Former Vanguard CEO Jack Brennan on Investing Insights [Ep.58]

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Plan for free@newretirement.com welcome to the new Retirement Podcast. Today we're going to be talking with Jack Brennan, the hand picked successor to Jack Bogle at Vanguard where he was CEO from 1996 to 2008. We're going to discuss what it was like growing Vanguard, key lessons during his tenure, and his new book, more straight talk on investing lessons for a lifetime. Jack joins us from Boston, Massachusetts, where I was born. And with that, you know, Jack, welcome to our show. It's great to have you join us.

It's a treat to be here. Thanks for having me.

Yeah, I appreciate your time. You know, our community, I threw out in our Facebook group that you're going to be joining us. We have a lot of questions from them later on, but I kind of wanted to cover, you know, a little bit about you and your history of Vanguard and then, you know, your book and then we'll get to the user questions. So, you know, why did you originally get into financial services and like, how did you end up at Vanguard?

So it's probably genetic. My father ran a bank. Both my sister, my sister and my brother are bankers. So there's some financial gene we have somewhere along the way. But listen, I sort of lucked into coming to work at Vanguard actually was, it's, it's a long story that no need to bore you with. And Vanguard was a, you know, really a bit player in the financial business, even in the mutual fund business at the time. It was seven years old in its current state. And to be honest, when I did a little homework with people from Boston, the two things they told me were, one, it has no future and two, you don't want to work for Jack Bogle. And my father had done a lot of that homework for me. And he says when he's done, you're going to take the job, right? I said, absolutely. I've been a contrarian my whole life and I'm going to take it because I think Jack, I could learn a lot and I enjoy working with him on the one hand and who knows? And so it was no, it was a bet. I was young, we were just married, no kids, all that stuff. And it was a time you could take a bet. But there actually, Stephen, there was something special about the unique aspects of Vanguard being owned by your clients that appealed to me at a gut level. And so I took the leap and then we, you can imagine it was a small place, it was a Couple hundred people, four and a half billion dollars in assets. So anyways, that's why I did it and love the financial business. Between college and business school, I worked for an interesting financial firm in New York and I got the bug because you have the same bug. Something's happening today that's interesting in your world. Right. And that's very different than a lot of businesses. So I'm a huge fan of the business as a place to build a career.

Got it. So you are kind of a, I guess had a more traditional financial services background for a few years before you joined Vanguard. And interesting to hear that Jack Bogle already had a reputation, it sounds like in the industry even before, you know, when you joined them, seven years into it.

Yeah, no, listen, Jack always said what he thinks. Vanguard had given up being a load fund company which made you a lot of enemies in those days, back in 77, 78. And people couldn't understand this quirky structure, that this is a place that's owned by its mutual fund shareholders. So there are a lot of reasons that people just didn't think it was going to go anywhere. At 27 years old you can afford to take that risk. I'm not sure I would have done it at 47 years old in the same circumstances. But listen, in the end it's an interesting business, ironically, and maybe we'll get to this, but I started at Vanguard a month before the 18 year bull market started in August of 82. That's not a bad time. The yield on the S and P was higher than the PE on the S and P. And I knew enough about economics and some other things that it seemed to me things had to get better in the bond market. I didn't know about stock market. The bond market was an easier forecast. So it felt like some good stuff might happen. But obviously a lot of good stuff happened environmentally. And then, you know, the company did pretty well as well.

Right. But I mean, you know, the choices that, you know, Jack Bogle and Vanguard made, I mean, I think you left clearly a ton of wealth, potential wealth on the table. And so you had to be aware of that too. Right. If I join this company, my future wealth generating prospects might not be as good. I mean, maybe it probably turned out fine for you but that, you know, you would get in a traditional Wall street kind of job.

