Bogleheads® Conference 2016

00:00:00.000 | >> Again, please welcome our special guest of honor, Mr. Jack Bogle.

00:00:14.300 | [ Applause ]

00:00:18.840 | >> Surely you must have had enough Bogle by now.

00:00:21.580 | God, I'm exhausted.

00:00:23.380 | I'm all exhausted thinking about who you all are out in the office, having -- all out in

00:00:27.420 | the audience is having subjected yourself to this unusual form of torture.

00:00:33.680 | But I always love being with you, and I'll say a little bit more about that later on.

00:00:37.800 | I thought I'd just like to take a minute to talk about the development of Vanguard and

00:00:43.360 | the development of indexing at Vanguard, partly based on Gus's remarks.

00:00:48.680 | And first let me say that there is -- in that Wall Street Journal article, it was so nice,

00:00:52.540 | championed the long term.

00:00:53.540 | I love that.

00:00:54.960 | There was a comment by Holman Jenkins that an industry graybeard told me that I would

00:01:01.600 | ruin the industry if I started a mutual company.

00:01:05.800 | This was not a graybeard.

00:01:07.960 | This was a man named John B. Lovelace, or John Lovelace.

00:01:11.320 | His father, John B. Lovelace, was the founder of the American Fund Group out in Los Angeles,

00:01:16.600 | and John was the head of it.

00:01:18.200 | And he was a year ahead of me at Princeton.

00:01:21.180 | So calling him a graybeard is not exactly accurate.

00:01:24.600 | But he was an important factor in the industry, not a big participant, but that has always

00:01:29.280 | been a very well thought of group, and he was a great guy, and he had to see me when

00:01:33.560 | I was out in their offices.

00:01:34.560 | I visited around a lot in those days.

00:01:36.800 | And when I was out in his office, he said, "I have to see you," and I said, "Well, I

00:01:40.280 | can't do it now.

00:01:41.280 | I've got a lot of meetings with your people.

00:01:46.440 | And then I can't do it tonight because I've got a dinner engagement, and I'll be leaving

00:01:49.920 | tomorrow morning on the 7 o'clock plane to Philadelphia.

00:01:55.080 | And so if you want to meet me at the airport, I'll meet you in the diner at 6 o'clock."

00:02:01.220 | So I went to the diner at 6 o'clock in all those covered little stools kind of thing,

00:02:08.920 | like linoleum or something, and in there was John.

00:02:12.880 | And after a brief, very brief introduction, he said, "I've heard that you're going to

00:02:18.480 | try and start a mutual company."

00:02:21.240 | And I said, "That's true.

00:02:22.240 | I don't know if it's going to work or not.

00:02:23.240 | We're still in the middle of no man's land with the board of directors in the summer

00:02:26.840 | of 1974, and no one knew how it was going to come out."

00:02:31.280 | And I said, "Yes, that's what I'm planning."

00:02:33.260 | And he said, "If you do that, you will destroy this industry."

00:02:38.360 | But this is not a gray beard.

00:02:39.360 | This is a guy about my age and certainly with my Princeton heritage.

00:02:44.360 | And he was very, very foresighted.

00:02:47.040 | He did not destroy the industry, but if he just added, "You'll destroy this industry

00:02:52.520 | as we now know it," that is exactly what is happening now.

00:02:58.080 | And the reason for that goes through a phrase I haven't used yet today, but I usually use

00:03:04.400 | it about 10 times a day when I'm trying to explain to an outsider what we're all about,

00:03:09.880 | and that is we started with the structure, the mutual structure, and then developed from

00:03:15.360 | that structure, I have a speech called Strategy Follows Structure, a low-cost strategy.

00:03:21.560 | The obvious thing to do if you have that structure, of which the highlight would, of course, be

00:03:26.040 | an index fund.

00:03:28.160 | So that was strategy and structure together.

00:03:31.880 | And it's amazing that it has worked this way.

00:03:37.320 | And I thought I'd just talk a little bit about the development of our index business.

00:03:43.320 | First of all, because the point I'm trying to make is, every single thing I'm about to

00:03:49.400 | tell you was intuitive.

00:03:52.520 | We had not a single formula.

00:03:54.720 | I didn't understand most formulas.

00:03:57.960 | I can probably read half of half of the articles in the Financial Analyst Journal and the Journal

00:04:03.480 | of Portfolio Management, or did I write half of them?

00:04:06.320 | I don't know, but something like that.

00:04:08.960 | And it was all intuitive, and starting with Vanguard Index Trust, Burst Index Investment

00:04:16.600 | Trust as it was called in 1975 when it was formed, I did a crude comparison of the companies

00:04:27.120 | and the mutual funds in the industry.

00:04:28.800 | There were about 60, it was all.

00:04:31.400 | They're all pretty much large-cap, blue-chip kind of funds, very similar, and I compared

00:04:37.800 | them for 35 years for the S&P 500.

00:04:40.320 | You saw that slide in my talk.

00:04:43.600 | And the index won by 1.6%, I think was the number.

00:04:48.120 | And 35 years later, or maybe it was 38 years later, that is to say a couple of years ago,

00:04:54.840 | I decided it would be interesting to see the correlation of that group of mutual funds

00:05:01.040 | in terms of their performance, how much was explained by the S&P 500.

00:05:05.000 | So I put Mike Nolan to work, and it turned out to be 97.

00:05:08.800 | In other words, if I produced that number, I would have been really confident, but this

00:05:14.280 | was just done intuitively without any of that.

00:05:17.280 | Then I decided that the S&P 500 would be the preferred index.

00:05:21.280 | I hadn't really heard of much else.

00:05:22.960 | I knew the Dow Jones was a terrible index, and the Wilshire wasn't even developed by

00:05:28.000 | then, total market index.

00:05:31.640 | So we did start it with the S&P 500, and I thought, you know, it might be a good idea

00:05:35.920 | for purists.

00:05:36.920 | We thought about changing the structure of the fund to be a total stock market.

00:05:42.880 | That made more sense, really, but no one had ever heard of the total stock market index.

00:05:47.160 | So in 1985, we created the extended market index fund, the completion fund.

00:05:53.760 | That's now our small, mid-cap and small-cap fund, and it's been very, very successful.

00:05:59.180 | But the original idea was the intuitive idea that you want to go out and get the rest of

00:06:03.320 | the market.

00:06:05.040 | Statistical studies about that?

00:06:06.040 | None.

00:06:07.040 | I didn't even know what the composition was.

00:06:08.840 | At that point, we brought Gus Sauter in, because we now had two index funds, and we went on

00:06:13.400 | from there.

00:06:15.320 | We started a bond fund, I think in '86.

00:06:18.160 | That was not Gus's part of it.

00:06:20.520 | And then in '89, I think, don't hold me to these dates, I didn't look them up, but around

00:06:25.120 | '89, we started an international fund.

00:06:27.800 | And I had the intuition that EIFA, Europe, Australia and Far East, Japan was terribly

00:06:35.400 | overpriced.

00:06:36.400 | It was half the world's market cap at that time.

00:06:38.440 | So I thought it would be a good idea to separate and have a European portfolio and a Pacific

00:06:43.000 | portfolio.

00:06:44.620 | Strictly intuitive.

00:06:45.620 | No data.

00:06:46.620 | In fact, the Japanese market soon collapsed, kind of vindicated keeping them apart.

00:06:51.400 | And that's where that came from.

00:06:53.520 | Small cap fund, small cap index fund, in 1990, roughly, came when the manager for the small

00:07:00.480 | cap index that we had, small cap managed fund that we had, came into my office, and I was

00:07:05.800 | telling him what a terrible job he'd done, which he had.

00:07:10.760 | And he said, and this is the first time I'd really thought about it, I said, "You know,

00:07:15.800 | I think we're going to convert this into a small cap index fund."

00:07:19.740 | And we did.

00:07:20.740 | I wasn't sure exactly how the small cap index worked, but it's worked okay.

00:07:25.160 | It's basically the best small cap index around, although I don't like its concept particularly,

00:07:29.600 | but that's another one.

00:07:31.360 | Then we started those admiral funds, original admiral funds, for long, short and intermediate

00:07:37.080 | term treasuries, based on the way we ran our municipal bonds, have the shareholder choose

00:07:41.680 | between yield and volatility.

00:07:45.120 | Then we started, this is a curious one, the growth and value funds.

00:07:49.220 | I had said probably in 1990, the development of our growth and value funds, the formation

00:07:55.980 | of our growth and value funds, will come as soon as we have a growth and value index.

00:08:00.340 | I didn't know what would be in the index, how would I know that?

00:08:02.940 | So Standard and Boors announced they were splitting the 500 into growth and value, so

00:08:06.660 | we started the fund, totally on intuition, on the basis that those two, growth and value,

00:08:13.440 | would be the same in the future.

00:08:15.300 | I warned people about switching on them, and they were, turns out from then to now, '93

00:08:20.720 | I think that was, growth and value had the same 9% return.

00:08:26.460 | It happens that Morningstar says that these two funds, growth and value, are the oldest

00:08:33.340 | and largest factor funds in the industry.

00:08:36.420 | So I will take credit for building the factor fund industry, but I don't want any credit

00:08:40.100 | for it because I don't believe in that.

00:08:41.460 | I started them for a very different reason, and I want you to understand that you can

00:08:46.180 | have formulas and formulas and formulas, but if they don't comport with common sense, you

00:08:51.780 | don't want to have anything to do with them.

00:08:53.140 | You can prove anything with data.

00:08:55.140 | I've done my share, and so that's a little bit about the development.

00:09:00.900 | We also tried quantitative, hire a quantitative manager, John Gorniak by name, to run Vanguard

00:09:07.180 | quantitative portfolios, and it seems so easy.

00:09:11.380 | There's the S&P 500.

00:09:12.940 | Just get rid of the five worst stocks or the three worst stocks, and all of a sudden you'll

00:09:16.740 | do well.

00:09:17.740 | Seems easy.

00:09:18.740 | It wasn't easy, and he barely outperformed the S&P 500 after taxes, I think, maybe underperformed

00:09:26.620 | with that quantitative portfolio, and I honestly can't remember if we still have a quantitative

00:09:30.460 | portfolio or not, but it didn't work.

