Don’t Count on It!

Praise for Don't Count On It! "e;This collection of Jack Bogle's writings couldn't be more timely. The clarity of his thinking and his insistence on the relevance of ethical standards are totally relevant as we strive to rebuild a broken financial system. For too many years, his strong voice has been lost amid the cacophony of competing self-interests, misdirected complexity, and unbounded greed. Read, learn, and support Jack's mission to reform the industry that has been his life's work."e; PAUL VOLCKER, Chairman of the President's Economic Recovery Advisory Board and former Chairman of the Federal Reserve (1979 1987) "e;Jack Bogle has given investors throughout the world more wisdom and plain financial 'horse sense' than any person in the history of markets. This compendium of his best writings, particularly his post-crisis guidance, is absolutely essential reading for investors and those who care about the future of our society."e; ARTHUR LEVITT, former Chairman, U.S. Securities and Exchange Commission "e;Jack Bogle is one of the most lucid men in finance."e; NASSIM N.TALEB, PhD, author of The Black Swan "e;Jack Bogle is one of the financial wise men whose experience spans the post World War II years. This book, encompassing his insights on financial behavior, pitfalls, and remedies, with a special focus on mutual funds, is an essential read. We can only benefit from his observations."e; HENRY KAUFMAN, President, Henry Kaufman & Company, Inc. "e;It was not an easy sell. The joke at first was that only finance professors invested in Vanguard's original index fund. But what a triumph it has been. And what a focused and passionate drive it took: it is a zero-sum game and only costs are certain. Thank you, Jack."e; JEREMY GRANTHAM, Cofounder and Chairman, GMO "e;On finance, Jack Bogle thinks unconventionally. So, this sound rebel turns out to be right most of the time. Meanwhile, many of us sometimes engage in self-deception. So, this book will set us straight. And in the last few pages, Jack writes, and I agree, that Peter Bernstein was a giant. So is Jack Bogle."e; JEAN-MARIE EVEILLARD, Senior Adviser, First Eagle Investment Management Insights into investing and leadership from the founder of The Vanguard Group Throughout his legendary career, John Bogle-founder of the Vanguard mutual fund group and creator of the first index mutual fund-has helped investors build wealth the right way, while, at the same time, leading a tireless campaign to restore common sense to the investment world. A collection of essays based on speeches delivered to professional groups and college students in recent years, in Don't Count on It is organized around eight themes Illusion versus reality in investing Indexing to market returns Failures of capitalism The flawed structure of the mutual fund industry The spirit of entrepreneurship What is enough in business, and in life Advice to America's future leaders The unforgettable characters who have shaped his career Widely acclaimed for his role as the conscience of the mutual fund industry and a relentless advocate for individual investors, in Don't Count on It, Bogle continues to inspire, while pushing the mutual fund industry to measure up to their promise.