Listen, it's certainly for me, money's never been a motivator. For me it's intellectual challenge, chance to lead. Now frankly compete and win. Money's not, it's Never been. Literally not. I took, you know, I never took a job for money, never would. And listen, 40 years later, that's what we attract, how we attract people. You know, you'll do fine financially. But if your goal is to cash a big check sometime or be the highest paid person in your industry, we're not for you. Because we are motivated as an organization by things that are different. And I think people make a mistake. I counsel kids all the time coming out of business schools or college. You know, there's going to be a shiny object known as money. But don't chase it. Chase fulfillment, chase challenge. Those things is what you should be looking for in a career. Obviously it worked out very well for me and it still works out well. Vanguard attracts really great people today. A much bigger organization, more complex. But again, you have to be willing to be in a quirky environment where the whole world is doing X and you're doing. Yeah, happens to be the winning strategy in my view and in the company's view for a long time. But you've got to be comfortable being different. And I happen to like that anyways. And anybody who sits and says coulda, woulda, shoulda about anything, in my view is looking backwards instead of forwards.

Right. That's a great perspective. And I mean just. Last question. I'm kind of getting started. Did Jack Bogle make the decision? I don't remember the timing for mutualizing the company. Was that a few years in or was that like right from the get go?

Vanguard was the Wellington group of mutual funds up until 1975. And then the board, Jack was the chairman of the board, took this unique step of saying, we want to take the mutual funds and separate it from the management company in 1975. So that was the big step. It was tiny. They had 13 employees, billion dollars or something. It was a big bet. It was a radical decision. But there was this core group of tremendously committed people who chose to do it. And all they really did was administration. All the money was run by Wellington. And then Citibank ran some money later on. When I got there, it was seven years old and bigger. But at seven years old, you're a new company still, right? You're a new company. And so there was a lot of cultural stuff that was evolving, but it always came back to shareholder as the primary point of focus. And it was disruptive and unpopular in the industry. Back to life. And the board deserves a lot of credit back then to support the idea of doing it because the easy path was a different path and they chose the tough path. And it's worked out great for investors, for sure.

I mean, for people, our listeners, that don't know this, many of them do. But, you know, Vanguard, Jack Bogle and your team has essentially been the, I would say, the biggest disruptor in financial services probably in history. Right. You've changed the entire ecosystem through aligning yourselves directly with investors, driving down fees, creating the index fund and passive investing, and it's changed the whole mutual fund space, and that's rippling through the rest of financial services and fees. And I think that it's not done yet. I think that we're actually still in early innings to some degree because, I mean, you're the only company that's done it, right? I mean, is it has that there's.

No motivation to do it, right? There's no personal motivation to do it. And, and lots of people could have done it. It would be very hard to do today. Right. Because does the world need a second Vanguard? Probably not. Probably not. And so that was one of the, obviously in the early days, my early days, there were entities that were mutual in structure who were far bigger than us and who could have said, I'm going to motivate myself the same way. And they didn't choose to do it. But today, the scale, the reputation and so on that Vanguard has would be awfully hard to compete with. But come back to the, you know, there's no personal motivation to take a company mutual. And that's. So nobody did it. It's the enterprises that were around the edges had a similar, maybe a more formal, neutral structure that could have said, I'm gonna compete and try to squash this bug before it gets too big. And eventually you get to 100 billion and a trillion. And, you know, your, your resources are so large and more importantly, your, your reputation for delivering value to clients. And that's when you just can't buy. You can't run an ad in the paper and say, trust me, I'm just like, Vanguard, it's not going to work.

Right. Well, I think that transparency is important. I mean, it, it'll be, it's kind of. I want to talk about this later. But like, you're seeing some new companies like Robinhood that are saying, okay, hey, there's free trading, but they're not completely transparent about how they make money. And there's money being made behind the scenes, and I don't think people fully understand that and how that affects what they do and how they operate.

