We've got a combination of questions from the attendees, the forum, and we have some late submissions. So I'll move between. The first question is from, got there late, Jack, first of all, thank you again for founding Vanguard and devoting your professional life to helping the little guy in investing.

What can we little investors do to help ensure that Vanguard remains Vanguard, and what do we need to watch out for, and how can we and our descendants preserve this wonderful company that you started and protect it from potential threats when we both move in and move out? Well, that's a challenging question.

That's why you got it first, Jack. I think the potential threats for without are de minimis, and maybe even non-existent. I don't know who's going to be able to do what we do better than we do it. I know that a lot of people can do it, but they can't do it better.

And that's just a braggadocio. If I was a money manager, say Peter Lynch, I'd say nobody can do it better than I can, you shouldn't believe me. I'm just talking about the mathematics of the marketplace. As I said 10,000 times, relentless rules, a humble arithmetic. So, how about from within?

What's the biggest threat from within? Well, first size. Basically, Vanguard has two modus operandi. One is on the investment side, and I think that's the without. I don't think anyone can tell. The theories are right, the numbers are right, the people are right. The other is the inside. How do we keep the values we have as we go?

From 27 crew members in May to 1,000, and then to 5,000, and then 10,000, and now to 13,000, a lower rate of growth. The people have slowed a lot with technology. Probably have twice as many assets under management per Vanguard crew member as we did 10 years ago, something like that.

That number is quite stable, so I can go a little bit. I have to say, I don't know what all those people do. Maybe you might know them. But how do you keep that? And what happens is I spent a lot of time talking to our crew members, and we have frankly gone critically wrong.

And the problem is the famous Vanguard saying from JCB about 15 or 20 years ago, "For God's sake, let's always keep Vanguard a place where judgment has at least a fighting chance to triumph over process." Now, at 27 people, 28 people, that's pretty darn easy. At 1,000 people, it's pretty darn easy.

But if you go up this, let's call it all judgment over here, all process over here, that line ascends. How far does it ascend? Move it up to the CEO. He loves process. We'll be out here. He hates process. We'll be in here, but we'll never get back to there.

You just can't do that with a big company with that many people. You need rules, you need bureaucracy. You really need them. You need guidelines. You need all those things. And frankly, they're antithetical to everything I've ever believed. But they're right for Vanguard. So you can't really fight that.

You can try and limit it. You can try in various incentive ways. I'm not necessarily talking financial incentives. I'll allow that to be a possibility. Just make sure that we get people in a position, I don't know, believe in our mission, but come to work committed, eager, looking forward to an enjoyable day, and make life a little bit better for our investors.

I talk to thousands of Vanguard members, literally. Each award for excellence winner I talk to for an hour. And it takes a lot of time by the time you go through one of these cycles of gravitating forward. And I'm still too busy, but I'd love to do that. I would cut out anything to avoid that.

And then there are a lot of retirement parties or anniversaries, 25th anniversaries or something. And I'll be invited to talk to the people in that department, the group, whatever you call them. And I always do that whenever I'm asked. It's physically possible for me to do it. And so I get to talk to them that way and chat with them before and after.

And so I'm still trying to spread the humanity of the organization. It gets more and more difficult for my successors to do. And it's not their fault. But they have to balance priorities. And my priorities might have been a little bit different from theirs in those days, I don't know.

And so I guess it's mainly don't get complacent. Be aware. Be aware that it's always human beings that are key to how an operation works. And I think we're doing very well on that score, just on first-hand contact with so many people. What can you do about it to help?

Well, one thing I think we are a little deficient in is transparency. When I was running a place, my compensation was always disclosed. We don't disclose all of this compensation anymore. And I think you get a bunch of double-talk, honestly. I probably shouldn't say that. When they say, well, for competitive reasons, look, every corporation whose stock we hold reveals all of their executive compensation.

As they said, we would divert out of our privacy. Anybody would divert. I would divert out of my privacy. But you get in that kind of a role, you have to be prepared for a little public attention and not always happy public attention. So I think that should be disclosed.

