>> Please give another very warm welcome to Jack Bogle. >> Thank you very much. That's probably quite enough applause. But I thank you. It's been wonderful to be with you. And I asked Mel to move me into the early spot this morning because I'm trying to be a good family man.

Yes, there is a family out there. And its prime member is my wife. And every year, we sign up for the Philadelphia Orchestra, Friday afternoon concerts, and we do about six. And one of them happens to be this afternoon. And I just -- you must understand that I did not want to say, "Eve, there's something more important than going on -- than going to the concert with you." It's being with the Bogleheads.

And she would probably file papers for divorce. Immediately, if not giving me maybe a chance to redeem myself. So it's great to be with you here again. I've had a wonderful time with you. That book signing was so much fun because I had a chance to talk to many of you about whether you were having a good time or not.

And for reasons that are beyond my contemplation, everybody seems to be having a good time here. I just can't imagine it. But I'm glad you are. And I'm glad you had a good time. Several people told me they had a good time. Over at Vanguard yesterday. And the management part.

People who actually work for Vanguard. And so we're going to just do a little Q&A here. And take it away, Mel. >> The most asked question, a number of people asked this. So I'll put this up at the top. If you remember last year at the conference, you were asked about Vanguard Target Retirement Funds and the Life Strategy Funds.

And why they are using Investor Class Shares instead of the Admiral Class Shares. You said you didn't know, but you look into it. What was the outcome? >> Oh, they have decided to use the Admiral Shares. That's an answer I made up at the moment. Mike, do you know the answer to that?

Is Mike here? Where are you, Mike? >> Why the Target Day Funds use Investor Class Shares? >> Yeah. Or do they? >> Yes, they do. We now have institutional price shares in addition to the original Target Day Funds for larger account balances. But as to why the decision was made to use the Admiral Shares.

Basically, those are under an attempt to serve smaller account counts. The idea was if you're just starting out, you would use the Target Day Fund as your portfolio grows. It becomes more complicated. You probably, we would expect a lot of investors to diversify individual funds. >> Well, one of the things a lot of us have been pushing is that these are nicely diversified portfolio in a single fund that rebalances automatically.

And now we're not talking about necessarily small investors. I agree that people might start with it. But we're also pushing simplification in when you get into your retirement years, both for your heirs and your spouse. And the life strategy and the Target Retirement Funds are an ideal fund to hold that.

So you could have people with $100,000. You could have people with a million dollars in there. So it's nice when you have the two sets of shares. I understand you can't have it. But you do have it with the institutional class shares. So why aren't the institutional class shares offered to us regular folks?

>> Yeah, so now what I'm hearing is there's an appetite for -- >> Oh, definitely. >> -- a big fund with ample pricing. >> Exactly, exactly. And the same is true for the life strategy funds because, of course, the Target Retirement Funds have a changing thing, but once you get the Target Retirement income, it's fixed.

It's not going to move. And people might not want that allocation. They may want one of the life strategy allocations, which remain the same. So I think that there's an appetite for both the Target Retirement and the life strategy funds at the admiral rate, whether they're called institutional or what.

And as I -- say again? Mike said that they do have an institutional class, but most institutional class is offered to large companies. Is that right, Mike? Yeah, and not to us regular investors. So we have to choose the investor class shares. But Mike said that normally, and there's a lot of truth to it, a lot of people in 401(k)s and that start out with a life strategy fund or a Target Date Fund, and that's a great way to start because they're small investors and they can still get a nicely diversified portfolio in a single fund, rebalances automatically.

But the problem is, is that we're -- we have been pushing -- not pushing, but telling people that there's nothing wrong with holding one fund. You don't have to -- you don't have to hold total stock market, total international, total bond, total -- you can instead have a single fund because when you do that, you have to rebalance yourself.

You also would normally want to get more conservative as you age. But in the case of the -- some investors are learning that they don't want to do this when they retire or they don't have to worry about tax efficiency in a IRA or a 401(k). So a lot of investors can have hundreds of thousands or even millions of dollars in the single fund when they want to -- especially when they retire, want to simplify things.

And so there could be -- in addition to the small investors, there could be very large investors. So I don't have any problem with putting a $100,000 minimum or something like that on the funds, but I think that they should be available to us regular investors who have qualified for whatever balance that they set for those funds.

And as I said, that was the most requested thing. Last year, people were asking about it. Jack said he'd looked into it, and now, this year, everybody wanted to know what the result was. So, yeah. >> Let me just add a couple of comments about target date funds because I do talk about them at some length, and about the whole idea of balance, rebalancing, steady balance throughout your life in the last two chapters of the book that I guess just about everybody here owns.

The new book. So this isn't a plug for the book because you already got it. But it is not at all clear that there is a better strategy. Is a target date fund based on your age and retirement date a better investment than, let's say, you deciding that you want to be in a life strategy fund at one level of risk or another?

Isn't that not at all clear that being in a balanced index fund, which we started back in 1992 or '93, which is just straight 60/40 for all investors all the time, it's not clear that target date funds will give you better returns than that. We just don't know. Nobody knows.

There is no guaranteed success in this business. You just take your chances. And so, I conclude in the book that I'm talking about asset allocation, how a lot of it is very intuitive. I'm not so sure we need to go from 60.1 back to 60 to rebalance, and I'm not even sure that you have to go from 70 to 60.

But maybe when you get to 80, you should go back to 65 or something like that. I just don't know. It all depends. There's no rule that is going to get you through there. And then, you have to take into account when you look at history that bonds used to yield a lot more than stocks.

