2011–2016
INVESTMENT GIANT ON LIVING WELL—
AND MADOFF
Philadelphia Inquirer, Friday, March 4, 2011
THINGS HAVE A WAY of coming full circle for Jack Bogle, founder of the mutual-fund leader the Vanguard Group.
At the midpoint of his sophomore year at Princeton, he was struggling in economics with a D-plus average, which placed his scholarship in jeopardy.
The basis of his difficulty? The first edition of what would become the seminal college economics text written by Paul Samuelson.
Later, in search of a topic for his senior thesis, Bogle recalled, he read on “Page 116 of the December 1949 issue of Fortune magazine” a story about mutual funds titled “Big Money in Boston.”
Inspired, Bogle proceeded to write about an industry that he said could be so much better. He argued that sales charges and expense ratios should be reduced and that funds should be run in the most honest, economical, and efficient way possible. Funds should be run for the benefit of shareholders and not managers, he wrote, and they should make no claim for superiority over market indexes.
Years later, that same Fortune would proclaim Bogle one of the four investment giants of the 20th century. And Samuelson, author of the legendary economics text, would write the foreword for Bogle’s first book, Bogle on Mutual Funds.
Samuelson, the first American Nobel laureate in economics, was both a personal and professional proponent of Bogle. In 2005, Samuelson wrote Bogle a note: “Any small influence on you has been more than offset by what Vanguard has done for my six children and 15 grandchildren. May Darwin bless you!”
That same year, Samuelson delivered a speech that ranked Bogle’s financial invention with the “wheel, wine and cheese, the alphabet, and Gutenberg printing: a mutual fund that never made Bogle rich but elevated the long-term returns of the mutual-fund owners. Something new under the sun.”
On Monday, Bogle regaled a full house at the Bryn Mawr Film Institute with such anecdotes from his past while celebrating the release of his newest book, Don’t Count on It!
At 81, Bogle was sharp as ever, displaying no evidence of having just been hospitalized for a touch of the flu. In fact, Bogle recently celebrated the 15th anniversary of his heart transplant, yet shows no signs of slowing down or curtailing the messages he has espoused for decades. Why should he? So much of what he has said for years has come true.
Bogle’s sense of serendipity extends to things he has preached for decades: ethics and giving value to clients.
He is the antithesis of Michael Douglas’s character Gordon Gekko, who famously said that “greed is good” in the movie Wall Street. To the contrary, while extolling the virtues of entrepreneurship, Bogle is quick to point out: “No, greed is not good. Ambition is good.” Bogle laments that college finance courses and business schools often assert that the only incentives that move the world are financial.
Isn’t living a worthy life an incentive? Isn’t being a good member of the community an incentive?
I read a wonderful quote the other day. It said the great thing about money is that it will buy you all you want of anything in the world that is totally unimportant. It cannot buy you what is important.
The day of his Bryn Mawr presentation, New York magazine released a jailhouse interview with the disgraced financier Bernie Madoff. “Everyone was greedy. I just went along. It’s not an excuse,” Madoff told the writer Steve Fishman, adding that banks’ and hedge funds’ willingness to work with him—and collect their fees—despite obvious irregularities with his business had amounted to “complicity.” Bogle agreed:
Well, of course there was [complicity]. Why was there? I will give you one example. These fund managers who used Madoff did not do any due diligence at all, and they were paid over three to five years just for pointing their fingers to invest “over there” $600 million. So of course they ignored all the warning signs. . . . Some of these guys I hope will go to jail.
Sprinkled into Bogle’s remarks were a number of thoughts from a business giant looking at a life well lived.
His mantra, “Press on, regardless,” was adopted from the name of his uncle’s boat. Bogle emphasized how important it is to follow that credo no matter how tough—or how easy—times may be.
And there was: “You deal with what is and not what might have been.”
And: “Live life a little with blinders on. You have the task in front of you. Don’t be disturbed by peripheral things around you. March to your own drummer, do your best, focus on the task at hand.”