If you feel that way. I'm not suggesting I can't write a campaign or something. But as we go on, think about transparency. Are we saying everything you need? I did a dumb thing, that Wellington Fund fee increase. A few years ago, we were reducing fees, and it seemed like every 20 minutes.

I was a tough SOB with Wellington Management. And the way I got it done mostly was to say Wellington Fund was $400 million. And I'd say, well, we're going to go to three basis points over five billion. It's an easy sale for someone that's managing $400 billion of money.

But then we get to now 58 billion, 63 billion, 64 billion. And that fee increase, I said to the SEC, we shouldn't have to go to shareholders. We're changing the management contract. As a result, we're reducing fees. But I failed, I failed to say, of course we're going to raise fees.

We're going to go to stockholders. So we've got to pre-write the increase. I don't like that much. But at least they should be better than page 11 of the annual report. And they should be called attention to what's really footnoted. So the lack of transparency worries me. I understand people don't want people to know this and that.

But I think we need better reporting on what we're doing with companies when we don't do a proxy vote and make our influence felt in other ways, like I mentioned that earlier. And we have to be responsible corporate citizens. We're the largest owner of stocks in the United States of America.

We own about 5% of every company in the country. And with that rank comes responsibility. And it's not just true of us. It's true of our competitors. Nobody is very active. No mutual fund that I know of has ever submitted a proxy proposal, maybe CIA, perhaps. But they don't have a big institutional business.

And we ought to be honest about that conflict between wanting to manage institutional money and being willing to take the risk of losing that institutional account if we put in a proxy or vote against the management of that company. That's what's going to happen, has happened, and will happen.

So you have to be shy about that. Everybody's got to say, "It doesn't matter to us. We have the Chinese bull," whatever that is. People know how the system works. You don't need a lot of rules to keep it from doing A-B-C. It just works the way it will.

And I always get in trouble for saying, "Here, that's one of the other things I'm in. It's free to be in." I always say there are only two kinds of clients. The institutional owners don't know about them. Actual and potential. That's a lot of clients. But there's a non-client A, so you should be voting against client B.

It's pretty obvious that they're not going to be too interested. So we do a very good job on transparency. We have to, in my opinion, do a good job. And so whenever you see any -- I get lots of letters from shareholders who are almost all nice. And I just forward them on to them.

I always acknowledge them and thank them. But send them all these things like, "You can do a better job on your statements," or whatever. Mind you, they love to tail stuff. I'm just a little tail guy. I send on. I don't usually hear what happens. But I think we can do it.

And I also think -- this came up with my daughter the other day. I don't see why we don't make Admiral shares a shareholder notion rather than a fund share notion. So if you've got a million dollars in, let's say, index 500, you're an Admiral shareholder. Mind you, you've got $10,000 in Windsor, too.

Instead of going to $11,000 and going into Admiral, and then back to $9,000 and going into regular, and then back and forth as those numbers change. It's a tiny part, small part, minority part of your business. If you're a million-dollar shareholder, what the heck? You're a million-dollar shareholder. So like the corporate bond fund that I mentioned, the afforded or maybe afforded corporate bond fund.

I think we have to look to ourselves a little bit. Always a good idea for any company at any time, including paying target sales. Beyond that, I don't know how to answer your question. Okay, we have three questions that are very similar, and I can only read one. It's Herbert or Hubert Crook.

The other two, I can't read the question, but they're all very similar. Assuming yields are comparable, do you feel certificates of deposit are acceptable substitutes for a bond index? And along that same line, would you condone a 0% asset allocation of fixed income for a 58-year-old retiree because of the artificial loan interest rate?

Well, the answer to the second question, I'll quickly note, I think someone said this in my first book. You always have at least 25% in stocks or bonds. And why is that? Because unexpected things happen, things you can't imagine that could happen. There's also the kind of reversion of the mean of these returns over time.

We don't know what's going to happen tomorrow. If you're a pure investor who never looks at the stock market, never peaks, as I say, probably 100% equities is fine. Probably. The fluctuation that gets you is where your behavior comes in. You see something drop way down, you think, "Oh my God, I better get out." And that's the problem with ETS.