00:09:35.380 | When we had a managed fund, I picked the new managers by intuition.

00:09:39.380 | When we had Windsor II, which I was assured would never do as well as Windsor, I picked

00:09:44.900 | the manager, Farrell Hanley, down in Dallas, and in fact, Windsor II has done a little

00:09:52.380 | bit better than Windsor, although they correlate very, very highly as they were supposed to.

00:09:56.460 | Prime cap, I like the way these guys look.

00:09:58.060 | They worked for American Funds.

00:09:59.060 | They had a lot of experience, and they did a great job on that, so I want to emphasize

00:10:04.580 | that we can look at formulas until hell freezes over, but use your head, too, and it's just,

00:10:11.700 | to me, common sense.

00:10:13.340 | Now, they say a word about managers with skill, which Gus mentioned.

00:10:21.620 | Yes, there are some managers with skill, and sometimes they beat the market, but if you

00:10:28.020 | think of Vanguard in one way, and people don't talk about this, competitors, we don't even

00:10:34.300 | talk about it, you are investing for a lifetime, and find me a manager that has beaten the

00:10:40.820 | market for 75 years or 50 years.

00:10:45.180 | They don't live that long.

00:10:47.260 | Start with that.

00:10:48.260 | That's an important qualification, and they turn over, and the manager's typical fund

00:10:53.220 | lasts eight years.

00:10:55.900 | Half of the funds, I mentioned this the other day, yesterday, half of the funds go out of

00:11:00.780 | business every 10 years.

00:11:02.540 | There is this genius who comes in the business just the day you come in, manages your money

00:11:10.340 | until your retirement, and then you both retire happily together and rich.

00:11:15.460 | They don't exist, and by the way, it's at the time sequence.

00:11:20.820 | How do you know to go to them?

00:11:21.820 | They don't have a record yet, so this industry is complicated.

00:11:26.340 | Things that, to me, are very, very simple.

00:11:29.780 | I think I said this the other day, but I'll repeat it because I like it.

00:11:34.620 | When our guarantee for you, all you bogleheads and anybody else that comes to Vanguard, we

00:11:41.460 | will guarantee you that if you buy the 500 fund or the total stock market fund, and they're

00:11:45.820 | pretty much the same, very high correlation between the two, 98, 99, we will have the

00:11:52.620 | same non-manager when you buy the fund as you do when you redeem it, when you start

00:12:00.260 | to get conservative in your ancient years.

00:12:04.380 | That makes sense.

00:12:05.980 | It's investing for a lifetime that this is all about.

00:12:12.340 | Those are just a couple of preliminary words.

00:12:16.180 | I should say that, to what Gus said, I did a competition with Rob Arnott, who runs this

00:12:25.980 | smart beta fund, so-called, at the Super Bowl of Indexing.

00:12:29.820 | I think that's the last one I went to, probably seven or eight years ago.

00:12:35.340 | He wasn't there, so a couple of us, I think Burt Malkiel was there and I was there, and

00:12:40.940 | Arnott was the third participant.

00:12:43.180 | He was on a television screen, about five times our height.

00:12:50.140 | When I talked to the crowd, I said, "We've got this giant Buddha hanging over our heads,"

00:12:56.460 | and in any event, the group there, Super Bowl, took a boat at the end of that meeting and

00:13:03.300 | they voted that the Bogle way, if you will, the standard and poorest 500 way, the market

00:13:10.140 | cap way, was going to be more successful than the Arnott way and the Jeremy Siegel way too.

00:13:18.100 | That's exactly how it's turned out.

00:13:19.460 | I told you the other day, they don't look much different.

00:13:21.620 | Why would they look much different?

00:13:23.380 | But they're a little more risky or a little less risky, depending on which one you're

00:13:26.660 | talking about.

00:13:27.660 | They have a little higher return if they're more risky and a little lower return if they're

00:13:32.140 | less risky.

00:13:33.140 | I mean, you kind of look at today, they've had 19 years, 10 for one and nine for the

00:13:36.940 | other to prove they're right and they prove that they aren't bad, they're not disasters,

00:13:42.220 | but they add no value.

00:13:43.220 | They actually subtract a little bit.

00:13:45.260 | So all these things lead up to the fact that we're getting big and big and big and big.

00:13:54.220 | So I'm spending a little bit of time thinking about risks to the concept of indexing.

00:14:00.140 | I hope the people back at the ranch are doing the same thing.

00:14:03.660 | The first one is we're taking in billions and billions and billions of dollars at very

00:14:08.820 | full market prices, not necessarily overvalued stock prices, but highly valued stock prices.

00:14:15.220 | How will those investors feel when the decline comes in?

00:14:17.780 | It will come.

00:14:18.780 | It always comes.

00:14:20.060 | We could easily have a 20% decline and since markets do overdo anything, it could easily

00:14:24.140 | be 30% and then it'll be maybe a great value.

00:14:26.980 | Who really knows?

00:14:27.980 | I don't.

00:14:28.980 | Number two, so that's one of the risks.

00:14:34.260 | How will shareholders react to a bear market having taken all their money out of the other

00:14:38.580 | funds and put it into ours, index funds, and how will they react?

00:14:44.580 | Number two, and there's some things being written about this now, is the concentration

00:14:49.720 | of indexing in three firms and we all own, well, we own about 6% of the market.

00:14:59.160 | State Street owns about 2.5% BlackRock, about 6%, same as we do, and yet it's a big difference

00:15:06.440 | in those three holdings.

00:15:07.940 | What does one make of it?

00:15:08.940 | I don't know, but we're the only one that is focused on traditional index funds, a standard

00:15:15.040 | garden variety, buy it and hold it index funds, and those two are dominated totally.

00:15:20.680 | State Street's 100% really exchange-traded funds and I guess BlackRock is 85% exchange-traded

00:15:28.200 | funds.

00:15:29.200 | Does that make a difference?

00:15:30.200 | What happens when people start trading these things?

00:15:31.880 | Will they do well?

00:15:33.080 | Will they do ill?

00:15:34.080 | How will those markets hold up?

00:15:35.440 | Those are big questions and it will be focused on index funds when that happens because that's

00:15:39.760 | what's driving the entire exchange-traded market.

00:15:45.300 | And then there is the randomness of performance.

00:15:49.000 | Think about this.

00:15:50.100 | Every year we look at the performance data and we say the average fund was up X, let's

00:15:54.240 | say 6%, and the index was up 8, and the industry number is the number of funds.

00:16:02.100 | So if you get a few very good performing funds, it doesn't help.

00:16:06.640 | If it was market weighted, market cap weighted, it would be very different.

00:16:10.280 | So that can turn against you.

00:16:12.360 | Small cap funds, little funds, they do much better.

00:16:15.360 | They won't do much better for very many people, but they will make the index look like it's

00:16:18.920 | underperforming when in fact it's not.

00:16:21.160 | So how will we deal with that?

00:16:22.160 | I don't know.

00:16:23.640 | And then there's the 10% rule.

00:16:26.360 | The 1940 Act says, the 1940 Act, the Investment Company Act, says that no mutual fund can

00:16:31.880 | own more than 10% of any corporation, essentially.

00:16:37.080 | We own 6%.

00:16:39.600 | What happens when you get to 10?

00:16:41.700 | Spend a minute thinking about that, and then I will take you to a famous comment from the

00:16:47.640 | great Daniel Rumsfeld, another fellow Princetonian, but not the nicest guy I ever met.

00:16:53.180 | And he says, I've talked to you about the known unknowns.

00:16:58.920 | What about the unknown unknowns?

00:17:02.000 | And that's a good question, which I will now answer for you.

00:17:07.160 | I'm only kidding.

00:17:09.400 | So let's take your questions.

00:17:11.760 | OK, Jack, the first question is from Kenner.

00:17:17.240 | He said, how does it feel to have beneficially transformed the investment world in order

00:17:21.520 | to give individual investors a fair share of the world's economic progress and to have

00:17:27.360 | enhanced the lives of millions of your fellow citizens?

00:17:31.600 | Good.

00:17:32.600 | OK.

00:17:33.600 | [LAUGHTER]

00:17:34.600 | I could have answered that one, and I figured that was the answer, but--

00:17:41.000 | I might even say, although I think the word "very" is overused in our lives, I might even

00:17:44.680 | say "very good."

00:17:47.520 | This question is from Stay the Course.

00:17:50.280 | It says, if you were born Jack Yashihara in Japan instead of Jack Bogle in America, would

00:17:56.640 | you still be advising 100% home country bias, or did you have some prescient feeling America

00:18:04.880 | would do this well the last 50 years?

00:18:08.360 | Well, look, this home country bias is a bunch of baloney.

00:18:14.940 | Think about it for a minute.

00:18:16.560 | The American corporations get half of their revenues and half of their profits from outside

00:18:20.400 | the US.

00:18:21.840 | So you have a diversified international portfolio already.

00:18:25.320 | Now, there are arguments you should add "international" or "non-US," and it's correct that these companies

00:18:34.240 | outside the US, indexes outside the US, have a lower price-earnings multiple.

00:18:40.200 | As I said with Bill Bernstein the other day, does that mean that they're just riskier,

00:18:45.480 | or does that mean they're cheaper?

00:18:47.160 | I don't know the answer to that question, and I don't know anybody else who does.

00:18:51.140 | The one thing I've learned in my career here, 65 years, is this is a hard business.

00:18:58.240 | It's a hard business to win at.

00:19:00.160 | So doing the simple things and getting cost out of the equation is the best thing to do.

00:19:04.600 | And everybody needles me, everyone, Vanguard doesn't even like it when I talk about it,

00:19:10.920 | about being international.

00:19:12.780 | I don't do it.

00:19:13.780 | Am I telling you not to do it?

00:19:14.780 | Of course not.

00:19:15.780 | Am I going to tell you because international has done so much better and non-US has done

00:19:19.000 | so much better in the last 25 years, since I first went into it in detail in my first

00:19:25.240 | book, 23 years, I guess.

00:19:28.520 | Does that mean it'll do the same in the next 10 years?

00:19:30.280 | I'd be astonished if it did that well in the next 10 years.

00:19:33.640 | Could it do worse?

00:19:34.640 | Of course it could do worse.