Praise for Don't Count On It!"This collection of Jack Bogle's writings couldn't be moretimely. The clarity of his thinking--and his insistence on therelevance of ethical standards--are totally relevant as westrive to rebuild a broken financial system. For too many yearshis strong voice has been lost amid the cacophony of competingself-interests, misdirected complexity, and unbounded greed. Readlearn, and support Jack's mission to reform the industry that hasbeen his life's work."PAUL VOLCKER, Chairman of the President's EconomicRecovery Advisory Board and former Chairman of the Federal Reserve(1979-1987)"Jack Bogle has given investors throughout the world more wisdomand plain financial 'horse sense' than any person in the history ofmarkets. This compendium of his best writings, particularly hispost-crisis guidance, is absolutely essential reading for investorsand those who care about the future of our society."ARTHUR LEVITT, former Chairman, U.S. Securities andExchange Commission"Jack Bogle is one of the most lucid men in finance."NASSIM N.TALEB, PhD, author of The Black Swan"Jack Bogle is one of the financial wise men whose experiencespans the post-World War II years. This book, encompassinghis insights on financial behavior, pitfalls, and remedies, with aspecial focus on mutual funds, is an essential read. We can onlybenefit from his observations."HENRY KAUFMAN, President, Henry Kaufman &Company, Inc."It was not an easy sell. The joke at first was that onlyfinance professors invested in Vanguard's original index fund. Butwhat a triumph it has been. And what a focused and passionate driveit took: it is a zero-sum game and only costs are certain. Thankyou, Jack."JEREMY GRANTHAM, Cofounder and Chairman, GMO"On finance, Jack Bogle thinks unconventionally. So, this soundrebel turns out to be right most of the time. Meanwhile, many of ussometimes engage in self-deception. So, this book will set usstraight. And in the last few pages, Jack writes, and I agree, thatPeter Bernstein was a giant. So is Jack Bogle."JEAN-MARIE EVEILLARD, Senior Adviser, First EagleInvestment ManagementInsights into investing and leadership from the founder ofThe Vanguard GroupThroughout his legendary career, John Bogle-founder of theVanguard mutual fund group and creator of the first index mutualfund-has helped investors build wealth the right way, while, at thesame time, leading a tireless campaign to restore common sense tothe investment world.A collection of essays based on speeches delivered toprofessional groups and college students in recent years, inDon't Count on It is organized around eight themes* Illusion versus reality in investing* Indexing to market returns* Failures of capitalism* The flawed structure of the mutual fund industry* The spirit of entrepreneurship* What is enough in business, and in life* Advice to America's future leaders* The unforgettable characters who have shaped his careerWidely acclaimed for his role as the conscience of the mutualfund industry and a relentless advocate for individual investorsin Don't Count on It, Bogle continues to inspire, whilepushing the mutual fund industry to measure up to theirpromise.

Foreword xiIntroduction xvA Note to the Reader xxxiPart One. Investment Illusions 1Chapter 1 Don't Count on It! The Perils of Numeracy 5Chapter 2 The Relentless Rules of Humble Arithmetic 25Chapter 3 The Telltale Chart 49Chapter 4 A Question So Important That It Should Be Hard to Think about Anything Else 71Chapter 5 The Uncanny Ability to Recognize the Obvious 87Part Two. The Failure of Capitalism 97Chapter 6 What Went Wrong in Corporate America? 101Chapter 7 Fixing a Broken Financial System 123Chapter 8 Vanishing Treasures: Business Values and Investment Values 137Chapter 9 A Crisis of Ethic Proportions 157Chapter 10 Black Monday and Black Swans 161Chapter 11 The Go-Go Years 187Part Three. What's Wrong with "Mutual" Funds 203Chapter 12 Re-Mutualizing the Mutual Fund Industry: The Alpha and the Omega 207Chapter 13 A New Order of Things: Bringing Mutuality to the "Mutual" Fund 237Chapter 14 The Fiduciary Principle: No Man Can Serve Two Masters 273Chapter 15 Mutual Funds at the Millennium: Fund Directors and Fund Myths 297Chapter 16 "High Standards of Commercial Honor . . . Just and Equitable Principles of Trade . . . Fair Dealing with Investors" 317Part Four. What's Right with Indexing 347Chapter 17 Success in Investment Management: What Can We Learn from Indexing? 351Chapter 18 As the Index Fund Moves from Heresy to Dogma, What More Do We Need to Know? 369Chapter 19 "The Chief Cornerstone" 393Chapter 20 Convergence! The Great Paradox: Just as Active Fund Management Becomes More and More Like Passive Indexing, So Passive Indexing Becomes More and More Like Active Fund Management 409Part Five. Entrepreneurship and Innovation 435Chapter 21 Capitalism, Entrepreneurship, and Investing: The 18th Century versus the 21st Century 439Chapter 22 Seventeen Rules of Entrepreneurship 455Chapter 23 "Vanguard: Saga of Heroes" 469Chapter 24 When Does Innovation Go Too Far? 493Part Six. Idealism and the New Generation 507Chapter 25 Business as a Calling 511Chapter 26 The Right Kind of Success 517Chapter 27 "This Above All: To Thine Own Self Be True" 521Chapter 28 "Enough" 529Chapter 29 If You Can Trust Yourself . . . 535Chapter 30 The Fifth "Never" 543Chapter 31 "When a Man Comes to Himself " 549Part Seven. Heroes and Mentors 557Chapter 32 Walter L. Morgan 563Chapter 33 Paul A. Samuelson 569Chapter 34 Peter L. Bernstein 575Chapter 35 Bernard Lown, MD 581Index 587