On the contrary, when something gets in your eye, "I better get in," or getting out when the day is the darkest and getting in when the morning is the brightest is a situation that will leave you with nothing eventually. And that's not a good place to be if you're ready for retirement.

So, it's a little bit psychosomatic. It takes a little bit of the volatility out of your portfolio, which is what you want. But a little bit uncertainty about the future. And I don't know how to deal with that. We could be facing, as I said, and I think I said it in the Times record, you have a Times record.

We could be facing an apocalyptic event. Apocalyptic events almost never happen. Almost never happen. So, you're protecting against something that may never need to be protected. You're buying an insurance policy with the hope that you don't die. Something like that. But I was looking for a dam. And so, it's just cautious.

And you should take into account everything I just said. I might be a very conservative person. You know, I'm a child of depression. I always had to work for what I got. And I look at things very differently from people that have great wealth. Or their families have great wealth.

And I also think about you all. And what kind of advice can I give you? It's pretty much eternal. It doesn't change. And that's something to do with age-based allocation. Not overwhelming. Because, as I said, in Social Security, you've got to capitalize it with a capitalized value of around $300,000.

So, if the remaining estate is 100% in 300,000 stocks, you're 50/50. And that Social Security stream is going to be fixed. But even if it's not fixed, you're going to get 70% of what you're getting today in Social Security. It's not as if it's going to be obliterated. It's going to be reduced.

But I don't think that's going to happen. But there's still a lot of money there for you at retirement. So, you want to think about pension. That's something else. Unless the company goes out of business, in which case you don't have a pension anymore. You've got the federal government.

You've got federal guarantee, insurance policy, or something like that. And that's where the graveyard of the pension fund is. And they're deeply and profoundly in debt. So, you don't really quite know what you're going to rely on. So, you diversify it with another asset class. Just make sure that the dividend chart shows you get the most money, the most return out of that asset class.

And that will cover a multitude of sins. Think about that. How easy it is to add 1% to your annual return without taking any additional risk. There is such a thing as a free lunch. So, you know, I really can't improve on that. But it basically explains cautious and always worried.

It's more for you than for myself, although I'm very extremely conservatively intensive, as I mentioned earlier. And so, I'm happy with where I am. I don't have to worry if the stock market goes up a lot. I'd say, "I wish I had more stock." If the stock market goes way down, I'd say, "I'm glad I have so much in bonds." And if I ever start to think in moments of peril in the stock market, I kind of get out.

I'm a vocal anonymous. I read Vogel's books. I'd say, "I'm going to get out." I'd like to follow up on something you just touched on there, because it's a major controversy among Vogel heads. And that is counting your Social Security as bonds. Because the main peril is that it puts people, you know, large, retired people, in a large equity position, much more than they're comfortable with.

So, how do you address that, those people who are concerned about losing a large percentage of their wealth? Well, sure, that's a good question, and there's no real easy answer to it. But the reality is you should be looking at your investments as providing providers of return in your retirement.

And Social Security is going to give you X per month. And if the stock market goes way up or way down, that doesn't usually influence your return, except for that one year I showed you when the financial system fell apart and dividends were cut by 21%. You know, if you look at your retirement wealth accumulation as how much income is it generating for me, or how much return is it generating for me, you know, that Social Security check is going to keep coming in for as far ahead as we can see.

And you can say it's not going to, and we just have a difference of opinion. So, you know, if your dividends get cut from your mutual funds, that's a matter of significance. Even if you've paid so much that you don't get any dividends anyway, that's why I have that caution.

But you shouldn't worry about the capital value. You should worry about what income it generates. And the capital value, whether those PEs, specular return, goes up or down, are going to take care of themselves in the long run. You saw that. That speculation accounts for nothing in the market return in the long run.

So maybe you've got to have a strong stomach. Guts? Maybe you've got to be oblivious. Maybe you've got to follow one of Bogle's other rules. Don't do something, just stand there. And that's generally much better advice than don't stand there, just do something. Because we're captives. We have met the enemy, and they are us.

