Don't Count on It!: Reflections on Investment Illusions, Capitalism, "Mutual" Funds, Indexing, Entrepreneurship, Idealism, and Heroes
"This collection of Jack Bogle's writings couldn't be more timely. The clarity of his thinking—and his insistence on the relevance of ethical standards—are totally relevant as we strive to rebuild a broken financial system. For too many years, his strong voice has been lost amid the cacophony of competing self-interests, misdirected complexity, and unbounded greed. Read, learn, and support Jack's mission to reform the industry that has been his life's work."
—PAUL VOLCKER, Chairman of the President's Economic Recovery Advisory Board and former Chairman of the Federal Reserve (1979–1987)
"Jack Bogle has given investors throughout the world more wisdom and plain financial 'horse sense' than any person in the history of markets. This compendium of his best writings, particularly his post-crisis guidance, is absolutely essential reading for investors and those who care about the future of our society."
—ARTHUR LEVITT, former Chairman, U.S. Securities and Exchange Commission
"Jack Bogle is one of the most lucid men in finance."
—NASSIM N.TALEB, PhD, author of The Black Swan
"Jack Bogle is one of the financial wise men whose experience spans the post–World War II years. This book, encompassing his insights on financial behavior, pitfalls, and remedies, with a special focus on mutual funds, is an essential read. We can only benefit from his observations."
—HENRY KAUFMAN, President, Henry Kaufman & Company, Inc.
"It was not an easy sell. The joke at first was that only finance professors invested in Vanguard's original index fund. But what a triumph it has been. And what a focused and passionate drive it took: it is a zero-sum game and only costs are certain. Thank you, Jack."
—JEREMY GRANTHAM, Cofounder and Chairman, GMO
"On finance, Jack Bogle thinks unconventionally. So, this sound rebel turns out to be right most of the time. Meanwhile, many of us sometimes engage in self-deception. So, this book will set us straight. And in the last few pages, Jack writes, and I agree, that Peter Bernstein was a giant. So is Jack Bogle."
—JEAN-MARIE EVEILLARD, Senior Adviser, First Eagle Investment Management
Insights into investing and leadership from the founder of The Vanguard Group
Throughout his legendary career, John Bogle-founder of the Vanguard mutual fund group and creator of the first index mutual fund-has helped investors build wealth the right way, while, at the same time, leading a tireless campaign to restore common sense to the investment world.
A collection of essays based on speeches delivered to professional groups and college students in recent years, in Don't Count on It is organized around eight themes
- Illusion versus reality in investing
- Indexing to market returns
- Failures of capitalism
- The flawed structure of the mutual fund industry
- The spirit of entrepreneurship
- What is enough in business, and in life
- Advice to America's future leaders
- The unforgettable characters who have shaped his career
Widely acclaimed for his role as the conscience of the mutual fund industry and a relentless advocate for individual investors, in Don't Count on It, Bogle continues to inspire, while pushing the mutual fund industry to measure up to their promise.
A Note to the Reader.
Part One. Investment Illusions.
Chapter 1 Don't Count on It! The Perils of Numeracy.
Chapter 2 The Relentless Rules of Humble Arithmetic.
Chapter 3 The Telltale Chart.
Chapter 4 A Question So Important That It Should Be Hard to Think about Anything Else.
Chapter 5 The Uncanny Ability to Recognize the Obvious.
Part Two. The Failure of Capitalism.
Chapter 6 What Went Wrong in Corporate America?
Chapter 7 Fixing a Broken Financial System.
Chapter 8 Vanishing Treasures: Business Values and Investment Values.
Chapter 9 A Crisis of Ethic Proportions.
Chapter 10 Black Monday and Black Swans.
Chapter 11 The Go-Go Years.
Part Three. What's Wrong with "Mutual" Funds.
Chapter 12 Re-Mutualizing the Mutual Fund Industry: The Alpha and the Omega.
Chapter 13 A New Order of Things: Bringing Mutuality to the "Mutual" Fund.
Chapter 14 The Fiduciary Principle: No Man Can Serve Two Masters.
