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The Thesis
Bogle proved that most active managers fail to beat the market after fees, and created the first index fund available to individual investors — the greatest innovation in investment history for ordinary people.
The Story
In 1976, Jack Bogle launched the First Index Investment Trust (now the Vanguard 500 Index Fund), the first index fund available to individual investors. Wall Street mocked it as "Bogle's Folly," and it raised only $11 million in its initial offering against a target of $150 million. The idea that investors should simply own the entire market at minimal cost, rather than paying expensive managers to try to beat it, was considered heretical.
Bogle was vindicated beyond anyone's imagination. Over the following decades, data consistently showed that the vast majority of actively managed funds underperform the index after fees. Vanguard grew to become the world's second-largest asset manager with over $8 trillion in assets. Index funds and ETFs now represent over half of all US equity fund assets. Bogle's innovation has saved ordinary investors trillions of dollars in fees and commissions. Warren Buffett called him a hero: "If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle."
Key Insight
The most powerful force in investing is low costs compounded over time — most investors' best strategy is simply owning the market and minimizing fees.
“Don't look for the needle in the haystack. Just buy the haystack.”
Jack Bogle
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