And that was a good reason. So, you come to your retirement and you want more income. Not everybody does, but most people do. And so, you've got a much bigger portion in bonds that will pay you income. And that's one of the principles of the target-date funds. But it isn't the case anymore.

You know, I'm using a future return. Well, let's talk about yield. I'm using a yield on bonds of about 3% for the next 10 years, and that's just based on a very simple division of your bondholders into 10-year treasury notes, yielding about 2.2%, and a corporate bond fund yielding about, I think, about 4%, and you end up with a 3% return.

And so, that's pretty much what you're going to get. Not the old 8, not the old 9, not the 15 that we got in Paul Volcker's era. Imagine that, 15%. I mean, shooting fish in a barrel. If you'd bought a zero-coupon treasury, nothing would have been better. So, I think we can say safely that it would be very hard to talk about the bond market and say that in the future nothing could possibly be better than a 3% return.

I don't believe that. So, it's very much intuitive. I think, I almost hate to say this, but people should relax a little bit about the precision of all this, or about the certainty of all this. There's no certainty in investing. And I had this letter that is in the book, and I wrote to a young man who was worried about all the problems in the world, and he was trying to set his asset allocation.

And so, you know, I said to him, you know, sir, young man, just as much about whether we're going to have a nuclear war as I do, or as anybody does, you know just as much about whether global trade is going to completely crash, which is kind of in the cards, but it may happen and it may not.

You know as much about the effects of global warming, or as we're now supposed to call it, climate change, as anybody, make your judgment about that, and I can't help you with that. And, you know, racial divisions in the country, gap between the rich and the poor, how is that going to be reconciled?

Nobody knows the answers to that, and yet that's an important part of what the market will hold in the future. So, I said, as for me, I'm invested 50% in stocks, stock index funds, and 50% in bonds, either our munis in my personal account or my corporate indexes or total, but not so much total bond market indexes, intermediate term in length, and I spent half, I said 50/50, and I spent half of the time worrying about why I have so much in stocks, and the other half of the time worrying about why I have so little.

>> Let's call that the investor's dilemma, and I think from that applause, for which I thank you, I think everybody is in the room, as I said, that said, oh yeah. >> No doubt, Jack. This question is from Dan Wickenhauser. He said, did you take an active role in the financial literacy of your children and/or grandchildren, and if so, how would you recommend that a parent start this process today?

>> Well, you know, that's really a good question, and somebody mentioned it yesterday, but giving their kids a stock that they could watch, that kind of thing, and believe it or not, I did that with my oldest son. I bought him four stocks, probably five shares of each. I can't remember the names of all the stocks now, but he put them on, he got these little decals and put them on his lampshade so he wouldn't forget to track them, and it got him very interested in the stock market, and that's the way to get your kids interested, but when it comes to investing, burn the damn lampshade.

And I don't know how one reconciles that gap, and it's sort of the fun of investing versus the fun of not having a needy retirement, and, you know, one is long-term in nature, one is short-term in nature, one you can watch every day and see good things and bad things happen, one is roughly like watching the grass grow.

And so I don't really have a good answer to that. I have given my grandchildren, in little trust accounts, which their parents will only be trustees for, balanced index fund, and I do it year after year. I'm not sure that's the perfect choice. Obviously, if you go back 20 years, 25 years, I should have put 100% in S&P 500, and I should have leveraged it, to be honest, but, you know, I'm just not into that.

I don't want to look at it, I don't want to think about it, I want to send the check in at each year end in my ability to make gifts that aren't taxed, get it out of my estate. And so they have had an education in the balanced fund, and there's a pretty good section about what we call the Bogle model in the book, and it shows how the balance, the Bogle model is basically, based on the balanced index fund, was in the top, did better than the top decile of college endowment funds.

The top decile of college endowment funds in the last 10 years, 5 years, 3 years, and probably 1 year, I can't remember. Wasn't that, yeah, and they had maybe, let me guess, a 1.25% margin, and we didn't have any geniuses running it. We had some genius who said balanced index is a good idea.

I think I can remember who he was. >> Jack, this next comment/question is, I'd be interested in what his views are when he looks at his lifelong accomplishments. Does he ever sit back and realize how many people he has impacted for the better, how much he has impacted the investment industry?

These impacts are huge, and I wonder what it must be like to contemplate your accomplishments. >> Well, when a question like that comes up, one is always called on to quote Sophocles, which I'm about to do. One must wait until the evening to enjoy the splendor of the day, and my evening is not here yet, so I'm not really enjoying, ready to enjoy the splendor of the day.

And yet, and I mean, I do get a lot of enjoyment about, you could see this yesterday, I feel badly about it, actually, maybe a little too much ego, a little too much pride in some of the things I showed you yesterday, but it was kind of my year, and I thought, hell, brag about it.

And it's not a good idea, I know that, and that's why that quote I gave you at the end about how minuscule we all are in the vast context of space and time, so you kind of come down to earth, and you also have a lot of lives. You have a family life, you have a community life, you have a business life, and you have a, I mean, I would say I have a ministry.

I'm much more interested in the intellectual side of this business than I am in the business side of this business, and indeed, that article I wrote for the Financial Analyst Journal, their request of what I mentioned yesterday, profession versus business, professional values versus business values in finance, is to try and strike some balance in all these things you do, and I, you know, we, we, my wife, I think I'm bereft of humility.