00:19:36.280 | So you just don't know, and it pays your money and it takes your choice, and I don't want

00:19:41.480 | to intimidate anybody into not buying international, although I do think diversifying at the market

00:19:46.080 | weight, which would mean non-US stocks are, I think, around 43% of the world market, is

00:19:53.560 | more than most US investors should have.

00:19:56.760 | And to me, it's just a matter of logic.

00:19:58.960 | But if someone throws a big formula at it and proves I'm wrong again, believe me and

00:20:04.640 | not the formula.

00:20:10.960 | I guess a little background on this for those who aren't aware, Warren Buffett has directed

00:20:15.960 | that his estate go into treasuries and the S&P 500 index.

00:20:23.840 | And this question asks, what is your take on Warren's choice of the S&P 500 versus the

00:20:31.400 | total stock market?

00:20:33.360 | Well, I asked him about that, actually, and he didn't answer.

00:20:41.480 | And first of all, there's not very much difference.

00:20:46.880 | The correlation, as I said, is, I think, 0.98 between the total stock market index.

00:20:52.820 | The S&P 500 represents 85% approximately of the total market.

00:20:57.820 | They can't be too different.

00:21:00.040 | So I'm not about to argue with him.

00:21:02.140 | I think a more interesting proposition is why he picked the US.

00:21:07.320 | Home country biased idiot.

00:21:11.200 | I'm kind of a little high here.

00:21:16.420 | I had my martini before.

00:21:22.120 | So I'm kind of relaxed about my answers.

00:21:23.700 | I don't mean to be cavalier.

00:21:28.960 | That's an excellent point, though.

00:21:30.400 | I hadn't even thought of that.

00:21:31.440 | I'm sure a lot of investors have.

00:21:32.440 | Oh, I'm thinking about it all the time.

00:21:37.140 | This next question is a two-part question.

00:21:41.040 | What is the ideal blend of treasuries and investment-grade corporate bonds in a long-term

00:21:45.680 | portfolio?

00:21:46.680 | And the second part, any necessity for or significant benefit from an international

00:21:53.960 | bond holding in a long-term portfolio?

00:21:56.720 | I think you can probably answer the second one in one word, right?

00:22:00.680 | Well, the international thing kind of mystifies me.

00:22:05.640 | It's not going to make much difference what you do as long as international bonds have

00:22:09.720 | the same quality and protective nature that US bonds do.

00:22:14.480 | So there's some questions I just don't have a good answer to.

00:22:19.300 | And that's one of them.

00:22:20.300 | I think it comes down to a preference.

00:22:22.120 | I do think that it's maybe a little bit preemptory to put these holdings of international bonds

00:22:32.960 | and individual stocks into the retirement plans, target date retirement funds, without

00:22:42.400 | asking stockholders would they like it, because there are quite large dimensions.

00:22:47.120 | I think Mike will have to correct me here, but maybe 35% international stocks, both the

00:22:53.000 | stock position, and 35% international bonds, both the bond position, something like that,

00:22:58.240 | Mike?

00:22:59.240 | 30 and 30?

00:23:01.280 | 40 and 30.

00:23:03.280 | I mean, that's a big change, and if they all do the same, it's fine.

00:23:10.120 | And I even hope somebody talked about it, even thinking of having target date funds

00:23:17.040 | that are US-oriented and target date funds that are world-oriented.

00:23:21.960 | Funds are large enough easily to accommodate that.

00:23:24.600 | But in any event, that's not the way it happened, and I think we should always have

00:23:28.480 | options available that don't encompass international stocks and bonds.

00:23:33.400 | It's an important choice, and whether there's going to be a big difference, I don't know,

00:23:39.720 | but my intuition, you know, maybe I'm just proud to be an American, or at least I know

00:23:44.600 | I'm free.

00:23:45.600 | There's a song that goes that way, called "God Bless the USA," which I will say

00:23:50.800 | to all of you, God bless the USA, too, a big part of our family culture.

00:23:55.840 | And the first part was -- The first part was, what is the ideal blend

00:24:00.800 | of treasuries and investment-grade corporate bonds in a long-term portfolio?

00:24:05.400 | Well, I have always said the best blend is not -- and this talks about, you know, intuition

00:24:12.320 | and not maybe thinking things quite through adequately, which is certainly what I have

00:24:16.160 | done, and that is when we started the bond fund, I just took the bond index.

00:24:20.160 | I figured it was representative, and it turns out it's 70 percent in treasuries and government-guaranteed

00:24:25.600 | mortgages, and that didn't matter much in those days, because the yields were running

00:24:31.640 | around 8 percent, but today it matters quite a bit.

00:24:35.360 | So you start and reflect, times have changed, and I would think it would be desirable to

00:24:41.480 | have a fund like that, you know, just top of the head, maybe 50 percent high-grade corporates

00:24:47.880 | and 50 percent treasuries and other government-backed mortgage, 50/50, just for the fun of it.

00:24:55.080 | Those corporates are now only about 30.

00:24:57.720 | So a better representation for a higher yield, and higher yield will lead to a longer return,

00:25:02.560 | holding everything else equal in the long run, as we all know.

00:25:06.000 | And somebody says, well, that doesn't match the allocation of the index.

00:25:11.480 | Well, wait a minute, pal.

00:25:13.880 | Where do you think that balanced index fund came from?

00:25:17.000 | When I started that, 1993, I think it was, you know, I said 60/40.

00:25:21.940 | I didn't spend a lot of time thinking about it, but that seemed like a reasonable number,

00:25:26.360 | and there's no 60/40 index, except for the index fund, which is the standard.

00:25:33.400 | And so some of this, I think we can overthink, well, having said that, I made a lot of mistakes

00:25:42.440 | in doing all the things I've done, and sometimes intuition doesn't work as well as I think.

00:25:48.000 | Sometimes my self-confidence is a little bit on the high side, compared to what turns out.

00:25:53.960 | I mentioned picking that quantitative manager.

00:25:57.200 | So I've had some failures, funds that we started that didn't do anything.

00:26:03.480 | And so I don't have a good answer, but I do think there should be available to investors

00:26:10.920 | who want to take the extra risk in these days of very low-yielding bonds, if you want to

00:26:18.040 | take a little bit of extra risk.

00:26:20.840 | You can do it now, by the way, by just owning a treasury fund and our corporate bond, high-grade

00:26:25.840 | corporate bond index fund, and it'll do fine.

00:26:29.640 | But people don't seem to like to do that, and it's hard to explain on the phone.

00:26:33.440 | Telemarketing is difficult when you've got to explain things to everybody.

00:26:37.800 | So I think it's a good idea, but hard to implement.

00:26:44.600 | >> Jack, this isn't a prepared question, but since you mentioned target date funds, I brought

00:26:48.840 | up a question that I get asked a lot and I don't know the answer for, and maybe you do.

00:26:55.560 | Why aren't there admiral shares of the target date and the life strategy funds?

00:27:00.960 | They use the investor share class in all of them, even if you had a million dollars in

00:27:05.600 | the fund.

00:27:06.720 | We like to try to recommend to people that they simplify their portfolios, and a great

00:27:11.640 | way to do it is either with the target date funds if you want the glide path or with the

00:27:17.640 | life strategy funds if you want a consistent asset allocation.

00:27:23.560 | So when people put a lot of money in there, it seems like they should be able to get the

00:27:28.240 | admiral shares.

00:27:29.560 | >> Well, Michael, correct me if I'm wrong, which he does all the time, by the way, but

00:27:35.920 | don't the admiral shares buy the -- don't the target date funds buy admiral shares or

00:27:39.760 | they buy them an asset value?

00:27:43.440 | An asset value?

00:27:48.040 | The funds don't pay an investor share price.

00:27:51.960 | They do?

00:27:55.920 | I'll talk to the management tomorrow.

00:27:58.440 | >> I've tried to get an answer from Vanguard and I haven't been successful, Jack, so hopefully

00:28:08.360 | you will.

00:28:09.360 | >> You might make a note of that, would you?

00:28:11.080 | >> I mean, it seems if they put -- the total amount needed to get the asset class of those

00:28:19.240 | would probably be much higher because of the underlying things, but it still seems if you

00:28:24.040 | put $100,000, whatever the requirement is, it still seems like there should be a number

00:28:32.040 | where they were able to get the admiral share classes.

00:28:36.040 | >> Well, there may be some rational answer to that, but I don't have it for you.

00:28:42.960 | >> I was wondering if there was any legal reason that you're aware of, but it seems

00:28:47.800 | like they're using the investor class, so I don't see any reason why they couldn't use

00:28:50.960 | the admiral class.

00:28:51.960 | >> Well, I take the credit or the blame for that if that's the way we run the life strategy

00:28:59.000 | funds, because I started them and the target date funds were, of course, just an outgrowth

00:29:03.920 | of the life strategy funds, and so that's probably a question I didn't ask.

00:29:10.120 | You know, I'm usually so good at asking all the tough questions, so what can I do?

00:29:14.880 | Apologize?

00:29:15.880 | I don't know.

00:29:16.880 | We'll get an answer.

00:29:17.880 | >> Great.

00:29:18.880 | Great.

00:29:19.880 | Thank you.

00:29:20.880 | This question is from Jay Willis.

00:29:21.880 | It says, "Should an investor attempt to factor in the effects of quantitative easing into

00:29:27.040 | their investment plan, or is it more likely to be a short-term event unworthy of consideration?"

00:29:32.760 | >> Well, the answer to the first part of the question is clearly yes, but I have no idea

00:29:37.960 | how to do it.

00:29:39.320 | [ Laughter ]

00:29:40.320 | I mean, there's a point at which you have to accept the flaws and foibles of the market

00:29:47.240 | for what they are, and this very low yield, even negative yields somewhere around the

00:29:52.000 | world are there, and you may not like it, but that's the marketplace.