And perhaps the most Boglesque: “If you have a good impulse, do it.”
AFTERWORD
On November 16, 2016, Jack Bogle, at age 87, was among the first recipients of the Philadelphia Inquirer’s inaugural Industry Icon Awards. I read with interest his acceptance remarks. As one who has read many of his dozen books, hosted him for radio interviews and live events, and had the privilege of visiting him in his Vanguard offices in Malvern, Pennsylvania, I was not surprised by anything he said. At the outset, the man who founded a company that had grown to nearly $4 trillion in assets felt compelled to defend the title of his remarks:
The idea of “Big Money”—the title of my remarks this evening—has never motivated me. My goal in this business was not to build a colossus. It was to give investors a fair shake.
After walking through a timeline of his life in business, he closed by saying this:
The idea of fiduciary duty, honest disclosure, and candor, along with our simple mutual structure and our simple index strategy that followed—all of which, as it happens, are Quaker in spirit—have become “the way.” We now effectively serve the needs of the 22 million human beings who have entrusted us with their investments, their hopes, and their confidence. We are proud of our heritage, and faithful service to investors has always been my primary goal. If “Big Money in Philadelphia” suggests that we have accomplished that goal, well, so be it! Thank you again, . . . Philadelphia Inquirer, for the honor that you bestow on me and Vanguard this evening.
That’s pure Bogle. There’s an underutilized, old-school word that sums him up: scruples. To the extent we use the word today, it is most often as a pejorative, to describe what someone lacks, as in, a moral hesitation. He’s the opposite. Every step he takes seems guided by his Quaker faith and sense of what is just. And that is the way he has run his phenomenal business.
Jack Bogle has achieved tremendous deserved recognition during his life. In 2004, Time magazine named him one of the world’s 100 most powerful and influential people. Fortune, in 1999, called him one of the investment industry’s four “Giants of the 20th Century.” And Institutional Investor presented him with its Lifetime Achievement Award.
In his book Enough: True Measures of Money, Business, and Life, Bogle quotes Joseph Heller as telling Kurt Vonnegut at a billionaire’s party, “I have something he [their host] will never have: Enough.” I get the sense that even without the many accolades, Jack Bogle, the proud Princeton alumnus who built a business on an idea he voiced in his senior thesis, had already had enough.
A LESSON IN GUMPTION,
AND ITS REWARDS
Philadelphia Inquirer, Sunday, April 3, 2011
FOR YEARS, my family has vacationed in the same Florida town. In fact, we just returned home after spending a week of spring break there with our three sons.
Many nights, we take the same scenic drive to dinner at a favorite restaurant. As we travel along Gulf Shore Boulevard, we admire a combination of small beach apartments, swanky high-rises, and spectacular homes.
A few years ago, we noticed that whenever we drive this particular route, there are always two men sitting in front of the same third-floor window of a low-rise apartment building that overlooks the road. All that is visible from the road are their two silhouettes. Even during off-peak months, they’ve always been there.
Over the years, we’ve had great fun speculating about who they are, whether they’re ha
ving a drink, and if so, what they fancy, where they’re from, and what they might be discussing. Our guesses have become a modern form of car bingo. Widowers? Retirees? Partners? We’ve run through the gamut of possibilities.
Eventually, I started beeping the horn as we passed. We’d wave. Our new friends would do likewise. There was something comforting in seeing them. In a world of constant change, it’s been nice to look up and see that they are there, same as we remembered from our last visit.
And then last spring, we drove by and they were missing. The apartment was dark. No one was visible in the window. Funny thing, we grew worried about two people we’d never met. Where did they go? Was everything all right? A new round of the guessing game. Too bad, because we had started to joke about dropping in on them to fill in the missing pieces.
On our last trip at Christmastime, we were relieved to see them once again. We were driving past about 6 P.M., and there they were at cocktail hour. I told my wife that I suspected they were gin drinkers and said we should buy them a bottle. She said that if I bought it, she’d deliver it. I said, “Tomorrow.”