Did you follow that all right? And there is, there is something to that, but I've tried to handle what I, I don't want to make this too personal, but I just, this is, this is really weird, and I may be overexpressing a little bit, but I just want to be the same kind of kid I grew up as.

I don't want to change. I had high values. I tried to set a good example. I took responsibility. I worked hard, and tried to do things the right way to help the community and the investor and anybody else I was working with, and that's good enough for me, and, you know, when I look at some of those monkeys, for the want of a better word, that are in the Forbes list that I talked about yesterday, you know, I have no envy.

They all have more money. No, I don't give a damn, not a damn, and we have all we need, so I'm not embarrassed in that score, and, you know, I've done my best to live a good life. I've made some errors along the way, but I do like, I mean, I get letters from shareholders, this is a more direct answer to your question, Mel, I get letters from shareholders pretty much every day to the point where if I hadn't gotten one in the morning, when noon comes, I say, "Emily, do you want to check the inbox?" And so that's good enough for me, and the letters I've written are incredible.

They're beyond belief in their generosity, in their appreciation, and, you know, little things, little things mean a lot in life, and I just got a letter in response. This was not even an investment letter. This fellow said he had talked to me, he's a man, I think, about 60, he had talked to me, he was scared, he thought he had to get a heart transplant, and he called me up to talk about it.

What am I supposed to say? I'm not going to talk to you, so I talked to him and encouraged him to do it, told him some of the challenges and difficulties, and how great it can work out, and he got his heart, and it's working fine, so I got a letter from him.

Well, that's nice, you know, if you can do something nice for another person, for God's sake, do it, and to quote what I said yesterday from someone you'll probably remember, "Do it now, for we shall not pass this way again." >> And a follow-up on that, Jack, what would the next Jack Bogle be looking to change?

Is there something that is ripe for a revolution that we will see over the next 40 years? >> Well, that's a good question. I don't think so. The index revolution comes kind of out of nowhere, comes out of an unwillingness of Wall Street and the mutual fund industry to change in a way that favors the investor, and that's just bad economics and bad business, but the mutual fund industry, particularly Wall Street too, has been able to get away with this fraud, if you will, I don't mean to speak too sharply, because the market keeps going up, and I use a number for something like this, if you started in, let's say, 40 years ago, 30 years ago, 84, what is that, 30 years ago, and had gotten the index return of around 11 or 12 percent, you'd now have, I think, around $75 for each dollar you put in, $750 maybe, and for the investors that got 5 percent, he's got maybe $400.

He thinks to multiply his money four times, it's something like that, and instead of eight, or whatever the number is, I don't have the numbers clearly in mind, but that's the kind of difference there is, and he thinks he's in heaven, my God, I've got four times as much money as I had at the beginning, my investment advisor must be a genius, my mutual fund manager must be in the greatest business in history, but he has lost most of that return.

Those kind of returns are not going to be with us for a long, long time, and indeed, given the perverseness of this business, the only way we're going to get those kind of returns again is if we get a good, solid market decline. Think about that, and particularly you who are still putting money to work regularly, what do you want today?

You should look for a big 50 percent decline, and, you know, you keep investing at lower and lower prices, so this idea that the market has to go up, big news in the paper, a new high yesterday, the Dow went up, I think, two one-hundredths of one percent. Well, I mean, that doesn't sound like big news to me, so it's, I think, I think we, it's an, what we have done is to do the right thing in an industry that refuses to change and put the stockholder at the top of the food chain instead of at the bottom.

And that's not going to happen twice. >> The next one is a complaint, Jack. >> Good. >> It says, "Ask him why he doesn't put a proper link to Bogleheads on his, the Bogle e-blog web page. His link leads to this forum. His link to this forum retains the name diehards.org.

A search for his site for Bogleheads returns nothing. Perhaps he is too modest?" >> Wait a minute, I didn't get the question. Are you saying I used diehards.org? >> Yes. >> How could I do that? >> Ask Mike. >> Mike, it never happened, did it? >> I'm sorry, Mike.

I didn't ask the question, I just read it. >> No, no, it's just an example of the incredible modesty I have. You've not observed it. >> Now, the next thing is, a comment says, "Since Mr. Bogle is a hero to people here on Bogleheads, I was wondering who your heroes are." >> Well, I've been asked that question more than once and so I don't have to agonize over the answer.

You know, in the world of business today, you know, certainly Warren Buffett has to be on that list. If you want to look at our competitors, I think Dodge and Cox is the best because they're in the, they're not always going to do well, of course, but they're in the business of, in the investment business, not in the marketing business.

And that's a big distinction, all no-load funds and that kind of thing. If you want to go back in history, long before the recent popularity boom, Hamilton has always been my favorite. And when I read the Chernow book, he was my favorite before I even read Ron Chernow's book.

And I didn't want to have 1,000 pages, I would have bought Chernow's new book on U.S. Grant. It was just too heavy for me. And I think I'd rather read the book than look at it on my iPad. So certainly Hamilton there. Benjamin Franklin, his sayings are quoted a lot and they're very much like mine.

In terms of more contemporary, I still am, I'm not going to say this one because it would get political. And I wouldn't want to do that. I've always thought Woodrow Wilson was one of the great presidents. He did go to Princeton. But he was an idealist, an idealist that obviously fell a little bit short, if not a lot short, in his racial decisions, decisions to remove blacks from the federal government back in 1912 or '13, I guess 1915.