00:29:57.320 | I don't know what you would do if you take quantitative easing into account, honestly,

00:30:03.560 | and I would also say that it can't go on forever, and interest rates can't stay this low I don't

00:30:11.440 | think forever, although I would have said it had gone on long before this, gone back

00:30:17.120 | up long before this, and there's some questions that even the "Great Bogle" doesn't know the

00:30:24.200 | answer to, and so I look at this with the same kind of mystery you do, but I don't know

00:30:30.040 | what to do about it, so I'm roughly 50/50, have bonds and stocks, mostly index funds,

00:30:37.360 | communities in my personal account, and corporates and taxables, treasuries, bond market, in

00:30:45.840 | my intermediate term, bond market fund, not the total bond market fund, and that gives

00:30:52.600 | you a little advantage in yield, and I just do it, and I don't pay a lot of attention

00:30:57.360 | to it.

00:30:58.360 | I mean, I don't think I look at my portfolio, I know I don't do it once a year, I mean,

00:31:03.400 | I know roughly what's in there, I don't even know any more than that.

00:31:06.080 | I think sometimes we complicate simple things, I mean, the idea of rebalancing, for example,

00:31:13.040 | is okay, if you know what you're doing, and knowing you're sacrificing all the time your

00:31:17.240 | higher-yielding asset, but you're reducing the volatility as markets go up, that's good

00:31:23.120 | in the one hand and bad in the other, but to do it too frequently, to do it every time

00:31:28.440 | as a one-point change in the ratio, it's just silly, it doesn't matter.

00:31:33.800 | So it's simplify, simplify, simplify.

00:31:36.480 | I think that's a quote from Thoreau.

00:31:39.160 | What do you think about the theory, though, that because of the low interest rate environment,

00:31:44.680 | that a lot of people are going out and investing in the market, in equities instead, to try

00:31:52.520 | to get a return, and that when the easing eases, that a lot of those people will be

00:32:00.920 | bailing and going to higher-yielding things.

00:32:03.960 | Do you think that's a correct analysis or not?

00:32:07.880 | First of all, at the margin, it's hard to even express these things.

00:32:15.160 | Would I recommend a wholesale shift that way?

00:32:17.240 | That'd be insane.

00:32:18.240 | Would I recommend maybe a marginal change to capitalize on your feelings?

00:32:21.920 | I'm not much of a believer in that, but I don't see any reason you couldn't do 5% in

00:32:26.960 | high-yielding stocks, higher-yielding stocks, or the-- what do we call-- high-dividend yield

00:32:34.000 | fund.

00:32:35.000 | I thought that was a good idea.

00:32:36.000 | That didn't happen to be mine, but I thought it was a good idea.

00:32:39.960 | And the same thing with bonds.

00:32:43.920 | When interest rates go up, bonds are going to go down.

00:32:47.160 | But stocks are going to go down, too, because the interest rate, the premium, equity premium,

00:32:52.640 | will have to shrink.

00:32:53.640 | I mean, if it stays the same, bonds will move hand-in-hand.

00:32:58.360 | Stocks will move hand-in-hand with bonds, just that that number is going to stay stable.

00:33:02.080 | It doesn't stay totally stable, and sometimes it's very counterintuitive, but that's kind

00:33:06.080 | of the right way to look at it.

00:33:07.720 | So there really isn't a good haven.

00:33:10.000 | And my own view is that reaching for yield is a very risky thing to do.

00:33:16.480 | It looks fine.

00:33:17.480 | You get the income.

00:33:18.600 | And then all of a sudden, it stops.

00:33:21.000 | And you've gone too far out in the limb, to use the metaphor, and the limb snaps off.

00:33:26.280 | So what I say is you should never use high-yielding bonds.

00:33:29.320 | 5% of your bond position, maybe even 10%, won't kill you.

00:33:33.080 | It won't change your monthly check very much.

00:33:37.020 | But as compared to shifting entirely into high-yielding bonds, which I don't think is

00:33:41.680 | a good idea.

00:33:42.680 | I mean, I'm a diversification guy.

00:33:44.680 | And I'm a believer in, finally, the investor has to accept the rate of return that's available

00:33:51.420 | in the marketplace.

00:33:53.680 | Doing otherwise means you're accepting greater risk.

00:33:57.520 | And I'm just conservative, simple.

00:34:01.640 | And it's worked for me for the better part of 65 years.

00:34:06.120 | And could it have worked better, by the way?

00:34:10.520 | Yes.

00:34:11.520 | I've been down 50% in equities ever since 2009.

00:34:18.320 | But I didn't go down.

00:34:19.320 | I got a little nervous when the market went down 50%.

00:34:23.040 | Anybody does.

00:34:26.240 | So there is, as Gus mentioned, actually your own investor tolerance for these things.

00:34:30.620 | But stay in the mainstream, or using the analogy I use in Little Book of Common Sense investing,

00:34:37.680 | have a funny money account, 5% of the total.

00:34:40.960 | And play games over there, do whatever you want, anything you want.

00:34:44.360 | Buy new issues, buy real estate, whatever you want to do.

00:34:48.840 | And with 95% in your serious money account, that's what you're going to send your kids

00:34:53.680 | to college on, that's what you're going to retire on, that's what you're going to have

00:34:58.320 | a long life with.

00:35:01.160 | That's going to be the basis of any sound investment program.

00:35:04.120 | All this implies, by the way, that normalcy, as we know it, kind of continues.

00:35:11.080 | This is a risky world we're in, a very risky world.

00:35:15.320 | We've talked about the risk of Russia, the risk of China, the risk of nuclear war, the

00:35:20.920 | risk of some idiot in North Korea, heaving a bomb across the Pacific Ocean, and a certain

00:35:30.280 | candidate who says we'll just take him out, which is probably not the worst idea ever.

00:35:36.800 | And maybe one of his only good ideas, by the way.

00:35:39.520 | Oh, I don't want to get into politics, I've had enough of that.

00:35:46.440 | And disease comes along, global warming is there, economic weakness around the world,

00:35:54.200 | over-leveraged world.

00:35:55.880 | This is a risky time, and the stock market seems to ignore it.

00:36:00.720 | Can it continue to do that?

00:36:02.120 | Well, like everything else, that all depends.

00:36:04.440 | All depends how it comes out.

00:36:06.160 | But we're very much out of balance here in the U.S. and all over the world is even worse

00:36:10.600 | in terms of the amount of borrowing, the amount of that Federal Reserve balance sheet, never

00:36:15.520 | been looked like this before the last five years.

00:36:18.720 | And I'm not so sure what to make of all these things and which of these risks come home

00:36:22.760 | to roost, but anyone investing today just has to be aware of the big risks out there.

00:36:30.520 | In my Common Sense on Mutual Funds book, the first sentence says something like, "Investing

00:36:38.040 | is an act of faith."

00:36:40.560 | Truer words were never said.

00:36:42.440 | An act of faith that our nation will prosper.

00:36:45.920 | An act of faith that our corporations will continue to earn money and have it grow and

00:36:50.720 | pay dividends.

00:36:52.440 | An act of faith that our investment intermediaries will give you your fair share of the market

00:36:57.320 | returns that are developed from that.

00:37:00.440 | And this is all faith.

00:37:01.840 | There are no facts here.

00:37:04.200 | It's based on the past.

00:37:05.960 | But the past is, as I said the other morning, talking about a completely different subject,

00:37:09.760 | the past is rarely prologue.

00:37:12.320 | So we live in an uncertain world, and anyone that doesn't understand that should do I don't

00:37:16.800 | know what, but not save, because as I said before, the one way to be sure you end up

00:37:23.920 | with nothing is to save nothing.

00:37:26.160 | And that's the only certain proposition that I can think of at the moment.

00:37:30.000 | So I'm not sure that's a very good answer, but I think we should all be aware of just

00:37:35.480 | the systematic risks, the broad risks that lie out there, let alone the risks that lie

00:37:43.080 | here in the U.S., which you're all well aware of.

00:37:46.880 | >> This question is from Lady Geek, who's here and who's one of the mainstays in the

00:37:52.240 | Bowheads Forum.

00:37:54.120 | Do you think the fiduciary standard will have the intended impact as you first envisioned

00:38:01.000 | it to be?

00:38:02.000 | >> The answer to that is absolutely.

00:38:05.040 | That is going to make much bigger change than anybody now envisions.

00:38:08.240 | You know, it's fine right now, this is a curious anomaly, it's limited due, it comes out of

00:38:15.160 | the Department of Labor, what have they got to do with the fiduciary standard?

00:38:19.040 | Where's the SEC here?

00:38:21.440 | And the Department of Labor, so it only applies to retirement plans.

00:38:25.660 | So we have this, I think I touched on this the other day, this awful anomaly of you've

00:38:29.440 | got a client here with a retirement plan and a regular plan, you have to honor your fiduciary

00:38:36.120 | duty with his retirement plan, but you can go rip him off on his regular plan.

00:38:40.560 | Obviously, that's not going to happen.

00:38:44.840 | More likely is that if you have a client that has only a retirement plan and another client

00:38:50.840 | that has no retirement plan, which is the standard account, is any broker with a half

00:38:55.320 | a brain going to treat the other client less favorably?

00:38:59.540 | I don't think so.

00:39:01.760 | So I think the system will actually, free financial enterprise system, capitalism, will

00:39:07.640 | work to iron this out.

00:39:10.560 | And so the fiduciary standard will spread either intuitively or by practice, probably

00:39:18.240 | before the SEC gets around to saying, which they should do, that a fiduciary duty applies

00:39:23.880 | to all anyone that touches other people's money, as I said the other day, including

00:39:28.560 | financial institutions that are managing all that money.

00:39:30.880 | Can you imagine them not having a fiduciary duty in law?

00:39:34.780 | I can't.

00:39:36.120 | And so that will come, probably a long time, probably hard fought.

00:39:41.160 | But it's interesting to say, we really don't want to put the customer first.

00:39:45.040 | Or as I said in one of the articles I wrote, yeah, I'm putting my own interests first

00:39:51.520 | and the customer second, but the difference is really small.

00:39:54.320 | It doesn't seem to me like something you want to say to your customer in the morning.

00:39:59.640 | So but it's going to spread, as I've written at some length and as I used the other day

00:40:05.200 | in my Adam Smith quote, it's going to happen even without a fiduciary rule.

00:40:09.900 | People are going to have to serve the investor.

00:40:12.680 | Producers are going to have to assume responsibility for consumers, giving them the best deal in

00:40:19.080 | town.

00:40:20.080 | They'll go out of business.

