Don't try and find the needle in the haystack - buy the haystack. Jack Bogle was an extraordinary figure in investing. He invented the ETF and championed the Cost Matters hypothesis. Which means, obviously, that when investing that costs make a difference.
Daniel Reyes is Head of Investments, and Head of Investment Strategy Group, Asia-Pacific at Vanguard. Daniel has worked with Vanguard from a very young age and met Jack Bogle very soon after joining the crew. Daniel read the Wall Street Journal as a teenager (who wouldn't?) but he didn’t really understand the concepts until he went to university where it all started making sense.
Focus on the things that you can control - Jack Bogle
I urge you to listen to this episode if you have any interest at all in ETFs. Daniel's explanations of key concepts are absolutely crystal clear.
Jack Bogle realised at university that a) if a fund claimed to achieve better than market average it was likely an exaggeration and b) the cost of fund management mattered.
His first ETF was known as Bogle’s Folly – it was seen to be un-American at the time. Contrary to the American ideal of striving to be better.
Daniel talked about successful investors having a sense of curiosity, and that they’re willing to take in information from wherever it comes.
- The importance of asset allocation –
- What is allocation?
- Asset allocation is the primary determinant of a return experience.
- What is volatility?
The “cost matters hypothesis” – investors must fall short of the market return by the amount of costs they incur. It’s the opposite of “you get what you pay for” investors get what they don’t pay for.
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