There's something different to being A fiduciary for people's assets rather than a facilitator of activity. And it's my own view why, if you look at the fund industry, the biggest companies are Fidelity Capital Research, Vanguard, and if you count our history going back to Wellington Fund in 1929, T. Rowe Price, they are firms with long histories of being stewards and fiduciaries for other people's assets. It's a mindset that's different than activity based rewards. And it's a tribute to the intelligence and the discerning nature of investors. They put their money where the experience and trust is. And so the idea that zero and then something behind the scenes is a good business proposition for the client is not one that's even possible to try to implement in the mutual fund industry because of independent directors and prospectuses and the tight regulatory structure over it. And I frequently and lectures and speeches talk about the fact that the bulk of the mutual fund assets are in the oldest companies, which is really interesting. They've evolved and adapted and become technologically savvy and do ETFs and do this and that. But at the core, the advisors who use them and the individuals who go direct, again, they don't chase the shiny object. They chase the tried and true and trusted enterprises.

Yeah, you know, like I was talking with Morgan Housel and some other folks is like the path to financial security and wealth is it's simple but not easy. You know, it's really like, hey, you got to figure out how to save money. So cut your expenses, make enough income, then you have to invest it. You have to keep doing that for a long period of time, keep your fees low and ignore all the noise. There's just a lot of stuff that's in your book. It's just that most people can't get out of their own way. It's like.

So I would tell you that most people do. Most people do. Interestingly, Tim Buckley, who runs Vanguard today, has a stat which I totally believe that by not panicking, over 99% of Vanguard's investors did nothing during the month of March last year. They saved themselves a trillion dollars. A trillion dollars. I'll tell you, when I started, market moved a little bit. The phones rang off the hook because people panicked. But through our efforts, the industry's efforts, your efforts, the media's efforts, the core of the population, who invests and it's not enough of the population, that's a different issue. Actually does a quite good job of being disciplined. Any data you see on 401k plans, they don't trade. They know that this is a 40 year exercise. But you can never say, you can never hit the principle of tamp down your emotions and tune out the noise. Right? It's the single best advice you, my best advice for anybody is live below your means. Start with that because then you have firepower. But after that, if you tamp down your emotions and you tune out the noise. I've watched it for 40 years with people in entry level ish jobs who retire with half a million dollars. They're probably members of your group. It's a compelling thing. And in a sense they were never really an investor. They were a saver in investment products. Doing it every two weeks. It's a fantastic way to create financial security.

Well, I, I think that there's, I mean people at Vanguard, people in Bogleheads, people that are part of our community at new retirement, I think they understand this, but there's still half this country has essentially no money. 20% of this country owns 85% of the wealth. It's, you know, so like if you get it and you can do it, you can get there. It's making it like that's part of what we see. Our challenge is like how do we educate a lot of people? How do we make planning at scale bring more people into the tent? And not just in the US but worldwide. This is a problem.

Totally agree with it. Our first international operation was in Australia which has an incredibly robust mandatory superannuation, 401k essentially at 15% of your pay. They're over safe when they get to retire. And they just put it in 25 years ago, 30 years ago. And it's compelling. And so there are public policy issues that we should get at. The other issue that's challenging, I think Steve, is when members of your community get to retirement, it becomes a different game. Becomes a different game. The risk of emotion taking hold is higher than if you're 35 and getting paid, getting a little more pay each year. And I think to me, you know, it's, it's, I think of the, the, this book as being targeted at my kids who are late 20s, early 30s and my contemporaries. Right. Because you either need to be a very, if the minimum that comes out, and I'm just not talking about my book, but the principles. You should be a great buyer of advice services or you should be well armed to do it yourself in retirement, either one, because that's the challenging point in time. Right. And I'm not sure I appreciated it when I was 28. Somehow being 67 makes it more interesting. And I get a lot more calls from contemporaries saying, what should I do? Right. They didn't call when they were 47. And that's a daunting period. And you may have more time to get noise in your ears as well, which is the other part of it. And so one of the things that's critical for people is find trusted sources, right? Your community has become one of those, I think, right?