00:40:21.080 | And so we're going to see a lot of change in this business.

00:40:23.200 | And indexing is going to put a lot of pressure on people.

00:40:26.240 | And you can't really get to indexing enthusiastically until you get to mutuality.

00:40:30.440 | And it may be before my days end, there will actually be another mutual company or two.

00:40:37.880 | I tried to do a couple, tried to persuade the Putnam directors, a complete disaster.

00:40:43.440 | They wouldn't do it.

00:40:45.280 | And look at them now.

00:40:47.360 | Oh, my God.

00:40:48.360 | I mean, they used to be the fifth largest firm in the industry.

00:40:51.320 | Now they're probably 30th, 25th, I don't know where.

00:40:55.520 | And terrible performance, high cost.

00:40:58.800 | They brought in, interestingly enough, a guy from Fidelity Marketing to run the new Putnam.

00:41:06.920 | They should have brought in an investment guy.

00:41:09.800 | They need help everywhere, and they're not going to get it.

00:41:11.920 | They're probably going to go out of business.

00:41:13.120 | That wonderful name that was one of our big competitors in the '30s and '40s.

00:41:17.420 | So the industry is going to change, and they may not like it.

00:41:24.400 | Although I will say, this is a editorial comment, that I kind of hoped, given that I've completed

00:41:31.840 | 65 years of service in this industry, including two years as chairman of the board of the

00:41:38.360 | Investment Company Institute, that maybe, just maybe, somebody down there would say,

00:41:44.640 | you know, let's bring old Bogle down here and have him make a little farewell speech.

00:41:50.520 | Not going to happen.

00:41:52.520 | Now, why is that?

00:41:54.520 | Think about that for a minute.

00:41:55.920 | The most successful company in the industry's history created that.

00:41:59.760 | The most successful strategy in the industry's history, he created that.

00:42:02.920 | Well, he hadn't done enough.

00:42:06.000 | But do you think the SEC is going to be shamed into covering non-retirement accounts?

00:42:12.680 | They're going to have to do it.

00:42:14.040 | They're going to have to do it.

00:42:16.280 | I think they're getting too bureaucratic, and Mary Jo White has a lot of conflicts of

00:42:22.040 | interest.

00:42:23.040 | I think she's a good person, but handling the kind of conflicts she has, and coming

00:42:27.240 | in the-- and she had no connection with the mutual fund industry, which is a dominant

00:42:31.400 | industry that they regulate.

00:42:35.000 | And I mean, this is a, I guess, $18 trillion, roughly, industry.

00:42:40.960 | And they got this big guy out there that I hope they're watching, who has about $3.5

00:42:45.040 | of those $18 billion, 20%, about right.

00:42:49.560 | And so, they aren't, I don't think, strong in the investment division, investment management

00:42:56.640 | that covers mutual funds, doesn't have the strong leadership, and I've been through a

00:43:01.280 | bunch of leaders down there, and worked with a lot of them, really quite successfully,

00:43:07.360 | I think, getting what I needed done.

00:43:10.200 | I'll tell you a little anecdote, since we have a little time.

00:43:14.720 | I once went to see the director of the division named Mary Ann Smyth, and they always used

00:43:19.080 | to ask me, "Where are your lawyers?"

00:43:22.040 | And I said, "I don't travel with lawyers."

00:43:24.400 | You know, I got eight lawyers in the room.

00:43:27.920 | And I always followed the principle, "He who travels fastest, travels alone."

00:43:32.440 | And so, I was down there, and I was about an hour early, naturally, for a meeting with

00:43:38.000 | her.

00:43:39.000 | I was trying to straighten out the name of the, I think it was the bond fund, they didn't

00:43:42.400 | like bond index fund.

00:43:45.600 | And so, I'm sitting down there, and they had a Roy Rogers, or something like that.

00:43:51.120 | Is that a place you eat?

00:43:52.760 | Yeah, that's what it was.

00:43:55.240 | And I was kind of looking, I was thinking maybe about the cheeseburger, and it has an

00:43:58.440 | awful lot of calories.

00:44:00.080 | And up next to me comes Mary Ann Smyth, looking for her hamburger.

00:44:05.960 | So she said, "Why don't you come up, and we'll have lunch together before the meeting."

00:44:10.520 | You know, you don't get that kind of stuff if you're a bureaucrat, if you really have

00:44:15.520 | an entourage with you.

00:44:17.920 | And we really got along fine.

00:44:20.560 | And I didn't quite make my point, I said, "Okay, if we can't call it the Vanguard Bond

00:44:24.680 | Index Fund, we'll call it the Vanguard Bond Market Index Fund, oh, that'll be fine."

00:44:32.400 | Every name has a funny derivation.

00:44:33.800 | I've seen all this.

00:44:36.520 | It's really strange, and it's really wonderful.

00:44:39.640 | Many events have been very painful for me to endure.

00:44:45.000 | In retrospect, every one of them is memorable, because of the fun it was, the memories it

00:44:53.280 | gave me.

00:44:54.280 | You know, they say victory has a thousand fathers, and defeat is an orphan.

00:45:01.040 | But I kind of revel in my defeats.

00:45:02.480 | I said to you the other day, if I hadn't been fired from Wellington, there would be no Vanguard.

00:45:09.440 | Think about that.

00:45:10.440 | A world without Vanguard, I mean, I can't imagine it.

00:45:15.200 | But that's only me.

00:45:16.200 | You'll have to figure that for yourself.

00:45:17.200 | >> Nor a world without Jack Bogle.

00:45:20.740 | This question is from BoglerDude.

00:45:23.240 | He said, "Is there a valuation level where it would make sense to invest internationally?"

00:45:28.000 | >> Well, sure, but we just don't know what it is.

00:45:34.720 | I mean, these questions are fine, but tell me how to figure that out, and then tell me

00:45:41.160 | what you're going to do in the way of market timing.

00:45:43.080 | I mean, then the valuation level is high, so you get out, and then it's low, and you

00:45:47.920 | get back in.

00:45:48.920 | Who can do all that?

00:45:50.200 | The international problem is no different from the same problem you have in the US.

00:45:56.040 | You don't want to put your money in the stock market when it's overvalued.

00:45:59.800 | But you put it in every day, and half of the time, well, it's overvalued probably 10% of

00:46:04.360 | the time, undervalued probably 25% of the time, and has a good growth potential most

00:46:10.280 | of the rest of the time.

00:46:11.800 | You're playing odds.

00:46:13.400 | And the one thing you have to do is protect yourself against your own weaknesses.

00:46:18.080 | And thinking you can decide in and out values and when to do it is, I think, superhuman.

00:46:27.040 | And as Gus pointed out, well-known fact, that if you're getting out of the market, somebody

00:46:31.320 | else is getting in.

00:46:33.080 | And one of my favorite stories is I heard somebody say there's said to be, I think it's

00:46:39.480 | $300 billion sitting on the sidelines.

00:46:42.960 | When that money comes in to be invested in the stocks, you're going to really see quite

00:46:47.280 | an explosion.

00:46:48.280 | And I said, wait a minute, wait a minute.

00:46:50.560 | If they spend that $300 billion on stocks, how much do you think will be left in the

00:46:57.480 | saving reserve?

00:46:58.480 | And he said, zero.

00:46:59.480 | I said, no, no, no, no, no, no, no, you don't understand.

00:47:04.560 | Somebody is going to sell them those stocks, and it's going to be the same $300 billion

00:47:09.000 | in the reserve account as there was before it all happened.

00:47:11.920 | It's just a different $300 billion.

00:47:13.640 | There's no way around the fact that the market is kind of this circular thing.

00:47:17.560 | So if you're doing one thing and the market is doing another, it's a closed circuit.

00:47:24.760 | And so you're then betting against somebody else, as Gus said this morning, too.

00:47:31.320 | And I just, I think to the extent you can get the idea that the market is a casino and

00:47:35.520 | you can bet and win is about the same as thinking that the casino is a casino and you can just

00:47:41.880 | bet and win.

00:47:43.240 | The more you bet, the more you lose.

00:47:45.160 | And every study that's ever been done, talk about intuitive, says the more you trade,

00:47:51.200 | the worse you perform.

00:47:52.760 | Of course it is.

00:47:54.680 | Because buyers and sellers aren't equal.

00:47:56.960 | They're equal to each other.

00:47:58.440 | But the man in the middle takes his hunk.

00:48:01.280 | And that will eventually, I think, put pressure on people who are using ETFs for such less

00:48:09.400 | than noble purposes.

00:48:11.200 | The fringe element I talked about the other day that made no sense at all except marketing

00:48:16.680 | sense.

00:48:17.960 | And Gus certainly got Arnott right up there by saying he's got a great marketing message.

00:48:24.640 | And these ETFs are about marketing.

00:48:26.760 | ETFs are about financial buccaneers.

00:48:30.480 | Not all of them, but most of them.

00:48:32.760 | And so they're another kind of big if in the future of indexing, too.

00:48:38.760 | Well, Jack, given your views on, your opinions on international investing, can you give us

00:48:43.920 | a little background, a history of how Total International came about?

00:48:48.280 | Well, I started the International Fund because I thought there was a definite place for international

00:48:54.520 | in the mutual fund industry among investors who wanted international exposure.

00:48:59.480 | And did I think it through in the same way I do today?

00:49:02.640 | I mean, I didn't think whether it would help them or hurt them.

00:49:05.440 | I thought it was a viable option.

00:49:07.800 | And it really is funny that we started off-- before we got to the International Index Fund,

00:49:15.120 | we started the International Eyes, the old Ives Fund, that fund that failed so badly.

00:49:20.080 | And we divided it into an international portfolio of 50% and the US portfolio of 50%.

00:49:25.560 | And the year after we did that, the international portfolio went up 100%.

00:49:30.960 | Brilliant.

00:49:31.960 | No.

00:49:32.960 | Market timing.

00:49:34.720 | Luck.

00:49:35.720 | And, I mean, that's 100% in a year.

00:49:39.360 | It's amazing.

00:49:40.680 | And you can check it in your little prospectus or something.

00:49:43.920 | You check me, Mike.

00:49:44.920 | I'm pretty sure I'm right.

00:49:47.000 | And but it was a very large number.

