New Capital Management

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John C. Bogle (1929-2019)

On my desk sits a signed copy of The Clash of Cultures, a book by John C. (“Jack”) Bogle, the founder of Vanguard, one of the three most important people in the American investment industry over the last 100 years (the other two being Warren Buffett and Benjamin Graham), a giant among giants who passed away at the age of 89 on January 16.  In an age where major mutual fund companies control trillions of dollars in investor assets, Vanguard and its $5 trillion under management stands at the pinnacle as the principle purveyor of low cost, index-based investment.

Vanguard is one of New Capital’s most important business partners, and we have invested approximately 10% of total firm assets with them, particularly in fixed income funds where Vanguard possesses enormous market power to reduce the costs involved with bond investing for our clients.  Eric Pickens is our representative at Vanguard, and when he visits he always provides valuable insights for us into both Vanguard and markets in general.  In recent years, Vanguard has significantly expanded its relationship with advisors like New Capital and we enjoy access to the most important thought leadership offered by them.  Vanguard has its own dedicated page on our new website, and if you are interested in some of their recent views on issues like health care in retirement or environmental, social, governance (ESG) investing, we provide them there.

Unique among mutual fund families, Vanguard offers true mutual funds as they were originally conceived in the earlier years of the 20th century, where the owners of the funds are the fund shareholders themselves, rather than a private or publicly-traded owner.  This structure has allowed Vanguard to pass on savings to shareholders and thereby enhance the returns offered by the funds.  As Bogle himself liked to say, “In investing, you get what you don’t pay for.”  In every fund we analyze here at New Capital, we take account of the fees involved, and we refuse to pay for funds in which we do not believe you receive benefits at least in return for fees paid.  We favor investments that are passive (the concept on which index funds are based) and which attempt to produce market returns rather than “beat the market.”

Our approach to investment, and your investments, therefore, owe more to John Bogle than to any other single individual.  While there have been and are many important thinkers and practitioners in modern finance, no one, not even Buffett, has personified modern investing to the extent of John Bogle.  As Warren Buffett himself said on Bogle’s passing: “A lot of Wall Street is devoted to charging a lot for nothing. He charged nothing to accomplish a huge amount." 

My entire career in the investment business has been built standing on the shoulders of John Bogle as I’ve tried to craft an advisory firm with fiduciary obligations, evidence-based investing, and fair fees.  As Vanguard, New Capital, you, and I go into the unknown future, the things that we do know – markets are efficient and difficult for almost anyone (including professionals) to beat, costs matter, time and patience are your best friends in investing – we know in large part because John Bogle has popularized them and made them accessible to the investing public.

As a young man, he was a scholarship student in prep school and college, and worked to help pay his way.  Later in life, he gave half of his earnings to charitable causes.  There will not be another like him.

Leonard Golub, CFA
Fiduciary Financial Advisor

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