Yeah, definitely. I mean, we're full of kind of do it yourself power users today. But the, you know, we also have people that, you know, they're trying to figure it out there. And I think we're taking the view of we believe like you do. Community is a big part of it. So we have people that are ahead, right? Hey, I've done this successfully. I've saved a bunch of money. I'm a kind of like, you know, 401k millionaire, right, like you described. And then there's people falling behind that are like. And say, I'm 65 and I've retired. And there's someone who's 55 is like, well, you know, can I do this now? Do I have enough money? How should I think about it? Should I get an advisor or not? I'm paying fees. And we're not trying to answer the question. We're just trying to facilitate a trusted place. It's not where people aren't soliciting and selling, but, like, you can learn, here's what I did well, or made mistakes, and it's a better way, I think.

Than, oh, it's tremendous. Because I have a whole chapter in the book called trust. Basically, you got to trust a whole bunch of things, the markets first and foremost. Because if you don't buy T bills and lose ground to inflation every day. But the trusted people, friends, relatives and so on, hopefully knowledgeable, trusted people. Because sometimes you get trusted people who aren't so knowledgeable are really important. It's no different. You know, I have this joke. I tell people there's only three things in the world. Your health, your money, and everything else. Okay? You think about where did you get your doctor? Probably ask somebody or your dentist. Financial advisors or trusted financial firms. Those relationships are really important. And so, you know, it's why firms want to be that. But it's really important to have, you know, whether it's a community, whether it's, you know, friends who are knowledgeable, have been ahead of you and this stuff because it provides comfort to you to make good decisions and it I think puts up a shield of defense against bad decisions or bad advice, which is really important.

Right. I think one of the risks people face is one of the things we see out there is. So most of financial services is geared on getting paid on assets under management or transaction fees. Right. And so they're trying, you know, those, those games are being played and it's knowing who you're dealing with, how they're getting paid and also making sure that it's like reasonable. So you know, I, I, I agree financial advice and planning is huge. You have to make sure you get someone trusted and that the fees make sense. Because for our users, you know, so the average user has a million dollars and say they're hoping to get a 4% real rate of return and live on that 40,000 plus Social Security and they're good. You know, when you're saving money and you're getting advice, you know, 1% doesn't sound that bad for a financial advisor. But it's like fees on a fund. You know, if it's 1% is 10,000 of your $40,000 income that year, it's 25% of your portfolio income. It's a lot of money. And does that make sense? You know, I think it's one of.

The, well, it's one of the great things that's happened though in the last, you know, I wrote the first edition of this book in 2002 and I talk about a few things that have changed a lot. I think the ubiquity of advice options at various price points is really important. It's really important. And so you don't have to pay 1%, you can pay closer to 20 basis points now. Right. And you know, so 20 basis points feels a lot less challenging and you may want to pay more, that's fine. But the availability from very trusted, high quality firms of readily available advice options is really important I think because it, you know, I'm one of these people who, I do, I've always done the shopping in the house and I have my generic stuff that I don't care about the brand. I buy what's on sale, right? So I'm saying, and I think I save four bucks and a hundred dollar grocery bill and I feel great about it. And then you say you're going to pay $10,000 for financial advice. If you could pay 2, why would you pay 10? You may want to pay 10, and that's fine. But I think the ability today to, and listen, there's plenty of Places you can get one time now than you couldn't before. So again, there's so many people who are so well armed to do this themselves. It's great. But if you're at all concerned about it, to me it's imperative that somebody shop, make a conscious choice, go no go, high touch, low touch. It's amazing how quickly advice choice has come to the retail market. And I think it's a great thing for the investing public.

Do you, do you think there's a lot. I mean, I remember, I think Tim Buckley said this. He was like, we're going to do to advice fees what we did to mutual fund fees. I had that quota. Do you think that's happening in a big way?