So I bought a bottle of Bombay, and en route to dinner at dusk the next night, we speculated with our three boys as to their names and why they had disappeared during our last visit.
Approaching the usual stretch, we were pleased to see the light was on. This time, there were three images in the window, not two. Our friends were entertaining. I pulled over.
My wife, accompanied by our 10-year-old, boldly got out, clutching the gin, and headed toward the stairs to their door. I remained behind with the other two boys, and parked across the street. Then she disappeared from our line of sight.
In a scene reminiscent of Hitchcock’s Rear Window, we watched as one of the men rose to answer the door. Then he, too, was out of the camera frame. After a few minutes, he returned to show his two friends the bottle that had just been delivered. Soon, another of the men went toward the door, presumably to meet whoever had paid them a visit. Then we saw both men return and show the bottle to their guest.
A few moments later, my wife and son returned to the car.
She said Phil and Helmut (one of the boys had guessed “Phil” correctly) were appreciative of the gift (and I was correct about their fondness for gin!). They couldn’t have been nicer and encouraged us to stop next time for a drink. Yes, they’d seen our car and had heard the greeting of the horn. And while they appreciated our concern over their absence in the spring, they had just been away on vacation.
As we started the car and continued along the beach to dinner, my wife and I were happy that a throwaway line about delivering a bottle of gin to our Florida friends had yielded a lesson to show a little gumption and take some initiative. After all, you never know when you could become a comforting constant for somebody else.
Last week in Florida the apartment was dark. But we’re not worried. I beeped anyway.
AFTERWORD
I’m sad to report that Phil and Helmut are no longer where we saw them in Naples. We still vacation in the same place and take our normal route to dinner. But for several years, the drapes have been pulled in their apartment and there have been no signs of life, at least when we’ve been in town. We miss seeing them in the window, while imagining their conversations as we pass in the night. Instead, we now speculate on what became of them. Did their relationship end? God forbid, did one of them pass? Or maybe they just settled on another unit or in another town? Regrettably, I confess to not having learned the lesson of my own column: taking a risk with new relationships. I failed to ensure they read this story. We didn’t return to Florida for several months after I wrote this column, and when we did go back, I forgot to pack it. Lacking an e-mail or street address for Phil and Helmut, I never made them aware of what I’d written.
CAN YOU IMAGINE
HOW CHRISTIE’S SON FEELS?
Philadelphia Inquirer, Sunday, June 5, 2011
IT WAS NO SURPRISE TO ME that Chris Christie took heat for using a state helicopter to attend his son’s baseball game, but I’m not thinking of the wrath of New Jersey taxpayers. If his house is anything like mine, he has bigger problems on the home front for the poor decision he made.
Last Tuesday, Christie flew from Trenton to Montvale to watch his son Andrew play baseball in a state playoff game. Upon arrival next to the field, Christie was shuttled about 100 yards in a dark town car with tinted windows to the stands. Then, after the fifth inning, play was halted so he could depart in order to travel to Drumthwacket, the governor’s mansion, to dine with some Iowans who were courting him to run for president.
The state police superintendent said the pilots would have been training in the new $12.5 million craft without the governor, so there was no additional cost to the state police. In similar circumstances, the Star-Ledger reported, Governors Jim McGreevey and Christie Whitman repaid the state. After initially saying that he wouldn’t do likewise, Christie and the state Republican Party announced Thursday that they, too, would pay their own way.
But I’m thinking that satisfied only one segment of his critics. Here’s why.
I drive two vehicles: a 2004 F-150 that I own and a 2011 Jaguar XJL, which is provided to me by a sponsor of my radio program.
I was first offered the Jaguar when the model was released, and so I was among the first to drive one on the Philadelphia roadways. The car is spectacular—the finest I have ever driven. It’s both ultra-luxurious and a smooth ride. So imagine my excitement to pick up our sons from school. Our boys are this week finishing the fourth, seventh, and ninth grades.
