets, a little under 20% in very random numbers.

I don't think you need to go that far to get 60% outside of the U.S. I mean, we earn our money in dollars. We pay our bills in dollars. We save in dollars. It's a dollar economy. And so to speculate whether foreign currencies, which is a big part of when emerging markets and developed markets are different, it's currency change and not fundamental value change, not global currency change.

So I just don't think it's necessary. But if you said, what's the matter with 20%? I would say nothing. I advise you not to go to 50%. But I could be wrong. I don't think it's going to be all that different. But I don't do it myself. I'm only about 20% in equities anyway.

I thought at one point about getting into emerging markets. But to confess totally, and I'll say not only the thought about investing in emerging markets came to me. I thought maybe you want to do that. The idea of putting 1 or 2% in gold came to me. And the idea of getting much more conservative when I saw how far stocks would fall.

I had the same temptations. Everybody does. Stock market, what am I doing with 20% stocks? And the secret of my success, such as it may be, is I don't succumb to those temptations. So I just leave things alone. The burden of proof for me is actually making the change.

Do you really want to do it? When do you want to do it? And that's a hard thing to do. I wouldn't want to scare anybody out of international. It could be something I should be doing, trying to scare you out of it. But we don't know the answer.

So to make sure you're widely diversified, hang on to it. I wouldn't change your positions or relative to anything I say or do. But just think about, and particularly that idea about composition of the index. It's remarkably concentrated in a very small number of countries. And China is either the answer to our prayers for investing for the red, and this is Dr.

Malkio's point of view, forever. Or maybe it's going to be the next great big collapse. And I'd say the odds of those two things happening are about 50/50 in each case. A lot of funny stuff goes on over there. Okay, the next question is from Sue, Lady Inc., right here in the front.

She says, "Do you think that a 4% safe withdrawal rate in retirement is a good objective?" We're back to the Trinity study here. Yeah, but 4%, and we've gone from an era where everybody thought 5% was right, and I've always thought 5% was too high. Because when you think about the climate for market returns, it's going to be something like 7% for stocks, I believe, and 3% for bonds, 3.5%.

And that's going to give you a portfolio return of, I'll call it 5%. 4% isn't safe, but I think you can do that in those circumstances, change. I keep a little eye on whether you're consuming capital. And what you're doing, though, with that kind of return, is with the knowledge, certain, the purchasing power of your assets will be smaller 10, 20 years from now than they are today.

If we have inflation of 3%, and right now inflation is, I guess, 1% or something, and the bond market and the inflation bonds tell us the inflation rate will be, even up to 30 years, will be 2%. And that may be right, but if it's right, we've got a lot of problems.

This economy is not going to be growing if we have 2%, if we have 2%, only 2% inflation. So, you know, I'd stick with 4. I mean, it's too fine-tuned. I think 3 of 3 is a little bit lower than it needs to be. If I was to tell you no 3.5 would be better than 4, I'd be talking through my hat.

As usual. The next question is from Chester Scarobo. I hope I pronounced that correctly. It's a three-part question. If you had a magic wand, what changes would you make to, number one, what is currently available to retail investors, number two, how Vanguard is run, and number three, the overall investing atmosphere in the country?

Well, I'm thinking about the second one. I think, you know, this has become a product industry, and I banned the word product, Vanguard, when I was running it. And you have to pay a $5 fine if you ever use such a word. And the reason for that is quite simple.

We are not in the business, or should not be in the business, of selling products. You know, that's somebody else's business. You know, whether it's Campbell Soup's business or Budweiser Beer's business. You know, make it and get rid of it. And that's not the business that is the core of what Vanguard should be about.

The word is crepe back in, and we use it all the time. I don't mean that in a too critical way, a little bit critical way, because there aren't a thousand other words. I mean, you say a financial service or a trust service, and it doesn't kind of, it seems a little complicated and cumbersome.

So, product is kind of a good word until you think about it. And so, I didn't like the idea. It left, and, you know, it's just not a happy way to think about the business in which I find myself. So, I think, I think you said the first part of the question of what retail products or services should we have to make available product for the retail investor.

And I say, less, less. Why do we need more? You know, there are, I don't know, thousands of funds out there. Now, we've reached totally the wall. It's absolutely like going to Starbucks in the morning and getting that iced latte with blah, blah, blah. I mean, you hear more, that must be terribly expensive.