I think there's one verity in the financial business in many ways and that's today's the highest price you're going to pay for just about everything. Right. And there is a vanguard effect. And you know that in a sense intentional in the sense that you have to compete. It's never been a driving motivation. Motivation is deliver the most value the firm can. But already you've seen price points come down in advice. And with the advent of technology, artificial intelligence, a whole bunch of things, you can take a lot of the cost out of advice delivery. You can enhance the productivity of the advisors because they spend so much less time on administrivia and even analysis and more time with the two of us talking about your hopes, dreams and fears. Right. And so there's no question that you think the total cost of ownership of an advised mutual fund program today, I don't know exactly, but it's a quarter of what it was 30 years ago, used to pay an 8 1/2% load, maybe a 12B one on a couple other funds and you just keep going. Right. And today in a really great program, let's say you have ETFs and it advise you for 30 basis points, you get a whole program diversified, tax efficient, pretty hard to argue with in some ways.

Yeah, no, it's amazing. So it's good. I mean it still feels like there's lots of business models though they're predicated on the full white glove. I think 1.3% is the average advisor fee charged per year. I mean, I do get that that's gonna, I think it's gonna go away or it's gonna get come under a lot of pressure.

Well, with every day, as I said before, the customer gets smarter, competitive pressures come about. And listen, if you've got a complex family situation that should be a much higher fee. Right? There's a lot if you're in a wealth management business or the family office business, but the buyer is smarter and so there'll be pressure. And again, I think it shouldn't necessarily adversely affect profitability for the firm. You can deliver great service at a better price. Vanguard's a great example. I think the average 10 basis points or something in aggregate if you want to buy a Vanguard program, right? Something like that. It was 60 when I started, which was low cost. But that's down. You know that down a lot, right? It's 87% decline. And the basket of services you get is so radically different. You could wait hold for three minutes if you called us for the privilege for 60 basis points because we didn't have enough staff. And so the value is a lot more than eight times, it's 30 times or 50 times for radically different prices. And that's one of the great parts about the business. This is such a highly, highly competitive. Vanguard's a big place. Blackrock's a big place, Fidelity's a big place. Nobody has big market share when you think about it. So the competition will remain intense. This is not Google in the ad business. This is and different models. And that's all to the consumer's good.

So let's move on to your book. I really appreciate more straight talk on investing. Can you just give a couple minutes on why you wrote the book?

I wrote the book because first I've been asked a lot to write the book and I've always said yes, meaning no. If you politely say yes and and then listen. The events of last year, the advent of speculation instead of investing, the lionization of crypto traders, just struck me that it would be fun to provide the counterbalancing point to it. The first version of this just called straight talking Investing continues to sell copies and people like it and find it valuable. So what I did was read the book, read the first version, say, is there anything in there I would say was a mistake or take out and actually it wasn't. But there's a lot of additive stuff and there's affirmation and so that's the motivation. It's really to be a voice, if you will, for your son when he realizes that he's not getting rich trading, right. And to affirm really tried and true principles of investing, but back them up with data. So there's a lot of data in the book that proves the points about various things and it's fun to do I've enjoyed it. I've enjoyed feedback already. It's only been out for a week and the number of emails and texts I'm getting from people, it's fun to do, but. And obviously there's a lot of sort of vanguard principles in it, because I'm a vanguard guy. I'm a vanguard guy and that was why I did it. And I'm glad I did it, frankly.

I think it'd be interesting for you to go on a panel at some point with, you know, like the founder of like Robinhood or something or some crypto people and just have a discussion around, hey, intrinsic value, you know, getting some historical frame of reference. Because I agree there's nothing like living through thinking your total net worth is getting cut in half. And you know, hopefully coming out of that on the other side. Okay, and this is where most retail investors fail is like they're buying on the way up because they get sucked into the hype, things crater, they think the world's ending, they sell at the bottom or close to it, then they sit out of the market while the recovery happens. And that's why most people, they, they sell.

