The House That Jack Built

Jack Bogle was a giant among men. Index funds and the philosophy of passive investing are among my most deeply-held beliefs, and they have helped to shape my worldview. For that, I owe a debt of gratitude to Jack Bogle. This essay is an attempt to articulate that worldview, at least as it applies to investing. It is my little contribution as a lifelong, diehard Boglehead.

***

My first investment was a stock called Hirco (Ticker: HRCO). I had started at my first job in the great city of London, and had a bit of money saved up. Having heard stories about the property boom in India, I decided it would be smart to buy a stock that had exposure to India’s growing economy and burgeoning middle class. And so I bought HRCO — a property developer building rental properties in a couple of Indian cities. Then I patted myself on the back for picking what I thought was a winner.

— Ernest Hemingway, The Sun Also Rises

Turned out, I had exquisite timing. Hirco was a turd, and not even a polished one at that:

I kept that worthless piece of paper for a long time. It was a good reminder that given enough time, the price of every stock in the world will eventually go to zero.

***

You’d think I would have learned from this humbling experience, but my next investing adventure was buying an inverse ETF. Fresh from my studies in derivatives pricing, I was quoting Arrow-Debreu and complete markets to anybody who cared to listen (i.e., nobody). The idea of receiving the inverse return of an asset — wow, that was cool.

This story had a less memorable conclusion than Hirco. Sugar prices stayed higher longer than I anticipated — you can’t speed up crop cycles beyond certain biological limits, apparently— and when I moved from London to New York, I had to “re-mat” my ETF and received another piece of paper from my London brokerage firm. Fortunately, many years later, I was able to trade the ETF at Fidelity and make a modest return.

***

It took a while for the lesson to truly sink in. Despite these early adventures, at various points, I went on to hold individual stocks: Goldman Sachs, Bank of America, Apple, Google, and Amazon. I now cringe when I realize that I was still holding individual stocks while studying for the CFA (Hello, cognitive dissonance!). But eventually, I developed a simple framework for thinking about investing. Here it is.

***

We live in a world with an endless barrage of investing advice and news, much of it designed to maximize FOMO and induce some kind of activity (which will generate fees for the purveyor of the activity). This is the first thing to remember: as Jack Bogle said, in investing, it’s often better to “just stand there, do nothing!” with your money.

It can feel counterintuitive that this “lazy investing” approach is the simplest path to improving your financial well-being. Nevertheless, it is true. Here are the precepts of my investing framework:

***

Visionaries who build something truly great in the world are in short supply in an era of ‘DAUs’, ‘clicks’, ‘swipes’, ‘likes’, and ‘claps’. Thank you, Jack Bogle: you are leaving the world’s investors immeasurably richer and wiser than you found them.

Related posts:

When you live the rodeo lifestyle, you have to be prepared to spend every other weekend on the road during the season, which means putting upwards of 40,000 miles on your truck and trailer. Chance…

In this installment of our Series we are going to explore some things you need to do during your PagerDuty incident response. Things let setting the incident commander, assigning tasks, and running…

Django is a framework that works alongside the language Python. It allows you to create web apps more quickly with less code, according to their website, and who doesn’t want to create applications…