And we're victims of behaviorism. But don't let yourself be, or try and avoid it. Read a Bogle book if you get nervous. This is a good question, Jack. And I think in one of your interviews, I think I saw you touch on this. If you could go back to the early start-up years of Vanguard, what would you do differently?

Maybe something in the corporate structure, or fund design, or management, line-up. And I think I heard you say that you wish you had kept part-ownership, so you still have. I still say, yeah, I'm tongue-in-cheek. I read that in the press, and they said I said it. Which was unfortunate, because I did.

See, I'm just John Worth saying something he shouldn't have said. And I just say, I was certainly tongue-in-cheek. Perhaps I should have kept an ownership of 1% Vanguard. We would have been only 1%, only 99.99. But it doesn't really work. I never considered it at the time. So, I think you look at it as tongue-in-cheek, kind of an answer.

What would I do differently? I kind of touched on this before. Just about everything I did for marketing reasons, I would not do again. I'm thinking about, should I have created that broken value index fund? It's okay. I'm not going to do anybody irreparable harm. Is it wise to encourage people to think they can track the markets, the sectors of the markets, and compare to the total market itself?

And I think it is unwise. I did a little rationale, which I told you about when I talked about it, about income when you're older and growth when you're younger. I'm not sure anybody bought it for that reason. I started something called Vanguard Sector Funds. And this is really an amusing and ironic story.

And we had four or five sectors. We didn't want to do it the way Fidelity did. I convinced myself we were doing it differently for our sector. We only created five. There was a service economy fund. There was an energy fund. There was a gold and precious metals fund.

And basically, every fund bombed out. And nearly all of those six or seven or eight series are gone, except one, the health care fund, which is probably, paradoxically, the most successful mutual fund in the history of the industry. It has made more money for more people real on fact-checking records.

It made money for people. And I don't think anybody else can duplicate the number of dollars created by investors today. So out of this chaos came this brilliant health care fund. So if I want to pat myself on the back and forget the ones that failed and I want to succeed, what else is there?

I also started -- the directors kept pushing me. And the directors pushed me too much. And it was one thing that really hurt me because finally I pushed back. And I'll tell you that story. I might as well tell you that story too. I have great regrets about that.

But they wanted me to start some modern, aggressive funds. And we started -- what was the name of it? But long forgotten. And then we had a fund that could buy short, buy and sell short. And we had -- they were all aggressive funds. They were all Vanguard Horizon funds.

Long forgotten and deservedly so. It was a really stupid idea in my part. But I let the -- what you're saying, you've got to do more. You're losing market share. You've got to do more to get in there. Well, that's what happened when I did the go-go thing with Ives Fund back in 1966.

And it was wrong. And that was wrong. And it was stupid. But I let myself be swayed by trying to be nice to the board. Another time I was swayed by the board. It still makes me bothered. It bothered them a lot. They came into the meeting one day and said, "We need a retirement plan." And I said to the other directors, "You've got to be pulling my leg." Retirement plans are for people who give their life to the company.

People who make modest amounts of income. And they go to retirement. And we have an obligation to take care of them. It's not for directors who come in here six hours a month. It's that. And say they need a retirement plan. So they made a motion and passed it.

I voted against it. I may have abstained. I certainly didn't vote for it because my conscience wouldn't let me do that. And they bore that resentment for a long time. And after I was gone, they did away with it. Well, bless them if they never should have done it in the first place.

Getting into the real estate fund. Closed in on REITs we had. And I was persuaded. The young guys said, "It's a new asset class." Well, an asset class of real estate, we learned, is first it's hard to hire a good manager. We hired the best manager we could find.

And second, when you buy real estate in a publicly traded form, the nature of real estate changes. You don't own the asset. You have a security that owns the asset. And the price of that security doesn't necessarily have anything to do with the value of the asset. Another mistake.

Have you had another couple of hours? That will probably hold us for now. Jack, you mentioned John Worth. And we had quite a crucifying of John on the forum when he called you a rabble-rouser. What did you feel when you read that, "rabble-rouser"? Well, I told him that because he must have been out of the room.