Yeah, and, yeah, and you know, the data on that, I mean, you miss six months and 10 years and your returns are cut by 40%. Right. But the reality is if you look at rolling 20 year returns, which is what people should do, you don't notice 87 or 99, 2000 or 0809 or March of 2020. And that to me is, I'm a big fan of graphs because I think people don't like to read as much as they used to. You just look at rolling returns and you say, okay, you probably know the quote from, I think it's Charlie Munger, that sloth and lethargy are core to our investment philosophy at Berkshire Hathaway. But do nothing is generally the best answer to any catalyst. And if it isn't, your assets aren't positioned correctly. Again, as I said, speculation is a bull market phenomenon. This bull market will end at some point and it'll end badly for a bunch of people, as it always does. You've seen the data. Leverage is up a ton. Margin loans, classic sign anyways. But you've only had to be investing since 1999 to have lived right. The NASDAQ bubble, the global financial crisis, if you live through that, say you're 45 years old, you've had a lifetime of experience. That's one of the points I make in the book, is you don't think you have to be my age to understand this. You've been tested and if you couldn't sleep at night you should be more conservatively invested.

Yeah. Or if you just be comfortable that you can ride it out and keep investing when it's going down.

It's one of the gifts of defined contribution investing frankly is you dollar cost average through a lifetime and you do it in many ways with big impediments to doing something harmful to yourself. It's all good.

Yeah. Awesome. One thing in the book you have a postscript about income. This is something that's super interesting for our users. So our users are kind of 50 to 60, many of them they're mass affluent and they're like okay, how am I going to have income? Where is it going to come from? And fixed income is in the tank. It's not doing great. What's your perspective on what people can do and how to think about this?

So a couple of things. You know it's you know zero rates has been really damaging to that sector and the retiree sector. Right. Because you know you do want some stability and you want income and five years your income's down 98% on a 98T bill. It's a stunning number. And I say in the book, I actually believe people need to take a step back and say where am I getting my income? Am I willing to take some principal risk but not income risk to fulfill my income requirements? I think I get asked all the time about 60, 40, is it dead kind of thing. I actually think people need to look at their asset allocation and say could I and should I consider more stocks in my portfolio. The best income hedge over any period you want to look at over time, meaningful period, not a year or two but a decade have been dividends on high quality stocks. Roughly our total stock market fund yields about the same as a ten year treasury bond. And so ask yourself could I close my eyes to the fluctuations in the net asset value of the equity fund but get a comparable yield which will be historically would say grows faster than inflation and get it call on growth on the principal side of a total stock market fund. First time in my life I've thought that that is something that particularly retirees need to think about because the worst tax on retirees is inflation. If you want to have inflation adjusted income versified portfolio of high quality stocks is the best way to get that. That's the big punchline. The other, the other things Stephen are much more watch outs don't go out the risk spectrum don't go out the maturity spectrum without eyes open. If you bought a 10 year treasury in August of last year, you had 10 years of income wiped out in principal decline between August and this winter. That's a bad bet. And so at these low yields, the volatility of any fixed income interest, the duration is much higher than it's been historically. Any move you might make, whether it's to a longer maturity to lower quality, you really have to do with your eyes open about what that means. So I think strategically, and I'd say, would you be willing to take more volatility risk on your nav for better income prospects from this starting point and something I think your members should look at.

How about annuities? Do you ever think about that? Because I know insurance companies, they're also hit by the low returns and fixed income, but they're mutualizing mortality risk so they can give some mortality credit. Essentially, yeah.

Annuities can play a role. I think people have to understand both cost, which is kind of hard to figure out at times, and then there's some complexity in them, what you can and can't do with them, what are the benefits, but they can play a role. They're just a high cost role. To me. There is value in the diversified pool of risk that's in there. You only want to buy one from a very high quality company. But if you ask me, do I recommend people go buy annuities, the answer is no, because I think it's complicated and expensive. Not that they're a fundamentally bad product, but you need to be a really smart buyer. There's. Right.

Well, I think our point of view is we're okay with SPIAs, like single premium median annuities, like income annuities.

That's barely an annuity.

Right.

That's a cd.