And that was a shameless thing. But I think if we examined the history, we'd see there was horrendous political pressure on him to do that kind of thing. And I don't think he dreamed it up himself. But he did give, and here's a good one for Woodrow Wilson, gave women the vote.

At least signed the final amendment to the Constitution. And so I like Wilson. And young people at Vanguard will often ask me, "What's the secret?" And this is a Hamilton kind of comment. And I say, "Well, look, there isn't any secret." I said, "You have assets that I don't have and I have liabilities that you don't have.

And just make the most of your assets and minimize your liabilities and you'll do fine." But I said, and these words, almost exact words are in the Hamilton play, and that is, "Work a little harder, work a little smarter, be a self-starter." And that's what I've been telling them long before Lin Manuel's magnificent musical came out.

So I don't know what to add to that. And oh, above all, above all, Walter Morgan, my hero. I met him when he was 50 and came over to see him for his 100th birthday. And what I had done, my second book, Common Sense on Mutual Funds, was in the process of coming out, but I didn't have a book to show him.

So I got the publisher to give me the cover and the dedication page was dedicated to Mr. Morgan. And then a page which was like the whole book was printed in blue because Wellington Fund was the first, it was a very staid business back in the '30s. And Wellington used to distinguish themselves blue, prospectus, prospectus printed in blue.

So that was in his memory too. And he saw all that. And, you know, he gave me my first break. He turned the company over to me when I was 35 years old. He was, in many, many ways, a better person than I was. He had a more balanced life.

He was a fisherman and a hunter, had a place up in the country and I guess trout fishery, fisherman and deer hunter. And had his setters and pointers, dogs. And so, and he really didn't want to, he said later on, he turned the company over to me I think when he was about 62.

And he said later on, you know, I wish I'd stayed longer. But he also said, in a magazine that was published probably in the '90s, that hiring me was the best decision he ever made. So with all the turmoil that came with it, he was pleased and I was pleased and I dedicated myself to fixing the Wellington Fund.

Very few people know this story. It's in my book, Investment Versus Speculation. And fixing the Wellington Fund was the highlight of my life. I had to fix it for Walter Morgan and it was not difficult. You know, I'm not known for some investment genius, but all we did was get rid of an investment moron, if you forgive the expression.

And it's amazing, you look like a genius. So, you know, that would be the most of him. >> Jack, I'd like to interject something here when you were talking about Walter Morgan. I remember at the first conference in Miami, I had the job or the pleasure of driving you from the hotel over to Taylor's for our first conference.

And I thought to myself, "What on earth am I going to say to this guy?" And during the conversation, I kept calling you Mr. Bogle and you kept saying, "Call me Jack." After the conference, when I was bringing you back to the hotel, you were telling me about Walter Morgan, your mentor.

And you said, "I had a hard time calling him Walter." And I said-- >> Hard time, I couldn't do it to his face. >> And I said, "Now, you know why we have a hard time calling you Jack." >> It's an older generation thing. >> This was discussed quite a bit, and there's a lot of argument on this among the Bogle heads.

Says, "Mr. Bogle, what is your opinion on Bitcom?" Bitcoin, I'm sorry. >> Bitcoin, Bitcoin. Well, of course, I'm something of an expert in that field. And we're bringing out a Bitcoin fund. The management didn't want to do it, but given my standing in the community, they do it to be offered soon.

It's-- I think it's honestly ridiculous. It's a currency. How does a currency, you know, how does a dollar going to be worth $4 the next day? It's speculative. I don't fully understand this blockchain technology as they call it. I did have dinner when I was at the CFA or something.

Yeah, it was a CFA, a speaker's dinner. And the professor from the University of Georgia who's really expert on all this, the blockchain technology. And so, he sent me his stuff, but I haven't had time to read it, but I'd say, "Don't go there." Can I be clear? >> This is from Lady Geek.

The question says, "At last year's Bogo Heads Conference, you predicted that over the next 10 years, stocks gross return would be 4%, bonds would be 2.6%. Your slide presentation, pages 49 to 52, which only Lady Geek could remember. It's one year later, are you still on track?" >> Well, no, I'm not on track.

Let me be honest, I mean, I'm not sure what that means, one year into a 10-year forecast, but it means the returns will be much lower than they have been. But I want to emphasize this. I have never thought or said that this theory of the sources of returns, stock returns come from dividend yields, stock returns come from earnings growth, and we add those two together, and that gives you investment return.

And then stock returns get enhanced or reduced, by valuation changes. If the PE goes from 20 to 30, you get another 7% a year. If it goes from 20 to 10, you lose a 7% a year over the next decade. And those things are not really predictable. So we rely on history, I do, I think it's 10 years for one and 30 years for the PE.

And so when I say, as I do this year, 4% and 3% before costs are deducted, I say, if you don't like my prediction, make your own, and just think about how easy that is. And the dividend yield is 2%. You can't change that, and I can't change that.

The earnings growth, I'm using 4, and you can say it's going to be 8. I don't think you're going to be right, but you're entitled to say that. So all of a sudden, you're at 10, 8 and 2, and you say, I think the valuations are going to go from 25 times earnings to 30, and that's going to take the 10 to, let's say, 12.

Just don't give me the 12 without telling me the components. There's a discipline here. When someone says, I think the market's going to do 10% a year, just tell me, please, where it comes from. And right now, my predictions are not looking very good. Not predictions, really, but reasonable expectations.