00:49:49.520 | But it's a legitimate option for those who want it.

00:49:53.120 | I just don't think everybody should have it built into their investment objectives.

00:49:58.680 | And I think you should understand what you're doing and what you're getting.

00:50:01.680 | And one thing I say about internationals-- and this is all such common sense.

00:50:06.040 | I mean, I feel like I'm revealing the secrets of the world behind a curtain.

00:50:12.720 | But before you do anything on the international, look at the International Index.

00:50:17.160 | Well, the largest company in the International Index is Great Britain.

00:50:23.640 | The second largest is Japan.

00:50:26.320 | And the third largest is France.

00:50:28.960 | Britain, Japan, and France-- they're probably, let me take a guess, at 23% or 4% of the total

00:50:37.200 | International Index.

00:50:39.360 | I don't think Britain is doing so well.

00:50:40.840 | They don't even know what they're going to do about the so-called Brexit.

00:50:43.480 | They're still struggling with even-- they've never even voted to actually do it.

00:50:47.240 | The parliament is going to have to do that someday or go back for another vote, which

00:50:51.040 | I think is highly unlikely.

00:50:53.520 | But they have a troubled economy.

00:50:55.880 | They have this total question about the exit from the European Union.

00:51:01.240 | They have the likelihood that if they do that, Scotland will break off, and the United Kingdom

00:51:08.280 | will only have one kingdom-- Britain.

00:51:12.760 | And so it doesn't seem like the best of the place you'd want a big hunk of your money.

00:51:19.800 | Now, I could be wrong, and that valuation's maybe good, but kind of when you look at it

00:51:23.480 | in this way, Japan, my god, they've got the worst demographics in the world, the lowest

00:51:29.080 | ratio of probably about one to one of workers to retirees, raising the question of what

00:51:38.320 | happens to the last in the US?

00:51:39.840 | What happens to the last Social Security recipient when the last employer dies?

00:51:47.600 | This would be a problem, and then there's-- they get a tsunami periodically, and a very,

00:51:57.720 | very structured economy, and a very, very structured culture.

00:52:02.520 | I'm just not so sure that's going to be a good place to invest, struggling economically

00:52:06.240 | a lot, one prime minister after another, and they don't seem to be able to find the answer.

00:52:11.440 | And then there's France.

00:52:14.200 | They don't work in France.

00:52:17.720 | Well, that may be a little hyperbole, but they sure take the summer off, and it doesn't

00:52:24.160 | seem like--

00:52:25.160 | >> And they strike a lot.

00:52:26.160 | >> Yeah.

00:52:27.160 | And Germany seems to be doing a good job.

00:52:28.960 | They're fourth, but I only wanted to make my point by using the three bad ones.

00:52:34.600 | But you are owning countries, and to accept the index without knowing what's big, S&P

00:52:41.960 | 500, for example, we all know how totally dominated it's been in recent years by the

00:52:46.480 | Googles and the Alphabets and the whatevers, and Microsoft a little bit now, things like

00:52:53.680 | that, as compared to the conventional leaders, Exxon, not having a very good time either

00:53:01.480 | for a whole lot of reasons.

00:53:03.000 | So we don't really know how to deal with all that, except that these are very highly valued

00:53:06.640 | stocks compared to-- maybe not compared to their prospects, but compared to the leaders

00:53:13.160 | years ago.

00:53:15.640 | But it's still, just to come back to our friend Norman, I mentioned this before, but I'm going

00:53:19.960 | to mention it again, OK, they've had 19 years to do it, and they can't do it.

00:53:26.560 | He and Jeremy Siegel together, a little higher reward and a little lower reward, respectively,

00:53:33.040 | a little higher risk and a little lower risk, respectively, and a sharp ratio risk-adjusted

00:53:39.240 | return that's a little lower than the S&P 500.

00:53:41.600 | They haven't proven anything, and they've had 19 years of business between the two of

00:53:45.480 | them to prove it.

00:53:46.480 | And that's not good enough for me, but they prove it in advance.

00:53:49.800 | This is a great business.

00:53:51.240 | You can prove anything in advance.

00:53:54.040 | But will it happen?

00:53:55.040 | Read the articles in the Financial Analyst Journal by the professors, and they've got

00:53:58.920 | these formulas-- oh, head over heels, and they're incomprehensible to me.

00:54:03.920 | But they come and they go.

00:54:06.240 | It's just not a profitable thing to do.

00:54:08.360 | Bill Sharpe, by the way, said, "Smart beta is stupid."

00:54:13.760 | That was his contribution to the debate, which is good enough for me.

00:54:18.280 | This is an interesting question from Nyssa Prius.

00:54:21.000 | He said, "What can you tell me about the process of picking ticker symbols?

00:54:26.620 | Who chooses them?

00:54:27.920 | How are they negotiated?

00:54:29.520 | Is there a market among mutual fund companies in ticker symbols?

00:54:33.320 | Why did Vanguard pick BND for the total bond ETF, leaving bond available for PIMCO total

00:54:40.680 | return?

00:54:41.880 | Did Vanguard marketing think BND was better?"

00:54:50.560 | I think that's above my pay grade.

00:54:54.960 | I have absolutely no idea, but I do think one of the more interesting things that happened

00:55:01.320 | in our ETFs is they were originally called vipers, to contrast with the spiders.

00:55:07.120 | And after about three years, somebody said, "Aren't vipers dangerous?"

00:55:11.480 | Well, it shouldn't have taken them three years to figure out that vipers are dangerous.

00:55:16.840 | We all know that.

00:55:17.840 | So I just don't know the answer to that question.

00:55:19.840 | I'm sorry.

00:55:20.840 | No, I'm not sorry at all, actually.

00:55:23.400 | It wasn't your fault, right?

00:55:25.600 | So that's why you don't know the answer.

00:55:28.000 | This question is from Chris001122.

00:55:32.400 | As one of the best financial geniuses of the 20th and 21st centuries, do you believe the

00:55:37.480 | United States can ever begin to stop our dependency on debt?

00:55:41.680 | If you believe we should, what are some ideas you might have to help balance our budget

00:55:46.480 | and begin reducing our debt?

00:55:48.780 | If any single person could help solve this, I believe you might have some good ideas on

00:55:53.200 | this.

00:55:55.160 | Look, I am not a financial genius.

00:56:00.600 | I have never been a financial genius, and I have no aspirations to being a financial

00:56:05.880 | genius.

00:56:06.880 | Does that make that clear?

00:56:12.320 | With that, let me say a couple of things.

00:56:18.700 | First, we've struggled to pull ourselves out of this ghastly mess from 2008, 2009, almost

00:56:27.180 | failure of our financial system, almost entirely by monetary policy, Federal Reserve.

00:56:34.100 | We have done nothing in fiscal policy.

00:56:36.880 | We could have raised taxes to help or cut taxes to help, and we have done neither in

00:56:41.180 | any material way.

00:56:42.180 | There have been a few tax increases, I think, in that period, not enough to hold the balance.

00:56:50.540 | We're going to have to have -- every economist is going to tell you, at least they told me

00:56:54.720 | this in 1949, that the best way to deal with crises is to have fiscal and monetary policy

00:57:03.580 | work together.

00:57:04.580 | We have not done that here.

00:57:07.140 | How do we get out of it?

00:57:08.260 | How do we start to cut that debt down?

00:57:10.260 | Well, first, a massive, say, tax increase, huge tax increase to start running at surpluses

00:57:17.540 | would be an economic disaster for the country.

00:57:20.820 | The way it's going to have to work is if we continue to get growth, and I think we might

00:57:27.020 | be lucky enough to get 2.5% or 3% growth in GDP, we can work the ratio of debt to GDP

00:57:34.580 | down just by not letting the debt grow, and if the GDP grows and the debt doesn't grow,

00:57:39.860 | just by holding it steady, you won't do a lot of damage to the economy, and the ratio

00:57:44.180 | will gradually come down.

00:57:45.900 | It is large, and I would say historically alarming, but I think in today's circumstances,

00:57:54.100 | it's something that you have to be conscious of taking it down by maybe some combination

00:57:58.860 | of rising taxes, although the demands of our budget, all these things about having college

00:58:06.340 | free for students and helping the people that need help in our country of whom there are

00:58:10.380 | many and who deserve help, who we must have, we must help, we're going to have some kind

00:58:17.100 | of a revolution around here, which is the last thing anybody wants, to balance all these

00:58:21.820 | things in a federal budget in an affirmative, quickly changing, sharply changed dynamic

00:58:28.620 | is simply not going to happen.

00:58:31.660 | The Federal Reserve has balance sheets, I think it's $6 trillion or something, never

00:58:36.340 | anything like that before, how is that going to come down?

00:58:40.420 | I don't know the answer to that question, and how do we have in a political system that

00:58:47.580 | we are almost stymied every time we do something in government, nothing much happens down there,

00:58:53.260 | how are we ever going to do even the small things I'm talking about, a more intelligent

00:58:57.540 | tax system that can raise a little more taxes, enough to pay for the things we have to spend

00:59:02.180 | money on, or that I believe we have to spend money on, and it's a conundrum, but there

00:59:06.980 | are answers statistically, but what will actually work, what you can actually implement is really

00:59:15.100 | a problem, because we don't implement very much, nor do we have much of a consensus.

00:59:21.660 | We have two Republican parties at the moment, and probably two Democratic parties, it looks

00:59:26.540 | like that from the primaries anyway, and it may even get worse, so we have a lot to answer

00:59:32.060 | as Americans.

00:59:34.980 | They say we get the government we deserve, and I think that's accurate, we being broadly

00:59:39.360 | defined as everybody, but I constantly remind people, I was chairman of our Constitution

00:59:44.620 | Center then in Philadelphia when it was being built, and everybody used to say democracy,

00:59:49.940 | I said we are not a democracy, we have never been a democracy, we are a republic, for whom

00:59:54.900 | a republic, for which it stands, that's what we've always been, where the voters elect

01:00:01.940 | their most able representatives to represent them.