And I, by the way, I only drink Benny Bowl. Benny means large, by the way. Those of you who don't know. And so, I say less, and that's not going to happen. But the message I'm trying to send is don't complicate the job. And, you know, the first rule of shooting is don't shoot yourself.

And you know what the second rule is? I don't think it's relevant here. I hope not. If you shoot somebody else, be sure you kill them. I have a philosophy for you. At Vanguard, you know, there are some things that can't be changed. We've gotten big. And I'm not a big company guy.

I wouldn't work for a big company. And we have, by the way, the most incredibly dedicated people at Vanguard. They have a high respect for me, even if I'm in the waning years of my life and career. And they enjoy being with me. They ask me to come to their retirement parties, which I only do, religiously only do, if the management's not there.

When I get one of these invitations, I say, "I'll be glad to come and talk to you all if the coast is clear, if you know what I mean." And they write back and say, "I do know what you mean. Yes, the coast is clear." And that's not a cynical comment.

And I don't want to interfere with, you know, the management wants, they can't do all these things when we've got 12,000 people. So I'm happy to fill that gap, and my crew is certainly very happy to do it. Let me give you an example I often talk about when, you know, when you talk to these crew members that I told you I did for an hour at a time.

Usually we don't have a time limit, but sometimes it goes longer, but it seems about right. You know, you'd never, never, never be talking to one of these wonderful people. Often been there a long time, got the award for excellence for cooperation, and excellence, and working well with colleagues, and all that.

And you'd never say, "Well, an hour's up, that's it." I mean, you just let it go until it kind of doesn't go anymore. But we talk about the rise of bureaucracy. And I think I mentioned that line, I did mention that line to you. For God's sake, let's always keep a place, bank our place where judgment has at least a fighting chance to triumph over process.

And I say, "Look, here's all judgment, and here's all process." And the bigger you get, the more that line moves over. And when you get big, it's going to be here, say somewhere three quarters of the way across. There's no way around that. Although I do observe that if the chief executive loves process, it's going to be over here.

And if the chief executive hates process, it's going to be over here, but it's never going to be back here. And there's no way around that when you get big. That's one of the hazards of companies growing. And of course, when you think of people like GE, and God knows who else, who have 200 or 300, I think, Walmart, 200 or 300,000 employees or more, I guess.

If not, Vanguard really isn't big at all. But we started, I couldn't help observing as I looked at your program today, but it looks like we have around 30, I mean, I think it's a really great sign, by the way, some arms length stuff with Vanguard in the global heads for quite a while.

And that seems to be all amended, fortunately, or mostly amended anyway. And there are, I think, 30 Vanguard people that are going to be around here today. And they're going to have this little fair where you talk to people about ATFs or whatever else you want to talk to, and talk about, and then the participants in the panel, and then I guess a number of people to help you around A to B.

And I couldn't help thinking when I looked, I didn't do an exact count, but I think 30 is about the right number, it occurred to me that when I started Vanguard we had 28 crew members. So you're going to see two more people than I saw. Actually three if I didn't count myself.

So you get bigger and they can't help that. I think Bill McNabb is, tries to keep everything as personal as he can. But you have to do so much by video, which doesn't cut it for me, and I know they have to do it. And I think we're very sensitive on the flagship side to trying to maintain, fairly easy to get your flagship representative on the phone.

Very, very important thing, particularly now with Admiral's shares being so much more, I think I said 35%, 31% I guess, of our business. So you try and fight it where you can. But the key thing, the two key tasks as I see it for Vanguard are one, don't do anything stupid on the investment side.

And you can argue about some of these things. I'm not so sure about, you're going market neutral. I'm not so sure about the way we're running target retirement. I haven't figured out what the heck managed payout is all about yet. But give me a little time, I'm sure I will.

But that doesn't have to affect any Vanguard shareholder, because you don't have to do the things. I do wonder a little bit, the big tension in this business is always the tension between management, professional management and marketing. And marketing is a terrible driver. When everybody else has some hot idea, a lot of copying goes on.

And it's a strategy. You can argue it's a business strategy. It's a strategy. It's a strategy. It's a strategy. It's a strategy. It's a strategy. I did mention the second of those rules when it came to my attention. We're thinking about buying Barclays ETF operation. Market share must be earned and not bought, pal.