And I'd much rather, I guess just constitutionally, be on the low side than the high side, but the math is the math. Now, I could have said I expect more earnings growth, and I probably would have been wise to have put 7% earnings growth instead of 6. I'm sorry, instead of 6%, instead of 4 or 5%.

But we'll see. There's a lot of time to go, and happily, with this 10-year forecast, I won't be around to know whether it's right or wrong. >> Well, we hope you are, Jack. >> Not too much. >> And she made a comment that you're a Phillies fan, and wanted to know if you think the Phillies are going to turn it around.

>> Well, I certainly was a Phillies fan. >> Was, okay. That answers the question, Jack. >> But they have, I mean, it's just amazing to me. Everybody else seems to produce an Aaron Judge or somebody like that, and the Phillies don't. And I don't know if it's their farm system or what, and I think their management is top-heavy.

They've gotten this young quant right out of, what was the Billy Bean movie, Mike? What was it called? >> Moneyball. >> Moneyball. I had a good story about the investment, and that was a fun movie. But it's, we're in the quantitative era in baseball, and people are trying to pick and choose and look at little numbers.

And that will help some teams for some time, and other teams, well, that's just like the investment business. And as soon as somebody says there's a winning strategy, everybody else does it, and it's no longer a winning strategy. This is all so simple. And so, the Phillies, I don't know, hope springs eternal.

>> And this next question is from Victoria, who's sitting right next to Sue. She said, "Jack, what are your favorite topics in the Bogleheads Forum? And conversely, do any topics on the Bogleheads Forum concern you? I.e., do you think any topics do more harm than good for the average investor?" >> Well, let me first be honest.

I have to work every day, and that means I don't see the Bogleheads every day. I mean, the amount you have on there, the number of hits, number of comments are so vast that I just, I cannot be a subscriber. I kind of count on Mike if he finds anything that's, you know, relative to what we're doing, he and I are doing.

And, you know, he'll tell me about that. But as for topics, I mean, I think it's fair game, and there's no such thing as a bad question. There's just a bad answer. And so, I think the Bogleheads has been a huge asset, enormous asset at Vanguard. There's nothing like it out there in the world.

I read somewhere that it's the most popular investment website of any kind, not just, you know, put together of common ownership and common values, but any website that's there. So I'd love to see it. I usually send to Taylor stuff that might be of interest, but we kind of miss a lot of those.

I don't send enough of my stuff down, and he can decide whether to publish it, or Mel can decide whether to publish it or not. So, but I do look at it, and I do look at the number of comments about what I've said. And, you know, if I said something really stupid, I take those comments to heart.

You know, you can learn a lot from your mistakes, and so I try to do that. So congratulations to all of you on having a really, really good, really, really good website. And think of the number of investors that you helped, and it's the objectivity that counts. You know, you're not getting paid.

You've done it, and it works, and so that's a huge service and a huge part of Vanguard's growth. I mean, I can't give you chapter and verse, but probably, I don't know if we're doing $350 billion a year. God knows how much comes from the bogleheads, and then people that look at your site.

But it's a great asset to have in the element, you know, people talk about the index fund as being a great example of the democratization of investing. And you put the democratization right first, so it's the democratization of commentary and all that, and as well as the, you know, principal use of index funds, one way or the other, or low-cost funds is fine.

And so, I think that's all I can say. >> Well, I did point out to Vanguard when they showed the slide that showed the growth comparison of Vanguard to, Fidelity, I think, was second, and they were going neck and neck, Vanguard slightly ahead. 2007, Vanguard shot up like a rocket, Fidelity stayed down here, and I pointed out that in 2007 was when the Bogleheads Forum was founded.

And they acknowledge, the people, the Vanguard people do acknowledge the fact that we drive a lot of business there, and that's one of the reasons why they treat us the way they do. >> Well, maybe that's why they ran that thing about airline preferences on their website. >> This next question is from Rick Tawani.

Could you please comment on the differences and benefits of investing in different kinds of index funds? For example, cap-weighted, fundamental-weighted, and equal-weighted. >> There is nothing like cap-weighted indexing. It gives you the entire market return. It doesn't care about sectors. It doesn't care about managers. It doesn't care about styles, and in the long run, we know as a fact that it's very difficult for investors to capture the market return.

As a group, they can't, and so I go with cap-weighted totally. It also is kind of self-executing because people write, you know, if these hot stocks, whatever they call them, shag stocks or something, sag, rag, what's it called, Mike? Bang, bang, bang. When they fall apart, the index, boom, will be over.

But the reality is that other funds own those same fang stocks, actively managed funds, in almost the exact proportion as the index fund does. There's just no grounds for that kind of complaint. So, and it's not like we're driving up the price of Amazon if we buy it. We're not a big factor in that market because we aren't turning the portfolio over.

It's just investing new money. And so it seems to me quite clear that that kind of indexing is best. You will find in equal-weighted a kind of temptation because it's equal-weighted, you don't have to, it requires a lot of work to adjust it and keep everything equally weighted. And every once in a while, including the recent era, equal-weighted has done better than cap-weighted.

But it doesn't represent anything but a new way of looking at the market. And sometimes it will do better, and sometimes it will do worse, and sometimes it will do a lot better, and sometimes it will do a lot worse. So it's just the non-predictability of the returns on the equal-weighted portfolio, relative to the total market.

It's going to get people thinking I should have done this, I should have done that, I'm going to get out of this, get out of that, when those things happen. And so the temptation to change is always great. As for the value, I always thought that whole thing was kind of nutty, if you forgive the expression.