01:00:05.740 | We don't, I think we're slipping a lot, you could argue that democracy is responsible

01:00:10.900 | for what's going on in the Republican party and the Democratic party, almost in the Democratic

01:00:15.100 | party too, and Brexit, British thing, was basically a plebiscite, where everybody got

01:00:24.060 | an equal vote, where they had a flying clue as to what leaving the European Union would

01:00:29.940 | mean to Britain, and obviously most of them didn't, so you get issues about feelings,

01:00:35.180 | issues about emotions, issues about who talks the loudest, and get your ear last, and that's

01:00:40.660 | how you vote, and none of that is healthy, so I worry about that, and I don't see clear

01:00:47.380 | answers in front of us.

01:00:49.020 | You could argue we never have seen clear answers about the problems we face, but I think this

01:00:53.660 | nation has always had the strength to finally do what's right, as Churchill said, Americans

01:01:02.220 | always do what's right, but only after they've tried everything else.

01:01:08.220 | Jack, this is an area I think you've mentioned many times before, but not necessarily to

01:01:15.860 | this crowd.

01:01:16.860 | It says, "Hello Mr. Bogle, I've learned so much from you, your teachings, your experience

01:01:21.940 | via interviews and writings, I invest only in total stock market, and automatically reinvest

01:01:27.540 | all dividends and capital gains.

01:01:29.900 | My bond investment is totally my government pension, and social security benefits.

01:01:35.460 | I don't think I need a bond portfolio.

01:01:38.760 | What is your opinion?"

01:01:40.060 | Well, in the abstract, she's exactly right, but you can't do anything in the abstract.

01:01:46.900 | You would have to know what the value of her stock portfolio is, relative to the income

01:01:51.100 | she's earning from her two pensions, social security, and I think you said government

01:01:56.620 | pension, and so in the abstract, if they're, let me say they're 80% of her wealth, she's

01:02:06.300 | absolutely right.

01:02:07.780 | On the other hand, if they're 10% of her wealth, she should probably have a bond position.

01:02:12.060 | I've always thought that you ought to take into account, and I've said this many, many

01:02:15.260 | times for many, many years, you should always take into account your fixed income side of

01:02:20.740 | your equation, social security, corporate pension, and bonds, and then stocks on the

01:02:26.460 | other side.

01:02:27.580 | It's not easy to do that, statistically, because social security value, you know, the typical

01:02:33.840 | value of, I think the capitalized value of social security for a typical investor that's

01:02:40.380 | at retirement is around $300,000, $325,000 a year.

01:02:45.260 | Make a note of that, Mike, and see if I'm right.

01:02:46.820 | Is that about right?

01:02:48.940 | Well, thank you.

01:02:52.620 | You're going to go far in this company.

01:02:54.140 | We have a yes man.

01:02:57.620 | But that's basically, it's not a bond position because you don't own it, your heirs don't

01:03:03.020 | get it, it stops when you die, but in terms of your financial stability during the remainder

01:03:08.220 | of your life, it acts like a bond, and a bond with a cost of living hedge.

01:03:13.860 | I mean, is there anything better?

01:03:16.540 | And probably not.

01:03:19.140 | Maybe it's too good a deal.

01:03:20.140 | There are those that say the benefits ought to be cut back.

01:03:23.220 | I saw an idiotic op-ed in a letter to the editor of the Wall Street Journal saying why

01:03:29.220 | are we paying all these investors 8% if they wait until 60.5% to 72.5% or whatever it is

01:03:36.100 | to get their social security, which I did too, and they didn't seem to have the slightest

01:03:40.820 | understanding that the reason it's 8% is that these people die off every year and never

01:03:46.020 | get a penny.

01:03:47.400 | So actuarially, the 8% is probably not excessive at all, but it looks like it, and I couldn't

01:03:54.220 | believe the journal would publish it.

01:03:55.980 | Maybe they don't read these things before they publish them, except mine.

01:04:01.240 | I had a really nice exchange with the journal, and the guy that runs that column, we have

01:04:06.180 | kind of a laughing stock together, and so he handled me very well when the dean of Harvard

01:04:14.340 | Business School said the stock market adds value to the society, and it subtracts value

01:04:20.780 | by definition.

01:04:22.020 | So we had a little interchange, and I wrote a short letter.

01:04:24.140 | Short, and I wanted to write, but I wanted to make sure it got in.

01:04:28.260 | And if you've got to take on somebody, for God's sake, take on somebody like the dean

01:04:31.580 | of the Harvard Business School, right?

01:04:34.300 | >> This question is from Lynnette.

01:04:38.260 | She says, "Congratulations on a life well lived.

01:04:42.260 | What is your schedule, and how do you have the energy, passion, and drive to continue

01:04:46.300 | to work at your age?"

01:04:49.700 | >> My schedule is completely out of control, and I have the passion and drive to do it,

01:04:58.260 | because I really don't have any alternative.

01:05:00.380 | I don't know what to say about that.

01:05:03.140 | I think anybody, including my wife, who looks at what I do and the intensity with which

01:05:07.900 | I work, would think I believe accurately.

01:05:12.140 | I've lost a couple of cylinders in my brain, and that may well be true.

01:05:18.420 | But we're all different, and I love what I'm doing.

01:05:28.580 | I love the people I work with, my little team of Mike and Emily.

01:05:33.420 | I'm happy, very happy, to be totally accepted at Vanguard again.

01:05:39.380 | And I love the letters from the shareholder I get every day, even though I spent last

01:05:45.020 | weekend answering 32 letters while my wife's back was turned.

01:05:50.780 | And she's an unbelievably good human being, and I would be nothing without her.

01:05:57.340 | She's tolerant.

01:05:58.340 | She's patient.

01:05:59.340 | She's a great mother, a great friend to so many people.

01:06:02.780 | And we're very lucky to have a family that's pretty much together, all 31 of us, as I said

01:06:09.340 | the other day.

01:06:12.420 | So I guess we just honor the expression "press on regardless."

01:06:20.340 | Sometimes it's hard for me, I'll be honest with you.

01:06:25.220 | I don't leave home for work until 8 o'clock in the morning, and it's kind of like sloppy

01:06:30.820 | duty for me.

01:06:31.820 | But by the time you get to 3 or 3.30 or 4 in the afternoon, I'm too tired to keep going.

01:06:37.900 | I'll be honest.

01:06:38.900 | Michael knows this.

01:06:39.900 | So I go the hell home and take a nap before dinner.

01:06:44.340 | And if I can tell you a little family story, when I get up from my nap, which may last

01:06:49.740 | over an hour, my wife does not say, "You lazy lout, I need help around here."

01:06:58.940 | She says, "Did you get enough sleep, dear?"

01:07:07.100 | Somebody asked me in my -- I was introduced somewhere in my 50th anniversary, the time

01:07:11.700 | of my 50th wedding anniversary, obviously 10, 15 years ago.

01:07:16.220 | And one of the questions from the audience, which are usually quite shameless, there's

01:07:19.700 | often a shameless question, about the third question that came up was, "What's the secret

01:07:27.940 | to being married for 50 years?"

01:07:31.500 | And I said, "I never thought about it before."

01:07:34.980 | And I gave an answer, I've got to tell you, that I couldn't improve on.

01:07:39.980 | Right in a second, I gave an answer that I couldn't possibly improve on.

01:07:43.660 | I said, "Two rules, one, marry a saint, two, never forget the two most important words

01:07:54.460 | in the English language, yes, dear."

01:08:00.960 | You can all use that when you get to 50 years.

01:08:03.700 | It worked, because now I'm at 60.

01:08:07.820 | >> This question is from Quiet Prosperity.

01:08:11.180 | We know staying the course is what will give us the best chance of reaching our financial

01:08:15.380 | goals, but given our emotional makeup as humans, are there any practices, advice you could

01:08:21.700 | give on how to help fight off the potentially dangerous emotional decisions we are prone

01:08:26.500 | to make when the noise gets tuned up or turned up?

01:08:30.500 | >> Well, I'm subject to all those emotions, too, and I'm not some superhuman human being.

01:08:37.300 | And what I do, when you get a 50% market decline, you really get kind of worried, and you get

01:08:42.460 | kind of worried about not so much your own account, because I've got half of it, probably

01:08:45.740 | a little more than, a fairly safe bond account that's actually going up when the market's

01:08:50.900 | going down at that time from those interest rate levels.

01:08:54.500 | And so I don't really have a lot to worry about, but I still worry and still get knots

01:08:59.740 | in my stomach.

01:09:01.100 | So what do I do?

01:09:02.860 | I get out my first book and read it again.

01:09:07.940 | And you reinforce your beliefs, and it's a little hyperbole in that answer, but it's

01:09:15.660 | pretty much accurate.

01:09:16.660 | It's really -- it sounds good when I say I get out my first book and read it again, and

01:09:21.540 | that was really a book ahead of its time.

01:09:23.700 | Dr. Samuelson said, "John Bogle has changed an industry in the optimal direction, but

01:09:31.900 | very few can this be said."

01:09:33.500 | And this is before the development of indexing or anything else, and there was one smart

01:09:39.180 | guy.

01:09:40.180 | Talk about a genius.

01:09:41.180 | Paul Samuelson was certainly that.

01:09:44.060 | But it's basically, going back to original principles, what got me to invest in the first

01:09:48.820 | place.

01:09:49.820 | What I expected.

01:09:50.820 | Did anybody warn me the market could go down 25 or 30% or even 50%?

01:09:54.860 | You know, it's going to go down, typically.

01:09:57.740 | We don't know any of this, but it's a useful thing to think of.

01:10:01.380 | The market will probably go down 50% every 25 years, once every 25 years, and over 20%,

01:10:08.380 | probably six times in every 25 years or eight times.

01:10:12.020 | So when it happens, you say, "Well, there's one.

01:10:14.720 | Only five to go," or something.

01:10:16.940 | Or that's the sixth time, that's the last one.

01:10:20.740 | It doesn't work that way, but it's just going back to first principles and trying to figure

01:10:24.700 | out why you're investing, what you're doing, and are you doing it the best way you can.

01:10:29.580 | Have you been safe enough?

01:10:30.580 | Have you gotten your fair share of market returns?

01:10:32.940 | These basic principles are so idiotically simple that one wonders, how could it have

01:10:40.860 | taken 80 years, roughly, no, 75 years, I guess, for somebody to start a mutual fund?