And I could never figure out how that would work. I was not pleased that we were considering it, but I was ecstatic that we didn't do it. I don't think it would have high cost ETFs, the same platform as low cost ETFs. And if you make their high cost ETFs into our low cost ETFs, what are you buying the thing for?

They're going to all their profits. And it's a very profitable business. So I don't really think management is coping with difficult circumstances of growth, difficult circumstances of trying to be competitive. And I'm the competitive guy. I mean, I'd like to slug everybody in the nose. And I don't understand why anybody else is doing any business at all but paying for it out there in the marketplace.

But I think they're handling that tension as well as they can. So I really don't think I can complain about it at all. This next question... Oh, no, I didn't get to the third one. The overall investing atmosphere in this country. Crazy. And I mentioned this in my talk, the triumph of speculation over investment.

Yeah, I'm sorry. So what I'm saying about the overall investment atmosphere is the question is, in effect, ill chosen because we don't have an investment atmosphere in this country anymore. It's all speculation. What happens in the marketplace is 90% speculation or even higher than 90% believe it or not.

People trading with each other as if they were in a great big gambling casino with no gain to society and a loss to those investors who were doing the trading. I mean, to give you the example that I usually use. And then let's assume that each stock in the Standard & Poor's index, half of each stock was owned by speculators and half was owned by investors.

Well, we know that the investors who don't trade at all as a group will capture the market return exactly. And we know that the speculators will also capture the market return. But by trading with each other, because there's no one else to trade with, they'll pay these croupiers and they'll end up with less than the market return.

So the idea of investing over speculation, the triumph of investing over speculation, what we have now, the triumph of speculation over investment, is a mathematical certainty. A mathematical certainty. And, you know, I tried to build a company out of mathematical certainty. Gross return minus cost equals net return. You heard it here.

So it's crazy. And think about it this way. From my eye on the market this year, below, the value of American businesses represented by the price of stocks dropped by $2 trillion, say from $16 trillion to $14 trillion. Does anybody really think that the value in that, I don't know, four month period of American business dropped by $2 trillion?

I mean, it's conceivable. It was pretty much the same at the end of the period at the beginning. But market expectation was a big problem and created an environment for stock prices that was divorced from the value of securities. >> The next thing is from one of your favorite Bogo heads, Kathleen Ryan, who had to cancel.

The question's at the beginning, but she has a note to you after that. The question is, "Being you were born in 1929, did that influence you at all with regards to your study of investing in the stock market?" She says, "When my grandmother passed away at the age of 97 years and eight months, I went through her important papers and found a fractional stock warrant dated December 10, 1929.

I felt that she was very courageous to invest in the stock market only about two months after the crash of '29. The fractional warrant was from Transamerica Company with a signature stamp from A.P. Giannini. Had I known, I would have asked her if she met him. I like to think she did.

How cool is that, that if she had met him, she would have met the founder of Transamerica, and I, her granddaughter, had met the founder of Vanguard. Two very big captains of industry. I mean, wow. With best wishes to you always, Dad." So the question is, "Being you were born in 1929, did that influence you at all with regards to your study of investing in the stock market?" Well, first, not to belabor the obvious, I was quite young in 1929.

I don't remember anything about it. I saw the look in my father's eyes when he came home with the newspaper, and I knew there was some real trouble. But I was at that point six months old. I think in a sense, it's a pretty good question, but it's not so much the '29, but the '30s, where my family had a nice amount of money for those days, and it all vanished at the Montclair Trust Company.

Banks were doing the same thing they were doing in the last big bust, buying the things that were hot, and the buying probably leveraged those Goldman Sachs, leveraged closed-end investment companies that actually all went bankrupt. And that's Goldman Sachs for you. Change the script, but you can't change the outcome.

And so I think going through a period where I knew practically nothing about the stock market, instead of getting, like anybody else, these wonderful confirmations about how much our 401(k) plan was worth, we were getting notices from the personal finance company saying, "If you don't pay up, we're going to take over your house." That's a whole different environment.

So I remember the economic privation that came out of the boom and the bust very, very well. And it's made me a lot of luck, made me the way I am. I don't like to spend money. I really do not like to spend money, period. And I don't buy anything for myself, almost nothing.

