in your favor!
As we celebrate Jack Bogle day, let’s think about what the stock market is and how it got that way.
In the good ‘ol days investing was a lot more expensive than it is today.
- About 2% to buy or sell a stock.
- Insider trading was normal and legal.
- Commissions would chew up part of your profits.
- Expenses had risen after the mom & pop fund managers were replaced by profit extracting large investment firms.
What do we have now?
- No trading on secret information (unless you’re a member of Congress)
- Low bid/ask spreads (thanks to High Frequency Traders, and their money losing ways).
- Widely available commissionless trading (all the big online brokers raced to zero in 2019).
- Low fund/ETF expenses.
We need to thank Jack Bogle for this last point. In 1976 he created the first index fund available to us mere mortals–the Vanguard 500 Index fund. It started with low expenses and kept going lower as economies of scale made it cheaper to run. Their low expenses pulled costs down across the industry.
He also deserves thanks for creating an investment firm owned by its investors–when they save money they are obligated to pass it along to us.
These days Vanguard has linked their ETFs and mutual funds, minimizing taxable gains on the funds while not harming the ETFs. Once their patent expires in 2023 we’ll see similar benefits across the industry.
Lower fees, better returns, the best interests of the investor being #1…
Thanks, Jack.
And to the rest of us, happy Jack Bogle Day.
