Bogle FTW

I finally finished the Acquired episode on Vanguard. Vanguard has to be one of the most interesting financial companies ever created, also one of the most successful (if you narrowly define success as 'good for the world' as opposed to 'good for its shareholders').

Vanguard is known for inventing both passive and index investing, but neither of that is really true (other people thought of that first and/or are better at it). What they are REALLY famous for is driving ultra-low fees (around .07%) and thus making broad stock market participation viable for anyone, not just pension funds and such. It's hard to argue against the math behind broad participation, or, roughly speaking, 'buying everything and not wasting time trying to pick winners'.

There is a wonderful Warren Buffett quote about Vanguard's founder: ""If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle." 

The most interesting thing about Vanguard is that its owners are also its customers on a 1:1 basis. Therefore, any profits they make automatically reduce their fees. That, along with the normal drive for corporate efficiency (the motivation for which is unclear since nobody has much of a stake in its success), has, by popular belief, saved investors untold hundreds of billions that otherwise would have been used to buy yachts for 'financial advisors'.

Acquired asked 'this worked so well, why isn't this type of structure everywhere?' but then answered their own question by wondering why anyone would be incented to keep the business going, or grow it, absent the chance of a windfall capital gain. They never really answered that one.

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