I did buy a new pair of khakis last summer. Only at my wife's insistence. But I just don't enjoy that. And that comes out of your own brain. But in a lot of ways, your persona is shaped by not having a lot of money, knowing you have to earn what you get.

And I'd call those really good things. It's an advantage in life. I was mentioning this earlier, that one of you came up and chatted with me about leadership, I guess with Laura. And I read those little things in the New York Times on page two every Sunday about leaders or purported leaders and what their background is and what they look for in leadership.

And some of it's pretty good, some of it's pretty horrifying. But what is really interesting is I think at least a third of them had been waiters when they were young. And I think waiting on a table is probably the best training anybody could ever get. You know you've got to do it.

And no matter how unhappy you may be, and I was never unhappy doing it, and you're serving somebody else. When I'm a poor kid at Princeton waiting on the rich kids in the dining hall the way they used to do it. And I thought it was great. It was very democratic and very fair.

And now we're more democratic and I don't think that's very good. I think if the kids that don't have money have to work to get it, well that's life. But I think it came out of it with a big advantage. A big advantage of knowing what it is to stand up for yourself, knowing how to take responsibility, and knowing that sometimes no matter how difficult circumstances are you still have to smile and you can't get angry.

And the customer or the client or the person you're serving dinner to is always right. And I do remember dropping one of the biggest trays down. Eagle, Lower Eagle Dining Hall, you know you used to carry these trays like that. Probably had 12 plates, 12 butter plates, 12 saucers, 12 cups.

I can still hear the noise. I didn't do it deliberately by the way. So the next question is from Dan Smith. It says, "What's your opinion on the value of an Ivy League education? How important is it to go to Princeton instead of Rutgers?" Well, let me say this.

As you can probably imagine, a number of friends, classmates of mine from Princeton and friends of mine here will ask me to interview their kids and write a letter to Princeton. And I pretty much do them all, maybe for a year. I'm very clear about my recommendation. I can't say I've done this kid all of his life or her life and seen him grow because I haven't.

I say his father asked me to interview him and here's what I find. I'm very clear about that. I don't want to do anything deceptive or duplicitous. It's not a good idea. And I always say to the kids, you know, I know you want to get into Princeton. The odds are terrible.

They're much worse than the posted odds. I mean they claim to take 8% of the applicants and the real number I'm sure is like 4% if you count a football player here or there, another kind of an athlete. You need a tuba player. Generous alumni, I think they're entitled to some kind of a legacy and they are.

I mean they get it and I would argue they are but that's another story. But you take that group out and the real admission rate is probably 4% or 3%. Very impressive. And I say, you know, it's amazing how I say to these young men and women, it's amazing how many people I know who had enormously successful careers, happy families, fulfilling lives that never went to Princeton.

It's amazing. Would I prefer Princeton to Rutgers? Yes. But you know it was just a great place for me. It was so different and diverse now. We have a lot more, well I think it's exactly half, almost exactly half women. There were no women when I was there. There was a black young man in our class who we didn't even know was black.

It was kind of, you know, dark but he was black. It had limits on Jewish kids and there were very, very few Asians and all that has changed. I mean Princeton is adjusting to modern times and you know I loved it the way it was when I was there but I realize you can't, you know, I look back with great affection.

It was a wonderful, wonderful time in my life and you know if I hadn't gone to Princeton there wouldn't be any Vanguard, right? And I wouldn't have had a senior thesis in the mutual fund industry because no other college in the country asked the undergraduates to write a senior thesis.

So it was a great blessing and I wouldn't take it back. I owe it an awful lot. But today, you know, the world of talent will emerge and I'm sure you can get a good education at Rutgers. I'm sure you can get a good education at West Chester University here.

Little, big, it ends up being up to you and you know I'm a believer that we have ourselves to answer for fondly and the idea you don't get into Princeton say and spend the rest of your life complaining about how your future was ruined by not getting into Princeton.

There is the perfect identity of a loser. The next question, there's a little inside explanation for those who don't know. Jack really does have a slide rule on his desk and he knows how to use it. So the next question is from Dan Smith and he wants to know what kind of slide rule do you use?