And we had my sort of friend Rob Arnott brought out this rappy 1,000 fund, and it was based on industry fundamentals-dividend yields, earnings growth, book values, even number of employees, things like that that are pretty durable. And he's had a very erratic record, very high volatility relative to the 500, and is probably a hair behind the 500 as we speak today.

It was very, very close, he's been ahead a lot of the time, but now he's been behind, and now he's calling for a crash in fundamental indexing. And I don't think that can happen either. I mean, the guy's a little bit of a nut, and he wrote an article about him in the Wall Street Journal.

This is a little anecdote, and the journal reporter called me, a big article actually, and she said, "Well, how do you sum up your feelings about Rob Arnott?" And I said, "I just wish I was as sure of anything as he is of everything." And damned if that wasn't the closing line in the article.

And I heard from one of his associates that he loved it. He loved it. What to be said. So, you know, fashions come and go, and we'll see a little bit more of this in the cash flows as the year goes on and comes to a conclusion in probably next year.

But all this talk about value being better than growth, this year the growth index is up 22 and a half percent, and the value index is up by 10 and a half percent. So that kind of thing happens. Call it reversion to the mean, and that's a fundamental thing.

You saw the charts yesterday, and it's always, in my opinion, it's always going to happen. There is no such thing as a permanent solution, a permanent formula, a permanent way to get rich and just enjoy the market return. And you may do better somewhere else. I have no reluctance to say that, but you don't want to bet your financial future on odds.

You know, I got a 1 in 10 percent chance, 1 in 10 chance of beating the S&P. Why would anybody take that? So I'm very comfortable as life has gone on and almost everybody has adopted the S&P or the cap-weighted, market cap-weighted by total market capitalization and methodology, anyone serious about the business.

But there are a few kind of outcast, outliers, I should say, that do the total stock market. Right now it looks pretty good. I mean, do the equally weighted. So, you know, choose whatever you want, but I think if you're investing for a lifetime, there is no better way to do it.

And I will editorialize at this point, and I'm starting to write more about this. I did it to the CFA, too. Just think about this for a minute. You're a mutual fund buyer, and you buy the best managers that are around, looking at past performance, which is not only useless, but counterproductive.

And we know you start this at 25, and you're going to be investing for the next 75 years. Someone 25 years old will have a life expectancy of 100 years. So what happens in the next 75 years? Mutual fund, you buy three funds or four funds, good funds, good performing funds, and one, the average portfolio manager lasts eight years.

Not 75, eight. And the average fund, well, 50 percent of them go out of business every decade. So that's 50 percent, and 50 percent, and 50 percent, and 50 percent, and then 25 or something at the end. And so you're going to probably own, we have no way to calculate this, but I think we use, when I gave these examples, that you'll have, let me say, 35 different managers in your lifetime.

What is the possibility that 35 managers, some of whom have gotten fired for bad performance, some of whom brought in new managers who clean out the portfolio at great turnover cost, some of which come and some of which go, none of them are going to live for 75 years, more than their present age, and what are the chances that that large number of managers can conceivably outperform someone who is smart enough to pick no portfolio manager at the beginning with the guarantee that his fund will still be run by the same non-portfolio manager at the end?

Think about that. So lifetime investing is what we should all be thinking about and not being paid so much attention to what happens every day, every minute, every week. And listen carefully to Jim Cramer to get the best advice we can. A little aside on that, the first Bogo Heads conference was at the Miami Herald Making Money Seminar.

Jack was the keynote speaker and followed immediately by Jim Cramer. Jack made his usual buy the market, own the market, low cost. Jim Cramer came up, forget everything that guy told you, I'm going to give you 10 stocks that won't miss. Everybody's writing down, running out to make the calls to the broker and that was right before the tech wreck.

And his stocks, basically I think 8 out of 10 went out of business and the others lost 70%. So right after that, if I recall, he confessed that Jack was right, buy index funds. But that was right before he got the gig banging things on the TV show and found out he could make more money doing that.

And even more, this one happened to be in Florida too. I used to do kind of a speaking circuit thing and I could make a couple of bucks. I would no longer run well at Vanguard full time. And so somebody, I guess it was in Florida, said, oh, it was a money game kind of thing and you had all these, this ring of investment advisors around there and one guy saying gold is the only way and somebody else is saying gold is the only bad way.

And then so how do you, if you want growth without risk, here's how to get it and on and on around. They were all just big phony things. So when I got up to speak, I said to this nice audience of normal human beings, probably an audience very much like this one, and Taylor Laramore happened to be in the audience.

And I said, you know, the first advice I'm going to give you is don't pay any attention whatsoever to anyone who has an exhibit here. >> Well, I remember the comment at the end. >> I'm looking over at the guys sponsoring out of the corner of my eye. He didn't look at all happy and Taylor dropped me a vote and he said, I'm going to guess you're never going to be invited to be back again.

But, you know, if that's the price you pay for telling the truth, what's to be said? And it's an opinion. I can't really swear it's the truth. But the best advice is don't listen to all the stuff that you see on the billboards. >> Yeah, that was the money show in Orlando and I remember after that when Jack said, I don't know why they invite me.

They know what I'm going to say. >> Jack, the next question is someone wants to ask your thoughts on two active vanguard funds, Wellesley and Wellington, and their roles have held as part of a retiree's or accumulator's asset allocation. It seems many indexers here do hold these active funds and would be interested to get Jack's perspective.