Chapter 15 Mutual Funds at the Millennium: Fund Directors and Fund Myths.
Chapter 16 "High Standards of Commercial Honor . . .Just and Equitable Principles of Trade . . .Fair Dealing with Investors".
Part Four. What's Right with Indexing.
Chapter 17 Success in Investment Management: What Can We Learn from Indexing?
Chapter 18 As the Index Fund Moves from Heresy to Dogma, What More Do We Need to Know?
Chapter 19 "The Chief Cornerstone".
Chapter 20 Convergence! The Great Paradox: Just as Active Fund Management Becomes More and More Like Passive Indexing, So Passive Indexing Becomes More and More Like Active Fund Management.
Part Five. Entrepreneurship and Innovation.
Chapter 21 Capitalism, Entrepreneurship, and Investing: The 18th Century versus the 21st Century.
Chapter 22 Seventeen Rules of Entrepreneurship.
Chapter 23 "Vanguard: Saga of Heroes".
Chapter 24 When Does Innovation Go Too Far?
Part Six. Idealism and the New Generation.
Chapter 25 Business as a Calling.
Chapter 26 The Right Kind of Success.
Chapter 27 "This Above All: To Thine Own Self Be True".
Chapter 28 "Enough".
Chapter 29 If You Can Trust Yourself . . . .
Chapter 30 The Fifth "Never".
Chapter 31 "When a Man Comes to Himself ".
Part Seven. Heroes and Mentors.
Chapter 32 Walter L. Morgan.
Chapter 33 Paul A. Samuelson.
Chapter 34 Peter L. Bernstein.
Chapter 35 Bernard Lown, MD.
Don't Count on It! is Mr. Bogle's ninth book. His earlier books include Common Sense on Mutual Funds, The Battle for the Soul of Capitalism, The Little Book of Common Sense Investing, and Enough.
"If Bogle writes it, it’s worth reading. His latest, Don’t Count On It, is a collection of 35 essays, every one of them filled with wisdom and insight. . . While I have read Bogle’s views on these issues many times, I’m always impressed with the quality of his writing (Where else can you read quotations from Adam Smith to Winston Churchill to Cato?), the wit and humility he shows and his passion to help investors. The book is a compelling read, one that in effect tells the story and mission of a great man. We’re lucky and privileged to have him fighting on our side. As Bogle noted in his book, Machiavelli “described the accumulation of worldly ‘glory’ as the motivating principle that drives leaders to undertake ‘great enterprises’ and do ‘great things’ on behalf of their fellow citizens and not just themselves.” Hard to find a better description of Bogle himself." (MarketWatch)
“Mr Bogle’s prescription for a better system is relatively simple: to demand proper fiduciary management from money managers. They must prioritise client interests, act as responsible corporate citizens, charge reasonable fees and eliminate conflicts of interest. Amen to that. It may sound like nostalgia from an old-timer, or idealism from a visionary. But without such changes, investors and society will continue to be short-changed as the financial community carries on regardless.” (Financial Times)
“In Don’t Count on It! Reflections on Investment Illusions, Capitalism, “Mutual” Funds, Indexing, Entrepreneurship, Idealism, and Heroes, Bogle hammers at what he labels the cost matters hypothesis: Whether markets are efficient or inefficient, investors as a group must fall short of the market return by precisely the amount of the aggregate costs they incur. It is the central fact of investing. Not surprisingly, the book deals extensively with the low-cost innovation for which Vanguard is best known: the stock index mutual fund. When the company first made indexing available to small investors in 1975, critics derided the notion as “Bogle’s folly.” To Bogle, however, the benefits to investors were irrefutable. . . The impact of indexing has been so great that a second, hugely important contribution by Vanguard has been overshadowed. Vanguard originated the now standard segmentation of bond funds into short-, intermediate-, and long-term varieties. Bogle was enshrined in the Fixed Income Analysts Society Hall of Fame for this innovation. The author of Don’t Count on It! does not dwell on such honors, which include being named one of the world’s 100 most powerful and influential people by Time magazine. In fact, Bogle devotes the final section of his book to tributes to four of his own heroes: Walter Morgan, economist Paul Samuelson, investment guru Peter Bernstein, and Dr. Bernard Lown, a Nobel laureate whom he credits with keeping him alive in defiance of a mystifying heart ailment. Bogle also shows modesty in sharing credit for his contributions to the field and in downplaying his own theoretical expertise. His unashamed display of such old-fashioned virtues, as well as his heretical view that running a business is not entirely about maximizing the wealth of the owners, has earned him the nickname ‘St. Jack.’” (Financial Analysts Journal)