I arrived in this brand-spanking-new $80,000 car, only to have the first of them get into the passenger seat and slump down.
“Dad, I can’t believe you picked us up in this!”
Only when we cleared the school grounds did he and his brothers sit up straight and appreciate the interior beauty of the car.
The following day, I thought it best to get them in the F-150. Another surprise.
“Dad, how many pickup trucks do you see other than ours?”
Answer: none.
The lesson here was that at this age, they wish to fly beneath the radar—pun intended—which is not so easy with a father prone to the limelight.
So I can only imagine what it was like for Andrew Christie.
It must be bad enough that the opposing pitcher knows he is the governor’s son when he comes to the plate. You can imagine him deciding to put a little more heat on the ball. And now, to have added attention heaped on him thanks to a hovering helicopter, not to mention a town car apparently needed to shuttle dad 300 feet? How embarrassing.
I have to believe he was none too happy with dad’s arrival ceremony for a high school baseball game. Good thing his team won.
This also reminds me of a story I often was told by a friend and neighbor from Doylestown, Jack Ernst, who passed away a few weeks ago. Jack was one of the funniest men I have ever known. It runs in his family.
Jack grew up in Lockport, Illinois, with two brothers, Jimmy and Joey. The Ernsts had little money. Consequently, the family car was a late 1940s Ford coupe with a banged-up fender and an “88” Jimmy had painted on its side to resemble a stock car. The family was perpetually getting ready to get rid of it.
One day as teens, Jack and Joey had a date at the movies with two local girls. As they approached the theater in the family jalopy, they asked their father to drop them off a block away so the girls would not see the car. Dad obliged.
But when the boys got to the front of the theater, their dad suddenly pulled up, rolled down the window, honked the horn, and said, “I’m Mr. Ernst and this is my car!”
One can only imagine the horror the boys felt. Like mine did when I pulled up in the XJL and then the F-150. Like Andrew Christie no doubt did when his dad flew to the ball field.
Next time Chris Christie should drive. I’ll let him borrow the Jag.
AFTERWORD
My purpose in this column was to
tell a funny story and show some empathy for Governor Christie as a fellow dad. Well, he missed the joke. Instead, I was dead to him for having written it, a fact that became clear when, in the spring of 2015, Tom McGrath, the editor of Philadelphia magazine, asked me to write a July cover story on Christie and he refused to cooperate. It was bizarre. I had taken Christie’s participation for granted because he was so famously media accessible, and up until then, I’d interviewed him a half-dozen times and had often spoken and written about him in a complimentary manner, especially when he first ran against Jon Corzine. During that campaign I had called foul on Corzine’s use of slow-motion footage in a negative ad depicting Christie ambling along, because I thought the tape was slowed to accentuate his weight. Plus, this Philly Mag cover story would reach South Jersey in the midst of his reelection campaign. It seemed like a no-brainer. Well, my radio producer, TC, then reconstructed a ticktock of all dealings she’d had with Christie’s press office, how our cordial relationship and his frequent radio appearances had come to a grinding halt, immediately after this column ran. I published that recounting in a January 2015 column for the Sunday Inquirer, where I wrote:
Pre-helicopter, the staff was quick to respond and always courteous (“We’d like to get the governor back on with Michael once we start doing radio”). Post-helicopter, only one of many invitations got a reply (“Will be in touch about the next time we can get some time for the governor”).
Still, I wrote the cover story without Christie’s cooperation and I think I treated him fairly. Nine months after its publication, at the first GOP presidential debate at Simi Valley, I was present for CNN when Christie did a sound check and we had an awkward encounter and handshake. What a shame. For having once suggested he’d embarrassed his son—as I had done to my own three—I’d been tossed under the bridge, so to speak.
Clowns to the Left of Me, Jokers to the Right Page 25