The man who upended investing by founding $5.1 trillion Vanguard says he admires only 3 rivals, and even made some money off 1 of them

Jack Bogle Vanguard

  • Vanguard founder Jack Bogle admires a trio of peers, he wrote in his latest book. 
  • He purchased stock in one of them in 1994 to gather information about a competitor, and made hundreds of thousands of dollars. 

Jack Bogle founded a company even Warren Buffett has admired. In a book released last week, „Stay the Course: The Story of Vanguard and the Index Revolution,“ the Vanguard founder chose three companies he holds in high regard, one of which he accidentally made hundreds of thousands of dollars from. 

Bogle highlighted Baltimore-based asset management firm T. Rowe Price; San Francisco-based mutual fund company Dodge and Cox; and Austin-based investment firm Dimensional Fund Advisors as the firms he has always admired. 

The trio have demonstrated „professional conduct, low-key marketing (or none), and good people,“ he wrote. 

Bogle accidentally profited from T. Rowe Price when he bought a then-nominal 100 shares of the firm in 1994 for $4,200. He made the „token investment“ in the fund to collect information about his competitor and said he then paid little attention to the mutual fund manager’s stock price. 

„But, my goodness, I made a great investment,“ he wrote, thought he recognized buying stock in a major competitor was „awkward.“ 

Since that 1994 purchase, the shares split five times. In mid-2018, his holdings were worth $384,000, with an annual dividend of $8,960 – more than double the price of his initial investment. 

Bogle admitted that by keeping Vanguard private, he lost out on the fortunes his Wall Street peers would earn, a trade off he sees as beneficial to the firm’s clients. In 2012, he said his net worth was in the „low double-digit millions.“

„I marvel at the enormous profitability of T. Rowe Price and our peers in the mutual fund business, generated in part by management and marketing, but largely by the soaring prices of stocks in the great bull market and the staggering economies of scale available in managing mutual funds,“ Bogle wrote. „But the lion’s share of those economies of scale have been arrogated by the managers to themselves, and barely shared with the mutual fund clients whom the officers and directors of mutual funds are duty-bound to serve.“ 

Bogle also shared a personal connection to T. Rowe Price. Jim Riepe, his one-time assistant who would rise to executive vice president of Vanguard, left in 1980 for T. Rowe Price. 

„I was crestfallen at the loss of my heir-apparent,“ Bogle wrote. „But I was confident he had found the perfect home. (I was right!)“

Riepe would go on to a long career at T. Rowe Price, retiring as vice-chairman of the firm in 2005. 

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Source: Business insider

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