Don’t Count on It! Reflections on INVESTMENT ILLUSIONS, CAPITALISM, “MUTUAL” FUNDS, INDEXING, ENTREPRENEURSHIP, IDEALISM, and HEROS By John C. Bogle
Foreword by Dr. Alan S. Blinder
Co-Director, Princeton Center for Economic Policy Studies
and Former Vice Chairman, Federal Reserve Board
The ninth book from financial industry legend John C. Bogle
When John C. Bogle talks, people listen. Named by TIME magazine as one of the world’s 100 most powerful and influential people, the legendary founder of The Vanguard Group has, in the words of Forbes magazine, “done more good for investors than any other financier of the past century.” In November this best-selling author will release his highly anticipated ninth book, Don’t Count on It! Reflections on Investment Illusions, Capitalism, “Mutual” Funds, Indexing, Entrepreneurship, Idealism, and Heroes (Wiley, 2010).
Don’t Count on It! is an anthology of Bogle’s most important and insightful work over the past decade. In it, Bogle describes how numbers deceive us into seeing things as other than they really are and details the consequences our society suffers when so many decisions in corporate America and investment America are based on illusion rather than reality. The book examines how, as former Federal Reserve vice chairman Alan Blinder writes in the foreword, “America’s vaunted financial system let us down,” and offers Bogle’s solutions to repair the widespread damage.
The recent global financial crisis and stock market collapse of 2007-2009 have forced us to consider the flaws of modern-day capitalism. Don’t Count on It! provokes debate and thoughtful examination of the ways in which our complex financial system must be reformed, and encourages readers to not only ask questions, but demand answers that are understandable, intelligent and wise.
Don’t Count on It! is organized around seven themes:
- Investment Illusions
- The Failure of Capitalism
- What’s Wrong with “Mutual” Funds
- What’s Right with Indexing
- Entrepreneurship and Innovation
- Idealism and the New Generation
- Heroes and Mentors
Written in his straightforward and accessible style, Bogle offers unparalleled insights on investment strategy, the financial markets, and the values that we should emulate in our business and professional callings.
Widely acclaimed as “the conscience of Wall Street” and a relentless advocate for individual investors, in Don’t Count on It! Bogle continues to inspire, while challenging the nation’s enormous financial sector to measure up to its promise and return to traditional standards of fiduciary duty.
ABOUT THE AUTHOR
John C. Bogle is the founder of The Vanguard Group, and president of Vanguard’s Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as chairman and chief executive until 1996 and senior chairman until 2000. The Vanguard Group is the largest mutual fund organization in the world.
In 2004, Time magazine named Mr. Bogle as one of the world's 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award. In 1999, Fortune designated him as one of the investment industry's four "Investment Giants” of the twentieth century. He is the author of nine books, most recently Common Sense on Mutual Funds, 10th Anniversary Edition (Wiley, 2009) and ENOUGH. True Measures of Money, Business, and Life (Wiley, 2010).
John resides in Bryn Mawr, Pennsylvania, with his wife, Eve. They are the parents of six children and the grandparents of twelve.
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Don’t Count on It!
Reflections on Investment Illusions, Capitalism, “Mutual” Funds, Indexing, Entrepreneurship, Idealism, and Heroes
By John C. Bogle
Wiley; November 2010; $29.95; Hardcover
Don't Count on It!: Reflections on Investment Illusions, Capitalism, "Mutual" Funds, Indexing, Entrepreneurship, Idealism, and Heroes (US $29.95)
-and- Stewardship: Lessons Learned from the Lost Culture of Wall Street (US $27.95)
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