Yeah, I know the rates are kind of bad, but like variable, more complicated products, then you're kind of marrying up funds inside of a insurance wrapper and there's potentially high fees and so. And they get complicated and aggregate things should be really simple and transparent.

In a sense, it's why the fund industry has been as successful as it is. You know what you're paying, you may be paying too much, but you know what you're paying because it's mandated that you do it. And it's a pretty simple structure. Right. It's gross return, less expenses. I'm a fan of simplicity. I mean, I think a total stock market fund is one of the great inventions of all time.

Yeah. Actually on that topic, with regard to your book, I mean you called out at the end kind of like 12 principles, any kind of like top things that you think people should really. You don't have to reel them all off. We'll put them in the show notes.

Yeah, no, no, no. I have kind of a four item shorthand that I use with people. And it's not going to be anything revelational to you or your users, you know. But the first one we're already talking about is be knowledgeable. You don't have to be the portfolio manager, Windsor Fund, but you need to be knowledgeable about investing. The second thing in my view is discipline, just developing good habits. You said buy a little bit, buy a little bit, buy a little bit. The discipline matters. We've been on this a bunch, Stephen. Be skeptical. Fads are never money makers. That's the third point. That if somebody gives me the elevator ride to tell them. And then the fourth is really a bookend to the first, which is be observant. Just be a continual learner. Because every once in a while something meaningful happens in the investment realm and it may be the difference between a regular IRA and a Roth IRA or a regular 401 and a Roth. That's a huge issue for people and they have to make that decision correctly. I think it's the advent of ETFs. It's a phenomenal thing. Tax advantage, tradable without paying fees and other things. It's tradable in the sense of buyable. So being observant and just keeping an ear to what's happening. But the key part about being observant is never forget point number three, which is be skeptical. Because most of what you're going to see in here is not only not useful, likely to be harmful. Those are the four things that I think about and have served. Vanguard's first fund was started in 1929, the Wellington Fund. Been through the Great Depression, a world war, you go all through it all, it's delivered about 8% compounded to its investors over coming up on 100 years. And it's 65% high quality stocks, 35% bonds, market tanks. You buy stocks, market rallies, you buy bonds. Pretty good strategy for 90 something years, delivering incredible wealth creation for people. And we use it as a metaphor, I use it in the book, we call it the blue sport coat. Nobody says, hey, go out and buy a blue sport coat. But you can't do better than if you had to own one sport coat. You don't want to own a red one or A plaid one, you want to own a blue one. That's how I think about it. That's the summary for me of the core principles. And they've served me personally really well. They've served Vanguard's investors incredibly well over its 40 something year history. And they will again. I have zero doubt. I'm not big on forecasting, but I said to Tim the other, to Tim Buckley the other day, I'm going to give you the copyright of this book and you're going to write the next one in 20 years when you're 70.

Nice.

Hopefully it won't change much.

Well, it's great to have that historical context and I think that's the key lesson. And you know, the compounding. It's like when you're young, it's easy to be like, oh, well, my friends are making 50, 30, 50%, 100%. I mean, one quick story for me is like, I remember in 1999, you know, I had a company, but I had other friends that were. A friend of a friend was like day trading, like early day trading, and they got to like 300 grand, right? They're probably in their late 20s and they're like, okay, I'm rich. And then literally they lost everything, like in a couple days. And they were like, okay, what just happened? You know, they were margined up, everything was good, everything tanked. They were forced to sell and it was a mess. And you know, it's like, okay.

