Interview With John Bogle: Masters in Business

“Time is your friend; impulse is your enemy.”

“The stock market is a giant distraction to the business of investing.”

―John C. Bogle

Masters in Business: Barry Ritholtz Interviews Jack Bogle 

Last night I listened to the Masters in Business (MiB) episode where Barry Ritholz interviews John Bogle, the founder and retired CEO of Vanguard Group and the inventor of the index fund. I am pretty sure that I will go back and listen to this interview once or twice again because it’s just such a great interview. I don’t know a lot about John Bogle, but I intend to learn more about him. The interview is about 84 minutes, usually a fairly long time, but not if it’s an interview and chat between Barry Ritholtz and John Bogle.

Some of the topics discussed in the interview where Mr. Bogle shares his view and thinking are for example how he got started, his thoughts about investing and speculation, indexing, mutual funds, Wall Street, and Bogle also shares a few book tips.

What Investment Is All About [1:07:30 — 1:09:30]

In the second half of the interview Mr. Bogle shares his view on why he thinks that the stock market is a giant distraction to the business of investing.

BARRY RITHOLTZ: So that leads me to a quote of yours, and I have to ask you about it ’cause I found it fascinating. You once wrote, the stock market is a giant distraction to the business of investing. Explain.

JOHN BOGLE: Well, investing is about the long term. And investing is about earning what I call the investment return which is the dividend yield when you go into the stock market and the earnings growth that follows. That’s investment return. The market return also has a speculative return, and that is just the price-earnings multiple, if the valuation is high or low when you come in. And if they’re high they’re gonna detract from that return, and if valuations are low they’re gonna add to that return because the lower… in the valuations, the price-earnings multiple, reverts to the mean perfectly. It’s about what today… although it’s a litter higher today because the market is hardly inexpensive. But the reality is that it’s at about the same level as in the 19th hundred. So we’ve had ups and downs, booms, busts, and in the long run speculative return is zero. So concentrate on the investment return, forget the speculative return which is very difficult to predict, and just get what the business can give you. Now if you look every day you’re apt to do something, and one of my basic rules is: “Don’t do something, just stand there.” And if you’ve been doing that this year I think you are a lot better off, this is a tough year so far, not that bad I mean. I think the S&P is off about 3.5 %, and that’s really nothing. And although I don’t think it’s the end of the world. So it’s, don’t let the stock market moves distract you. They are a tale told by an idiot these moves, daily moves, hourly, minute by minute moves. A tale told by an idiot full of sound and fury signifying nothing.

John Bogle: My Favorite Investment Books [1:12:57 — 1:15:36]

Mr. Bogle also shares some of his favorite books.

BARRY RITHOLTZ: What about other investors? Who has influenced your thought process, your philosophy. Perhaps not your approach to investing, but what other investors have colored your world view?

JOHN BOGLE: Well, you certainly start with Benjamin Graham. He’s basically ground zero, and the Intelligent Investor his book, I have to like the fourth edition which is much more into, I think it was 1974, has much more about mutual funds and things of that nature. And he’s very clear on that, and so he would certainly be one.


BARRY RITHOLTZ: Let’s talk about books. You’ve written your fair share of books. Who’s… what other authors’ books being on investors have you enjoyed? What books would you recommend to people?

JOHN BOGLE: Well, I’ve already mentioned…

BARRY RITHOLTZ: …the Intelligent Investor by Graham.

JOHN BOGLE: …the Intelligent Investor by Graham. I think Burt Malkiel, a friend of ours, a friend of mine, and a former director here for many many years and really the best director we’ve had here from the outside. His Random Walk Down On Wall Street, updated every couple of years is another. David Swenson’s book on, for the individual investor. He’s really superb. Peter Bernstien’s Against the Gods.

BARRY RITHOLTZ: I just, I just read that over the holidays. Fantastic book.

JOHN BOGLE: Well he was a very gifted man, we were very close Peter and I, and we had our little disagreements here and there but overall we were on the same team. And then Will Bernstein’s Four Pillars of Investment Wisdom is a wonderful book. And there aren’t, it’s hard for me to go a lot beyond that to be honest with you.


Bloomberg Business: Masters in Business

Interview With Jack Bogle: Masters in Business (iTunes)

Bogle Financial Markets Research Center: About John C. Bogle

Vanguard: A Remarkable History

“In the long run, investing is not about markets at all. Investing is about enjoying the returns earned by businesses.” ―John C. Bogle

“She should have died hereafter;
There would have been a time for such a word.
To-morrow, and to-morrow, and to-morrow,
Creeps in this petty pace from day to day
To the last syllable of recorded time,
And all our yesterdays have lighted fools
The way to dusty death. Out, out, brief candle!
Life’s but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

―The Tragedy of Macbeth, Shakespeare