01:10:48.980 | How could that have happened?

01:10:51.460 | How could it take until 1975 for someone to figure out that indexing works?

01:10:57.900 | It seems inconceivable.

01:10:58.900 | I must be the stupidest guy in the world, because I should have thought about it years

01:11:03.220 | before, and someone should have thought about it years before that.

01:11:07.260 | It's all so simple, and I do think that is the way, and that it's proving to be the way,

01:11:13.740 | and whether the market goes way up or way down, I don't think there are doubts about

01:11:19.780 | the value of indexing.

01:11:20.780 | Maybe the value of equities is another question, but the value of indexing to get your fair

01:11:25.300 | share of the stock market returns is eternal, and it will continue to change this industry,

01:11:31.500 | and it will continue to destroy this industry as we know it.

01:11:35.100 | I'm a disrupter in the hell of it.

01:11:37.000 | Don't you think that it would be good to remind people, especially the people who are still

01:11:42.300 | working and have the 401(k)s, that they're buying low instead of bailing out, that this

01:11:47.660 | is a good opportunity for them, because their money's going in on a regular basis?

01:11:51.700 | Sure.

01:11:52.700 | There's no question about this, that people seem to like it when they put their money

01:11:56.780 | to work at ever-ascending prices and hate it when they're putting their money to work

01:12:01.140 | at ever-descending prices.

01:12:02.820 | Well, that's so backward.

01:12:05.680 | You should be hoping exactly the opposite.

01:12:08.260 | The problem with that, I mean, the syllogism is almost exactly correct, but the problem

01:12:12.620 | is that probably, let me guess, that 35% or 40% of Vanguard shareholders are accumulating

01:12:22.620 | -- maybe 60% or not, I don't know the exact number, maybe it's 65% -- have done all the

01:12:28.100 | investing they're going to do.

01:12:29.900 | So it's always hard to speak to the 35%, let's say, when the 65% is hurting.

01:12:37.300 | So your point is well taken.

01:12:40.300 | Low prices -- you go to the grocery store, and all the prices are down 50%, you're going

01:12:45.900 | to buy everything you can get your hands on.

01:12:49.620 | So this is a two-part question from Long Invest.

01:12:53.580 | It says, "I have two questions for you about good enough.

01:12:58.180 | My first question is about good enough portfolio.

01:13:02.700 | Is there anything wrong with investing in the three-fund portfolio recommended by Taylor

01:13:06.940 | Larimore, composed of total US stock, total international, and total bonds, without ever

01:13:13.100 | adding other mutual funds to it all lifelong, regardless of age and market conditions?"

01:13:18.580 | I mean, I'm not so sure.

01:13:20.980 | A lot depends on what you mean by how much you have in the non-US portfolio, and to each

01:13:26.380 | his own on that.

01:13:28.560 | And you could say the same thing about a two-fund portfolio, half bonds, half stocks.

01:13:33.860 | You can say it about a one-fund portfolio, the balanced index fund, 60/40, rebalanced

01:13:39.820 | every day, never more than 60, never less.

01:13:43.840 | So these are equally good options.

01:13:48.220 | But with the three-fund portfolio, I don't mean to stake my name and reputation on not

01:13:56.700 | thinking international is the greatest idea.

01:13:58.940 | But if you think about it, the way the markets are, they equalize.

01:14:02.820 | They're a medium for arbitraging the present and the future.

01:14:05.780 | I don't see any reason international stocks will do that badly.

01:14:10.060 | I just don't see a high superiority for them.

01:14:12.340 | It's not so much negative as it's just not a rousing positive.

01:14:17.340 | And I think, Mel, what I'll do, because I don't want to run over my time, but I just

01:14:20.700 | have a couple of final words.

01:14:21.700 | Would it be okay if I said them?

01:14:22.700 | Is that okay?

01:14:23.700 | Sure.

01:14:24.700 | Well, first of all, thank you all so much for coming.

01:14:34.220 | It's been such a delight for me to see all of you, to shake hands.

01:14:39.540 | I don't see how 220 people can take 2,000 pictures, but I guess it's possible.

01:14:46.060 | And the one thing I finally steeled myself to is you're not wasting any film, which is

01:14:53.540 | something I worried about, because I'm a well-known cheapskate.

01:14:56.460 | But it's been great to be with you.

01:14:59.580 | And as I mentioned, I think, before, and certainly to many of you, this is a happy time in my

01:15:07.620 | life.

01:15:10.620 | What can you say about the 65th anniversary in the fund industry?

01:15:16.180 | What can you say about the 40th anniversary of one of the most creative ideas, stupidly

01:15:22.060 | simple as it is, in the industry's history, or maybe in finance history?

01:15:27.820 | What can you say about the 60th wedding anniversary?

01:15:31.900 | And for that matter, what can you say about the 15th anniversary of the bubbleheads?

01:15:38.140 | You mean a lot to me.

01:15:39.260 | You always have, always will, your kindness and your generosity.

01:15:45.580 | And I'm a little embarrassed about being overrated, because I am just who I am.

01:15:50.540 | And I'm happy with who I am.

01:15:52.380 | I don't think I've found any way to improve myself.

01:15:56.500 | The old pump is working away.

01:15:58.420 | The back's not doing so good.

01:16:00.500 | But so what?

01:16:06.660 | I think what we have here is a wonderful group, Taylor, Mel, Laura, the other leaders, other

01:16:20.980 | Mel, did a nice job the other day.

01:16:24.260 | And all of you together make a huge difference in the organization of this, which Mel has

01:16:28.620 | done such a great job at, and his associates, I know he says he got a lot of people working

01:16:33.340 | on this.

01:16:34.340 | So this makes this a very nice way to celebrate as we come to the end of another year.

01:16:40.980 | I think what we have here is the magic of funds that are designed to serve investors

01:16:48.020 | with a fortuitous meeting of an investment organization, investment website designed

01:16:54.940 | to serve other investors, too.

01:16:57.940 | And when you come to the end of the line, it's, I think, service to others, the most

01:17:03.140 | important things in your life.

01:17:05.340 | I will quote here William Penn who said, "Whatever good you have to do, do it now, for we shall

01:17:15.780 | not pass this way again."

01:17:18.180 | But I hope to pass this way again a year hence.

01:17:21.840 | Thanks, everybody.

01:17:22.840 | Thank you, Jack.

01:17:23.840 | Thank you.

01:17:24.840 | Thank you.

01:17:25.840 | Thank you.

01:17:26.840 | And you're wasting valuable time.

01:17:27.840 | Thank you all so much.

01:17:28.840 | Please be seated.

01:17:29.840 | Jack, every year, it's tougher and tougher to try to find a memento to give you.

01:17:30.840 | I know your den is full.

01:17:31.840 | I know you've been through a lot.

01:17:32.840 | I know you've been through a lot.

01:17:33.840 | I know you've been through a lot.

01:17:34.840 | I know you've been through a lot.

01:17:35.840 | I know you've been through a lot.

01:17:36.840 | I know you've been through a lot.

01:17:37.840 | I know you've been through a lot.

01:17:38.840 | I know you've been through a lot.

01:17:39.840 | I know you've been through a lot.

01:17:40.840 | I know you've been through a lot.

01:17:41.840 | I know you've been through a lot.

01:17:42.840 | I know you've been through a lot.

01:17:43.840 | I know you've been through a lot.

01:17:44.840 | I know you've been through a lot.

01:17:45.840 | I know you've been through a lot.

01:17:46.840 | I know you've been through a lot.

01:17:47.840 | I know you've been through a lot.

01:17:48.840 | I know you've been through a lot.

01:17:49.840 | I know you've been through a lot.

01:17:50.840 | I know you've been through a lot.

01:17:51.840 | I know you've been through a lot.

01:17:52.840 | I know you've been through a lot.

01:17:53.840 | I know you've been through a lot.

01:17:54.840 | I know you've been through a lot.

01:17:55.840 | I know you've been through a lot.

01:17:56.840 | I know you've been through a lot.

01:17:57.840 | I know you've been through a lot.

01:17:58.840 | I know you've been through a lot.

01:17:59.840 | I know you've been through a lot.

01:18:00.840 | I know you've been through a lot.

01:18:01.840 | I know you've been through a lot.

01:18:02.840 | I know you've been through a lot.

01:18:03.840 | I know you've been through a lot.

01:18:04.840 | I know you've been through a lot.

01:18:05.840 | I know you've been through a lot.

01:18:06.840 | I know you've been through a lot.

01:18:07.840 | I know you've been through a lot.

01:18:08.840 | I know you've been through a lot.

01:18:09.840 | I know you've been through a lot.

01:18:10.840 | I know you've been through a lot.

01:18:11.840 | I know you've been through a lot.

01:18:12.840 | I know you've been through a lot.

01:18:13.840 | I know you've been through a lot.

01:18:14.840 | I know you've been through a lot.

01:18:15.840 | I know you've been through a lot.

01:18:16.840 | I know you've been through a lot.

01:18:17.840 | I know you've been through a lot.

01:18:18.840 | I know you've been through a lot.

01:18:19.840 | I know you've been through a lot.

01:18:20.840 | I know you've been through a lot.

01:18:21.840 | I know you've been through a lot.

01:18:22.840 | I know you've been through a lot.

01:18:23.840 | I know you've been through a lot.

01:18:25.840 | Jack, thank you again.

01:18:26.840 | Thank you very much.

01:18:27.840 | That's a wonderful momentum.

01:18:28.840 | You shouldn't have done it, but you did it, and I thank you.

01:18:30.840 | Thank you so much again, Jack.

01:18:32.840 | We hope to see you again next year.

01:18:34.840 | Thank you, Jack.

01:18:35.840 | Thank you, Jack.

01:18:36.840 | Thanks again.

01:18:37.840 | [applause]

01:18:39.840 | [applause]

01:18:41.840 | [applause]

01:18:42.840 | [applause]

01:18:43.840 | [applause]

01:18:44.840 | [applause]

01:18:45.840 | [applause]

01:18:46.840 | [applause]

01:18:47.840 | [applause]

01:18:49.840 | (audience applauding)

01:18:53.000 | [BLANK_AUDIO]

Bogleheads® Conference 2016 - John Bogle Q&A

Chapters