And it was true in 1929 and it was true in the tulip bubbles that, the tulip bulb thing in it in the Netherlands. And you know, it's different, but it's the same. You know, it's greed and fear and greed gets accentuated in easy times. And then fear gets overwrought when the music stops. But, you know, one of the great parts about this business is you can't change yesterday. You can learn from it. And that's, you know, that's why I love the business generally. I like writing about the business and speaking about the business because if I can help 10 people in the audience or 20,000 people who buy a book be smarter, I feel great about that. Because in the end, you know, it is what motivates people who work at a place like Vanguard is the success of the client owners. And it's great to have somebody. I had somebody stop me walking down the street in Boston today, say, are you you? And I always tempted to say, I get asked that question all the time, but I figure I might get caught and I Said, I am. Hi. And they said, Vanguard Investor for 25 years. Sent my kids to college and happily retired. I just want to say thank you. I didn't need to. I didn't need to walk the rest of the way to my apartment and just look down. But that's what gets you up in the morning and drives you. And it's what drives you. That's what you're not. You're doing something to try to give people better financial futures. And how cool is that?

Yeah. Yeah. No, I appreciate that. Hopefully it works. It's pretty amazing when people kind of see what you're trying to do. I mean, you've done it, right? And Vanguard's massive. I mean, we're tiny, but some people still see it. They're like, oh, I get why what you're trying to build is so different from everything else that's out there.

But it. But it comes back to actually, yeah, you always have to think it one by one. The other thing, I'll have people, I'm a small Vanguard investor, and I say, I'm sorry. This will sound flip. There are no such thing as small Vanguard investors. I liquidated my Fidelity cash reserves account in July of 1982 to open my first Vanguard account with 1200 bucks. It was my entire network. My accounts are worth a little more than 1,200 bucks, but they never treated me like a small investor. So the place is built one by one. And great firms, not just Vanguard, are built by thinking about each individual's success, not the collective numbers or anything else. And that, to me, and it's what you do with your community. It's Mary and Bob and Joe. It's not the collection of them, but collectively, they're stronger and better.

Yeah, I mean, I'll share my one Vanguard story. That kind of brought it home for me, which is. I was at a conference full of. It was a financial conference and was full of, like, all. All the financial shops. And then I saw this, like, kind of basic, you know, I don't want to say dumpy, but it was kind of like, you know, little display area with, like, you know, what we would do, which is like, kind of like, you know, super not built out or anything. Some books and, like, a couple pens laid out. A couple standing there, and I roll up, and it's like, Vanguard. I'm like, yeah, aren't you guys, like, giant company? And. And then it was, you know, but it was like some product person, pretty senior people. I were just standing around there, you know, and they gave they talked to talk to me. And I was, it was like clear. I was like, oh, wow, this company is frugal and walks the walk it. Because like you look across the room, there's like a small city built for like your competitors. That's like clear, you know, 50,000 bucks.

I'm laughing because I love it. We sent out sign books to people who helped us and other things. I signed 700 books last week.

Nice.

And the mail guys at Vanguard say, oh, we're going to send them FedEx. And my assistant says, no, we're not. We're going to send them three day FedEx because it's a quarter of the cost and most of them will get there the next day anyway.

Right.

And sure enough, she gets a return receipt on all the books she sent. And I just laugh. But she says, well, why would I pay 30 bucks if I could pay 10 or whatever the numbers are for the same utility. It's kind of the metaphor for Vanguard. Why would you pay 100 basis points for? We'll give you for seven. And it's, listen, if you look at the back cover of the book, somebody just pinged me today, said you got your watch in the picture on the back of the book. If you can see this, this is my watch. It cost 27 bucks and I would never let my picture be taken for PR stuff.

Yeah.

Without my watch showing. Right.

That's awesome.

You know, so anyways, hey, listen, I apologize. I actually have to go do my day job. Yeah, this is fabulous. Thank you for the great preparation and literally all fun aside for what you do. As I said, you know, the advent of communities like this podcast like yours I think are one of the great things that's happened. Temper the risk of noise. And so congratulations to you for what you're building.

I appreciate your time, Jack, and so thanks for being on our show. Dotto Robison, thanks for being our sound engineer and for folks listening, appreciate your time. Hopefully you found this useful. And check out Jack's new book, more straight talk on investing lessons for a lifetime. And you can find us@newretirement.com we appreciate your time and thank you very much.