>> Well, as I said yesterday, I've never done this kind of analysis but I am sure it is correct for Wellesley. But for Wellington, it is 98 percent indexed. It tracks the return, the source of its returns are determined 98 percent by the combination of 65 percent S&P 500 and 35 percent corporate bond index.

And I guess the Bloomberg, Barclay-Bloomberg Corporate Bond Index. So it's an index fund and I like that about it. I like the fact that the big change I made in the fund when it was run, it's kind of a terrible story, when the Boston guys took over, they put a man named Walter Cabot.

Bostonians love each other. That was an aside, in charge of the Wellington fund. He ran it for 10 years. He left the equity ratio normally at about 65 percent top, kept 83 percent, 83 percent totally out of the funds mandate at the high in the market of course and then watched it collapse with everything else, particularly because he put a lot of junk in it, the stocks of tomorrow.

And in Mr. Cabot's 10-year tenure, it had the worst record of any balanced fund. And what you have to understand about this business, it is just as hard to be the worst fund on the list as it is to be the best fund on the list. I mean, there's a lot of randomness here.

So he went on and so he was basically an abject failure. And so where did he go from there? He was named the treasurer of Harvard University and the president of the Harvard Management Company. Only in Boston. >> Do you think the higher profit potentials of large U.S. companies in domestic markets will continue at the expense of foreign and new domestic competitors?

>> Well, I don't really know how to answer that because these old dichotomies really don't exist anymore. We know that half of the revenues and half of the earnings of U.S. corporations come from non-U.S. sources. And so you already have an international fund there. And the question, I mean, let's call it 50 percent.

It's different. You don't have the same currency problems and all that, or currency value variations if you own foreign stocks. And by the way, I should say this. I don't know how many people know it, but I want to have a chance to mention it. And as last year, there is no question.

I'm glad Mel didn't ask one. There's no question that gets asked more of me than why don't I favor international stocks? And I've explained it over and over and over again. And now when somebody asks it, I say, I hate that question. You might as well be honest. But last year, this year that we're going through right now, foreign stocks have done exactly the same, non-U.S.

stocks have done exactly the same as U.S. stocks of about 14 percent until you get the weakness in the U.S. dollar, which has added 10 percent to those returns. So when you look at the international returns and non-U.S. returns, you will see 24 percent. But understand that those things are not fundamental in local currency terms, the way the markets are actually performing before you get into currency is identical.

So there are a lot of things that go into this. And I always thought currency risk was a reason not to own international or non-U.S. funds. But I don't really object to it. But it's gotten to the point, I think the article was on CNBC maybe, Mike, the thing about my feelings on international.

And oh, you didn't see that. You always wonder. It's six pages. Six pages. Of explaining my international position. And, you know, it's very logical. Could be wrong. I'm not saying that. You can always be wrong. But it points out that I don't say you don't need donors. You just be aware of these risks.

A lot of returns in the U.S. companies are already international companies. That currency risk is a big thing. That institutional kind of risk. And these are how these things change. I'm not allowed to get into politics, but the fact of the matter is we used to look at the United States as having the strongest institutions in the world, governmental institutions, court institutions, or other kinds of institutions that change our lives here for the better every day.

And, you know, the government institution is shaky today. Everybody knows that. I used to ask, have we lost -- one of the risks is will we lose the ability to govern ourselves? I think you could argue that we're giving that a good shot. But that's politics, so I won't pursue it.

>> Well, Jack, I guess I can throw the rest of the questions away since you don't want anything on international -- >> No, I'll be glad to repeat my usual patois. >> This is a little twist on it. He says, in Bogle on mutual funds, you explain why international investing has risks and state that perhaps investors should keep their money in U.S.

stocks. It concerns me that virtually no other passive investing author is worried about the same risk that you identify. Why do you think these risks are ignored and international investing is being touted as crucial for maximum diversity? What is behind this? >> Well, first, I have never given a damn about what anybody else thinks.

>> We knew that, Jack. >> And I pay attention and I listen to the arguments. That may be a little strong form of my feeling. But they're entitled to their opinion and it may be right. And as this article that I just cited mentions, and this is true, I say this whenever I write about it.

When I first said this, you don't need the international, any non-U.S. stocks. It was 1994 in my first book. I was on the record. You don't need them. If you're going to have them because of these extra risks, stop at 20 percent, no matter what the market weight is.

And so in the next 20 years, some 25 years almost, and the non-U.S. are up about, let me say, 300 percent and the U.S. is up 800 percent. So this is a brilliant prognostication. I hear a little applause there. And yet, I quickly acknowledge the fact that the U.S.

has done so well for so long in this relative sense may easily mean that we'll have some reversion to the mean. I always talk about that. And it could mean that one doesn't really know. So just take all of the-- don't take my word for it. Take it and make your own decisions.

But I do think that you don't want to get carried away with unknown risks. And then I use this other example. And they talk about Disney. And that is, when you talk about non-U.S., think about what non-U.S. means. Don't just take it for granted. The largest non-U.S. market is the United Kingdom.

The second is Japan, and the third is France. Now, the U.K. with Brexit and all is not in a particularly productive economy. I would bet that our GDP would grow faster than theirs in the next 25 years. Japan, very structured society, population shrinking, or aging population, tsunamis every few years.

It doesn't seem to me to be a place that will do better than the U.S. And France, my God, they don't go to work there. They're having a big fight again. So, if you're French, I'm sorry. But they have very strong labor protections in France. There's no question about this.