I said it didn't bother me at all. You know, we all misspeak. I've known John, I'll repeat to you all. I've known John for 25 years. He's been at Vanguard that long. And I would consider ourselves friends. But I don't think I used this formulation. He has to represent what the company wants, not what he wants.

Like the press secretary of the President of the United States. The press secretary doesn't make policy. The press secretary defends policy. And that's the position that John and Rick is in. And we go out together somewhat tongue-in-cheek. John says, "You know, I'm really caught between a rock and a hard place." And I said, "Well, that's fine, John.

Just so long as you know who the rock is and where the hard place is." I think some of us took it as a real compliment. You are a rabble-rouser. A rabble is an undisciplined mob of the lowest group. I'll take that. No, no. I think you started it wrong.

In the metaphor, that day, "rabble-rouser" was called. But I'm such a language maven. You look at that, and one of you guys did. Much of you guys did on that day. But I just like the support. And I read, again, when you were not in the room, somebody said, "You believe that I--they believe, Sam I am believe, that I kind of enjoyed it all." Of course I did.

Nobody likes a good fight better than old Vogel. He just doesn't like to lose. Here's a question here, Jack. Mr. Vogel, as you consider the current environment and look to the next decade or two, are you optimistic? Can you reflect on what might be broken in the current investment system or systemic changes that might most help individual investors in the year to come?

And I'll put one in for your last one. I think that really covers that a lot. But would you like to elaborate? You know, the biggest pitfall for investors to get into this speculative mode is to try and do a lot. Again, don't just do something, stand there. There's no question it's the best strategy because we're our own worst enemies.

I guess I quoted Vogel, "We have met the enemy and he is us." And so we've got to get to behavioral problems as far in the back of our minds as we can, which is not easy. As I mentioned, it even happens to me a little bit. But you have to rely on--I don't know what else to do, okay?

There's certainly a number of options. If you want to go beyond an absolute loser's game of fixed dollars, we will take on that certificate of deposit thing instead. And if you save nothing, you will end up with nothing when you retire. Build a home. And if you earn a real return of 0%, it's pretty much what savings do, and that may be your optimism for the future.

You're not going to accumulate anything for the future, anything additional. And so you invest, you must. You don't make a choice, really. And right now, investing doesn't look that attractive. The stock returns are down, but positive bond returns are low. And you should take that into consideration in your asset allocation.

Also take into account the emphasis on treasuries should be muted a little bit with a higher corporate position, which I hope will come to pass here and go on. And you have to accept the world the way it is, the investment world. You have to accept the markets, what they make available to you.

You can't change the markets. So then your task is to get the most out of the markets, whatever it is. You want to get 99.5% of that return. And there aren't a lot of places you can get that, and probably nobody other than Vanguard that can do that. So, you know, a lot can always go wrong.

But I look at capitalism, competition, not perfect. Free markets, not totally free. That's the best system we have going for us. And companies have a huge amount of capital, and they invest it, reinvest it, pay dividends. And I don't see that changing. There may be a very different group of companies.

There's the risk in individual companies. I don't think it's ever been higher than it is today. You see something like Eastman Kodak, the bluest of the blue chips, is in bankruptcy. Trying to sell their--I mean, it's pathetic. It's sad. And you see so many things that have come and gone.

The greatest companies seem to take the biggest fall. General Motors barely made it. IBM did a terrible failing but came back from that extremely well. But there's no escaping the rampant run, speedy run of technology. Companies called Research in Motion, that's the blackberry, thought they had it made. And they open the morning paper the next day, and they see in the paper someone has invented this kind of a thing.

And they know they are going wrong. I'm shortening the period a little bit. So all of a sudden you realize you're going and you can't help it. And that's technology. And there's more global competition. And I think so far the U.S. is probably the best position in the world.

We have the largest technology and the largest innovation, much larger in the area of technology than the rest of the world. Probably 18% of our market is technology in the U.S. and maybe 7% in the rest of the world. The best innovation we have, and everybody forgets this, the best system for shareholder rights ever known to man.

You go to some of these other countries, and you really don't know whether your money is going to be confiscated, the dollar is going to be valuated, the Argentine peso, or whatever you want to call it. And so this is the best place to have your money, in my opinion.

