Preface to Knowing Enough

No one, and I mean no one, did more for investors than Jack Bogle. My fellow Boglehead Taylor Larimore likes to say that he lives in "the house that Jack built." Count me, and many thousands more, in that happy group.

And millions more, whether they know it or not, sleep well at night without money worries because of the at-cost mutual funds that Jack invented at the Vanguard Group.

A quarter of a century ago, a few dozen people met at Taylor's "house that Jack built" (actually, a condominium overlooking Biscayne Bay) to chat with Jack. He was in town for the Miami Herald's March 2000 Making Money Seminar, which wouldn't make time for the group to talk to Jack. It seems that the Herald did not let Muhammad come to the mountain, so the mountain came to Muhammad; Jack went to Taylor's place for a meetup with this little group. (The Herald, realizing their mistake, sent a reporter and photographer to Taylor's place and splashed out a front-page story in the following Sunday Business section.)

The attendees by that point had already been cyberbuddies on the Morningstar forum devoted to Vanguard funds. Every year thereafter, save during Covid, the Bogleheads have gathered for an annual fall meeting. As one attendee at the 2001 meeting in Chicago put it, "I told my kids, 'I'm going off to spend the weekend with 50 people I don't know, and I met them on the Internet.'" When journalist Jason Zweig asked the other attendees what their friends and family thought about that, most replied. "They think I'm nuts." I attended my first meeting in 2002, and, to be honest, as I flew out for it the following year I recall asking myself, "Exactly why am I doing this?" As soon as I arrived, I got reminded of the answer: The Bogleheads are the sweetest, best-informed bunch of folks you'd ever want to hang out with.

As educational and enjoyable the annual meetings are, the conference facilities allow for only a few hundred attendees. The bogleheads.com forum, in contrast, has 120,000 registered users, and many more visitors. (Morningstar graciously hosted it initially, after which it became an independent organization.) For my money, it's the single best source of both general and personalized financial advice on the web.

Early on, one contributor to another Morningstar forum posted that he had a rapidly progressive cancer with a fatal prognosis and needed financial advice for his wife and young children. Within days, the Bogleheads offered solid direction about how to handle Social Security, probate, and 401(k) rollovers. As I'm typing this, a fast look at the bogleheads.org home page features posts about how to handle a teenager's first investment account, student loan forgiveness, paying off a mortgage, and more than a dozen threads about asset allocation, as well as one on the choice between a ¼-inch and a ?-inch socket wrench set.

Most famously, the Bogleheads epitomize Jack's focus on what he calls "The Majesty of Simplicity," which they formulated as their patented "three-fund portfolio": stone-simple mixes of total U.S. stock market, total international stock market, and total bond market, a portfolio that can now be put together at a cost of just a few one-hundredths of a percent per year.

Jack's great rival in the fund business, Fidelity's Edward C. Johnson III, once derided Vanguard's index funds, opining, "I can't believe that the great mass of investors are going to be satisfied with just receiving average returns." The joke was on him; it turned out that investors increasingly cottoned to the simple arithmetic of mutual fund investing: Because of their low expenses, index funds routinely waxed actively managed ones. Johnson couldn't have been more wrong: Investors were happy with "average" returns. As Vanguard's assets swelled, the resultant increase in economy of scale increased that advantage even more, a "flywheel" that lost Fidelity so much business that it had to bring out its own index funds, and eventually, wait for it, a family of zero-cost funds. (There's no free lunch here, of course; once you purchase Fidelity's zero-cost funds, their shares cannot be transferred out of their platform.)

In 2007 Jack asked me to join him on the conference stage for what became a high point on my personal calendar, a nearly hour-long "fireside chat" during which I'd fire questions at him and, on occasion, educate him about Yiddish expressions. The last of these was in October 2018, shortly before he passed away.

In 2023, Bill Falloon of John Wiley & Sons approached me about a "last fireside chat" memorial volume that combined two books, Jack's Enough and my If You Can, with all royalties going to the Boglehead charitable arm, the John C. Bogle for Financial Literacy. The two books dovetail nicely: Enough is a meditation on the meaning of money and on the ethics of the money management, both of which matter a great deal to the individual investor.

The book's title derives from a conversation between novelists Joseph Heller and Kurt Vonnegut at a soiree thrown by a wealthy financier. Vonnegut remarks that their host undoubtedly made more in a day than Heller had made from his runaway bestseller Catch 22. "Yes," replies Heller, "but I have something he will never have . enough."

Enough's other central passage recounts a mythical dialogue between a preacher and a recently retired greyhound racing dog:

Are you still racing?

No.

Well, what was the matter? Did you get too old to race?"

No, I still had some race in me.

Well, what then? Did you not win?

I won over a million dollars for my owner.

Well, what was it, bad treatment?

Oh no. The treated us royally when we were racing.

Did you get crippled?

No.

Then why? Why?

I quit.

You quit?

Yes, I quit.

Why did you quit?

I just quit because after all that running and running and running, I found out that the rabbit I was chasing wasn't even real.

If You Can came from the same place. In 2014, in the spirit of the Bogleheads, I decided to make it available as a free download (just google "if you can" and my name). Nearly all of my financial writing is aimed at older individuals, most of whom are, or soon will be, fairly prosperous. Both writing about and practicing finance have been good to me; If You Can seemed a good way to pay forward some of that to young people just starting out on that journey.

The two books fit together; Jack's describes the zen of personal finance, while mine is the Boglehead three-fund nuts and bolts version. Wiley first published Enough in 2009; both books are now more than a decade old, and upon rereading them I'm pleased at how well the two have held up.

The one part of Enough that needs only the slightest revision is the few pages on exchange traded funds (ETFs). Because they're so easy to speculate with, Jack didn't like them, and their champion at Vanguard, Gus Sauter, nearly had to step over Jack's metaphorical dead body to debut Vanguard's.

Jack's criticisms of ETFs are even more valid now than they were then: It seems not a day goes by that an investment company doesn't bring out one bit of speculative toxic sludge or another packaged in an ETF wrapper-leveraged funds, inverse leveraged funds, hyper-narrow sector funds, and the like.

But there's also no denying that because anyone's ETFs can be bought on anyone else's brokerage platform-even on those of the bad old "full-service" wirehouses-they've greatly expanded the investing public's access to low-cost vehicles.

Mr. Sauter also realized before Jack did that ETFs treated investors more fairly than the traditional open-end mutual funds, which penalize long-term buy and hold investors with the trading costs of short-term speculators. Mutual funds trade enormous dollar amounts of stocks and bonds when investors purchase or redeem their shares, and these large trading volumes can incur considerable "transactional costs." By "externalizing" those trading costs with the small bid/ask spreads incurred when individuals buy and sell ETFs, this shifts the high costs of rapid trading to ETF speculators, leaving the buy-and-hold investors nearly untouched.

The improvements in ETFs, as well as the increased ease of trading them, also have also negated one of the major recommendations in If You Can, which was its emphasis on dealing, wherever possible, with the Vanguard Group. Since then, two things have rendered that recommendation obsolete. First, in 2013, the online platform Robinhood fired the brokerage shot heard round the world when it debuted its commission-free trading phone app for stocks and ETFs. Over the next several years, the big discount brokerage houses-Fidelity, Schwab, TD Ameritrade, and E*Trade-followed suit. So it's possible to buy Vanguard ETFs at any of these brokerage houses commission free; this is even possible, though I don't recommend it, at some of the old wirehouses. Moreover,...