And the idea of the new Macron, I guess, administration is to reduce those protections and have a more competitive framework. And labor is revolting. You know, they have a, I think it's a 35-hour maximum week or something like that. And, thank God, I work 35 hours and a half a week.

Not now, but I used to. >> Jack, this next one is a little embarrassing. It says, "A friend of mine is a successful salesman for Northwestern Mutual in Omaha and continues to push insurance financial products. I have told him time and again that I'm not interested and I'm now a bogey head.

Three fund, low expense, index investor, full discloser. His comeback was stating, 'Good news. Jack Bogle is a Northwestern Mutual customer.'" Is that true or is that-- >> Yes, it's true. I mean, let me tell you the truth of the matter. As a young married man, I wanted some insurance in case.

I quirked, passed, went, so whatever the-- but don't use the word died, please. And so, I bought a $10,000 policy for Northwestern because it was clearly a mutual company which was probably the best company in terms of relationship of rates to premiums and for $10,000. And I think maybe there was a companion policy I bought later on which is a tie on to that which maybe was another $8,000.

So, yes, and I still kept it. So, I had $18,000 with the Northwestern Mutual. I mean, confession is good for the soul. I hope that doesn't-- >> Well, are you getting royalties for them using your name, Jack, as a sales tool? >> No, but you know it's going to happen.

You know it's going to happen. >> OK. Besides contracting for a term like policy, is there any reason to invest in an insurance product? >> Well, when you get beyond term-- and all term is not the same, by the way. You want to pick that very, very carefully, but there's some perfectly good term policies.

Sure, there's a place for an insurance product. For people that, you know, they have modest means, they're very dependent on-- their family is going to be very dependent on their earnings. They don't have a lot of savings put aside. And it's an expensive way to save, but it's immediate.

You know, you invest the difference and it's-- it just is a perfectly intelligent thing to do, just so long as you don't get ripped off. And I'd say there's such a thing about-- and the hidden cost in insurance and particularly in variable annuities are just an outrage. And so then it's not a good investment.

It's a terrible investment, but there are things that are more important like your livelihood. And when you get into things, my experience or maybe intuition, when you get into something that gets complicated, it's really hard to maintain. So, you're buying term and investing the difference and, you know, it's complex and, you know, if you forget to invest a couple of times and your term policy lapses or-- there's so many things that can go wrong that I think the strategy in the abstract is fine, but in the implementation, just make sure you do what you're intending to do and buy from a good company.

And there aren't very many of them. I'd say Northwestern is still a pretty good company. >> This one said-- first of all, this was in almost every question. It says, "Mr. Boyle, thank you for all you've done for the little guy," and I just didn't want to repeat it over and over again, but it was in almost every response.

"If I were to include Social Security as part of my fixed income, what would be wrong with holding the balanced index fund for life? My plan is to put it in this one fund and never look back." >> Nothing. >> OK. >> That is nothing would be wrong if you missed the beginning of the question.

>> This one, again, repeats, "Thank you for all you've done in order to help the individual investor. Thank you for providing that constant reinforcement through your books and interviews that allows me to feel confident with my investment strategy. Taken into consideration, you're often quoted aging bonds as a starting point in determining one's fixed income asset allocation as well, as there is less need or willingness to take risk as we age." >> Well, in the abstract, that's probably true, but it's a rule of thumb and it depends on so many things.

First, it depends on including Social Security as a fixed income position, which it clearly is. And as long as it holds up, it's a fantastic-- and we all just got-- everybody in the room just got it-- everybody that's on Social Security got a 2% raise. And, you know, that's not a bad year.

And so it's inflation hedged by and large. And the government is not going to go out of business. It can be fixed. I'm reminded of a panel, a joint interview I was doing with Paul Volcker some years ago. And I said that-- they were talking about Social Security and I said, "The fixes are so easy, you wouldn't even notice them." And I said, "If you would just make Paul and I the two czars of the new Social Security system, we'd get it fixed in a day." And Paul looks up at me and says, "Couldn't we fix everything?" >> Jack, I know you have to get out.

So we're going to let you out on time. I want to let you know that we ran out of meaningful tokens of appreciation for your-- for the annual events. So we decided to create one. I know recently in conjunction with the Forbes Award that you won, you mentioned Founders Mentality.

And we thought we'd pick up on that and we'd create something to commemorate this. As you know, many memorable events happened here in Philadelphia and pictured on the left of this are the founding fathers at Independence Hall in Philadelphia and on the right is a picture of you. And the title is Visionary Founders.

And you certainly fit that to a T, Jack. And thank you for all you've done. >> Well, thanks guys. We all need strength to carry on, I underscore the all. And these couple of days with you have given me enough strength to go on for as long as I'm able.

I'm not going to go on forever. And there will be a time when your mind starts to go. It happened to a lot of my friends. They died, we lost three good friends in the last two weeks, about my age, one a little older, one younger. So that happens and it's part of life.

But I'm going to try and go on as long as I can responsibly do it. And responsibly be fair to my family. And I'm still trying to make my family life a little bigger part of my regular life. I do take those couple of months off in the mountains in the Adirondacks in the summer.

But I found out that when you've been at Vanguard for 30 years, you get eight weeks vacation. So I've been there for 65, so I may just go up there and stay there, but it's a thrill to be with all of you. God bless you and God willing, I'll see you all next year.

Thank you.