Now, a lot of you have argued with me, and should, about whether you should have a much bigger international component. I don't think so. Well, what do I know? You know, I don't. Does that mean you shouldn't? No. You can figure it out. The risks are higher. Subtle risks.

The multiples are not too different. Emerging markets might be quite attractive. Why the developed markets of the world are interesting to anybody is quite problematical to me. When you look through the biggest companies in the index, the international index, including Great Britain, stumbling on them. We've all looked at austerity.

You look at Japan. Even without the tsunami, they've been in trouble for a long time, a rigid society. You look at France, which is next. Nobody works in France. How are they going to do it? Invite your dad to Germany. They either have the American ethic, or we have the German ethic.

But it's a lot of social and cultural things that make economies work that way, I think. Don't give me too hard time in these comments, Bill. I may be wrong. I think if you take emerging markets, developed markets, pricing arbitrage, for the future, I think the beginning of any 10-year period, which is going to do best over the next 10, US, developed, international, emerging international, I think the odds are 33% over the US, 33% over the developed markets, and 33% over the emerging markets.

And that's a pattern that appears over and over again because the markets are different. There's one place I don't want people to take my advice. It's an international. I want you to think it through for yourself. And you can have your Britain. You can have your France. You can have your Japan.

But I don't want them. And they're probably 35% of the international index. Maybe not that much. So, I don't like to do people. My whole career has been based on not giving any advice. Buy the market. Bond market. Stock market. Hold it forever. And I'm very comfortable on that territory.

When you want to submit it, segment it, I'm not so comfortable. Because I don't know. I don't give me credit for the wisdom that I don't have. So, you pay your money and it takes your choice. But I will say this. It's hard for me to see that we're going into an era where emerging markets, let's say, are going to do, say, 4% a year better than the US.

It could happen. But if you've got 20% of your portfolio in emerging markets, that's 8/10 of 1%. Don't buy a cheap fund. It's 8/10 of 1% cheaper. It's what I do. So, I'm still the simple guy. I make no claim to prognosticative ability. But I do know the fundamentals.

I know it's the fundamentals that that corporate wealth will create returns, have created returns in the past, and I don't see any reason they shouldn't in the future. Once again, Jack, we really, really appreciate you spending time with us. It's a real treat for us. And I know that you're not going to be here tomorrow.

So, we'd like to give you this memento of Budweiser 11. It's a beautiful Mountain View statue of Independence Hall. Oh, wonderful. Which is significant because, of course, the location in Philadelphia of this event, but also the financial independence that you've created for millions and millions of investors. So, thank you so much, Jack, for being here.

Thank you all so very much. You know, I have on my mantle, getting kind of crowded with Boba Head's gifts. I have the love statue from last year, and I have from the previous year. It's right there. I look at it, but you're going to have to forgive me for an old man's loss of recent memory.

But it's a wonderful thing to try to cross the street to the Constitution Center. I've invested so much of my time. I don't do it just because I'm nervous. No, I'm just fine. You know, you get old, and you get reflecting about you just can't do what you've been doing all those years.

And so that's kind of sad. But anybody in this room thinks I'm out of energy. I probably am now, but of course it's morning. So all I can say is it's a very, very meaningful, lovely time to be with you all. And I hope to write to the shareholders.

I get a lot of letters from them. I answer every one. When they say something nice, it's almost always, "We all"--underline "all"--mean strength to carry on. So thanks to you guys, I have strength to carry on for another day or week, a year, a decade, or even the rest of my life.

It's longer. Thank you. So right now, just sit right out there. You can bring it back in. Are you here, Emily? Yeah. You want to stand up? I want you to all meet my wonderful assistant, Emily Snyder. She has the patience of Job. She tolerates me every day. We all work very closely together.

She's been at Vanguard, I think, around 25. She's of course your 25-year mark. And it's been with me, I'm pretty sure, around 22 of those years. And we're going to be today with an Emily Snyder Ikea mansion. So thanks, Emily, and let's give her another little round of applause.

Thank you. Thank you. you