Pick an echo or COFL and ICER. Which is best? Why do you use the slide rule instead of Excel? The answer to the second part of the question is COFL and ICER. And it's aluminum. The wooden ones get very sticky and I also have a little mini one that doesn't work very well.

I have three of them. So when I start banging on my desk to find one under all that paper, I always find one. Everybody says it's kind of a joke but I got into this a long, long time ago. I didn't use it. I wasn't an engineer or anything which is where you see slide rule was used mostly in undergraduate days and when I was in college.

But I was doing every, the end of every month I would have to go over to our Camden office where our funds were located as compared to the management company and get yields and everything in the portfolio. And so that was what we did in those days. And you know I had my little Monroe calculator and it kind of made me crank.

Well I found out the yield on General Motors say was 6.48329 on my computer. Wonderful. What the hell do you do with that? I found out by a quick switch of the slash of the slide rule. I got 6.4 and I didn't care about the 82419. I mean it's very, very efficient compared to what we were doing then.

I don't use it as much now but I don't think many days go by when I don't do something with it. And it's because I'd rather be approximately right than precisely wrong. This question is from the forum Jack. It's from Joel and he asks Mr. Margo what are your top priority projects for the next one or two years?

Thanks for what you've done for individual investors. Well my highest priority and you know things keep getting, it's amazing how every day something new pops up. And you'd think that the demand for my ideas, services, whatever would fade. But they don't. And in a certain way I think I could make a statistical case without even the slide rule.

They're actually intensifying. Right now, I spend a lot of time on things like the talk I gave to the endowment fund officers in Washington. And I spend a lot of time doing this this morning, a little slap dash from me. But it doesn't, you know you don't just say well let's throw together some charts Mike and say that to him at 4 o'clock yesterday afternoon.

That's just not the way the system works. So all these things are diversions from what I really want to get out of the way for my next priority. Just finishing the darn book. I mentioned the deadline got lengthened because of my disability or inability as the case may be.

So that's my first priority. And then I don't think I'm going to write a book anymore. I think that really will be my last book. It's a lot of work and it's the overhang of having a task that has to be done when you're 82 years old. And so it will be done by my deadline at the end of February.

And it will be done well. I don't want to compromise on quality. As well as I can do it I should say. I don't want to compromise on quality. And then there will be periodic speaking invitations. I'm doing very few between now and then. And I did get an invitation to speak in Lexington, Kentucky in 2014.

2014? I told them I was busy that day. And I don't much like anymore flying. You know we grew up with getting there is half the fun. Getting there is not half the fun anymore. I guess that was the Cunard Line slogan. Travel doesn't really appeal to me. So I'm trying to limit my ambit where at all possible to New York, Boston which I can get to by training easily.

And Philadelphia and Washington. So I have little speeches. The National Association of Business Economists down here is coming up. I'm going to do a seminar I must say that was greatly complimented by this. I don't know how many of you follow Jim Grant, the interest rate observer guy. The best writer in this business without any question.

And he has a big forum every year that's very prestigious. And he asked me to just do a Q&A with him this year. And he really needed me. So I took that as a great compliment so I'll be up in New York and I'll attend that whole thing which probably starts at 8.30 in the morning and goes till 4.00 or 5.00 in the afternoon.

But I'm interested in getting home at night. Getting home at dinner. So I'm going to leave you this afternoon probably around 6.30. I'll be there up until then. But I just want to see how our guys do. Get a chance to chat with you all a little bit. And we'll chat a little bit.

And then if you're going to do television interviews. And this is you know, it's a ridiculous kind of discipline. But if you're going to do even a simple television interview with an ignorant question. They're not all ignorant by the way. I don't mean to suggest that but it's been known to happen.

And you have to be prepared. So you end up trying every day to keep up with what's going on. And if you're interested in every single thing that is happening in the world, which would mean you're in the financial business. You know this is the New York Times. This is the Wall Street Journal.

On Saturday morning I can spend two and a half hours with those two newspapers. During the week I do one of them coming to work and one of them going home. Because the company is still nice enough to have our mail room guys take me back and forth. And so just keeping up and being interested in everything.

And then after I get the book done, I was telling someone earlier, I don't think a day goes by without some idea in my mind for an op-ed in the Wall Street Journal or an op-ed in the New York Times or even the Financial Times. They want me to do something.

