August 31, 2014

Who Are the Bogleheads?

bogleheads

Last week, I joined a group of 200 John Bogle groupies at the 12th Bogleheads Reunion outside of Philadelphia. Long travels from the West Coast, Canada, and the Netherlands did not stop my fellow fanatics. No matter where they hailed from, all shared an admiration for the legendary Vanguard founder.

At age 84, Bogle arrived a bit banged up in body but not in spirit. His arm was in a sling, and he told us he was nursing a broken bone that wasn’t healing well. When asked what happened, Bogle quipped, “Stupidity.” He went on to share that he’s writing the longest book he’s ever written: “it’s called Mistakes I Have Made.” Then he shared some of the worst investment mistakes he’s made in life (including buying a supposedly hot stock from a friend that went bankrupt a few years later). You don’t get this kind of honest humor from leaders at the beginning of their career.

At the reunion, Bogle shared that he’s just a common guy with some really good ideas. This kind of humble confidence is what makes Bogle so inspiring. He then went on to talk about how Vanguard has become the largest fund company in America.

Despite Vanguard’s increasing market share, investors face an onslaught of marketing dollars from higher cost mutual funds, annuities, and insurance products. I suspect this is one reason why so many Bogleheads make the annual pilgrimage to the reunion. Even the most ardent believers in low-cost investing need to be reminded that their strategy is based on intellectual rigor and historical evidence.

The Bogleheads are also known for their collaboration in the Bogleheads forum, an online peer-to-peer website that averages between 500 and 1,000 posts per day. In fact, I was introduced to one prolific Boglehead at the conference who is part of the elite group of contributors that have posted at least 10,000 times on the site.

The Bogleheads forum is the best place for a do-it-yourself investor to receive peer feedback. Every day, new investors post their entire asset allocation and investment plan to the site and request feedback. Others go to the site for advice on Social Security strategies or tax planning. Looking at the site today, I see a post on free online college finance courses, a request for advice on paying off a student loan versus investing, and another for advice on budgeting for a home renovation.

The relationships developed on this website collaboration have turned into several books. The Boglehead’s Guide to Investing is one of my favorites for new investors. The book synthesizes much of John Bogle’s wisdom into a savvy financial planning guidebook. There’s another in the Bogleheads series that specifically focuses on retirement planning.

Our conference also included a visit to the Vanguard headquarters in Valley Forge, Pennsylvania. It was clear to me that Bogle’s wisdom continues to thrive not just in the Bogleheads but in the thousands of “crew members” (they are not called “employees”) who work for Vanguard. I found out from one crew member that even after retiring, Bogle continues to eat with the crew in the company cafeteria.

Vanguard’s culture is unique because Bogle decided early on to mutualize and create a company owned by its shareholders. This corporate structure is what allows Vanguard to keep its costs at razor-thin margins. When touring the headquarters, Vanguard executives made it clear that our group were not simply customers but fellow stakeholders in the future of the company.

There is great value in identifying your life heroes. If John Bogle is on your list, you just might be a Boglehead.

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About Matthew Illian

Matthew Illian is on the Investment Committee at Marotta Wealth Management, Inc., specializing in small business consulting and retirement plans. He loves spending time outdoors, the less pavement the better, with his wife and three energetic boys. Favorite trails: Forest Hill Park

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