They haven't even said what. But they come to me. I don't know exactly why. Maybe it's irreverence. Maybe it's age. Maybe it's wisdom. God alone knows. Maybe it's because they know I'm a pain in the duffle bag. But I could write an op-ed at least, I say every day on a different subject.

But I can't do it because it takes a day to write the darn thing. Can I just tell a funny kind of story? Sure. One of my most amusing was in the Wall Street Journal. And I get a little note from Tucku Vaginaria, the guy that ran the Indian Educated in Britain.

He was kind of an irreverent guy and we got along pretty well. So I wrote a lot of stuff for him. And the editorial guys over there really didn't like much of what I was writing, particularly when I wrote something nice about Eliot Spitzer. But they would print and he would essay.

I get a note from him one day and it says, "Don't you hate dot, dot, dot," the title I think, and then dot, dot, dot in the next line, "DAVOS." DAVOS for the World Economic Forum takes place every year. And so I write back and say, "It's absurd, ridiculous, and a waste of everybody's time except the egos of all those big shots that go there." So he writes back and says, "Can you give me 1,200 words on it?" But since they're all in Europe, you've got to meet the deadline for the afternoon for the European edition, so it has to be done by 3 o'clock this afternoon.

So I write the thing and my granddaughter was coming in for lunch, one of my granddaughters, and believe me, she's not going to be part of my type of time schedule. If you have a chance to have lunch with your granddaughter, don't let anything interfere with that ever, ever, ever, ever.

So I got it typed up, took her out to lunch, obviously at the cheap Vanguard cafeteria, came back, edited the thing, and had it all up in a quarter of three. And it was a really, one of the most fun op-eds I've ever done, probably the best one I've ever done.

It was fresh, it was irreverent, and I complained about all these guys. And then I said, "You know, I am interested enough," the last line said something like this, "I am interested enough that when I read President Clinton is flying over to give the concluding address tomorrow, if he calls me up and will take me on his plane, darn if I won't go with him." He didn't call.

So it's a lot of fun and there will be things to do, but a book is really a big project. And I have to tell you, I love when I look at chapters in the past books, I don't dwell on them, but every once in a while I'll look and see what I said.

And I really love what I've written and how I've written it. It's very egotistical, very self-serving, but I really do, and I think it's my fault for writing very important issues. But the first drafts are so pathetic that if I was your student and you were a teacher, you'd say, "Pal, you got no future.

You need an extra year." That's in a lot of ways what I am anyway. This question is from Got There Late. I know he's out there somewhere. "Do you have any regrets about your founding of Vanguard, and what would you do differently if you had it to do all over again?" Well, there are two things I'd do differently, one of which I talk about and one of which I don't.

Duh. I feel comfortable in saying I kind of wish that I'd had a gentler, I mean I'm basically fundamentally a gentle person, but if you're trying to put a new company and new ideas on the map, you can be pretty darn abrupt. And I don't think anybody would tell you if I was ever in a mean-spirited, put-down way, but things have to be done, and you can't convene a committee to do them, and I never did.

You try things in this life, and given my work ethic, which is superb or pathetic, depending on how you look at it, I'm going to know more just because it's the kind of person I am, not because I'm any smarter. I'm going to know more about the issues I want to talk about than the people around that table.

And I don't want to have other people who know less. If they know more than I do, I'm more than willing to help them. But they haven't thought about it, they haven't walked around it. It's a new exposure for them, this is not their fault, we are who we are.

And so I was probably much, and I've confessed to this, much more of a dictator, high-handed probably, but I think in a decent way that people pretty much understood. And so maybe I should have been, according to George Bush I, a kinder, gentler executive, chief executive. But maybe there wouldn't be any vanguard if I were.

So you've got to take the good and the bad. And no one can really imagine what it was like in those early years to try and get stuff done. And you know, you say, "Do it!" And, or often, with a group of four or five people, I don't know who's going to do what, would you guys figure that out?

Here's what has to be done. And that was it. And I don't think that's a bad management style, actually. But I never thought about management style. And someone, Laura, I think again, asked me about leadership. First rule is, for God's sake, be who you are. Because people can spot a phony a thousand yards away.

I don't think anybody has ever called me a phony. How could they? Good. The reality is so terrible they don't need to. (audience laughing) you