Course Code: FIN 547 Course Title: Security Analysis and Portfolio Management

Course Instructor: Dr. Nitin Gupta

Academic Task No.: 2 Academic Task Title: Assignment on John C. Bogle

Date of Allotment: 12-09-2020 Date of submission: 26-09-2020

Student’s Roll no: B45,B44,B43,A69 , A70 Section: Q1E11

Student’s Reg. no:11900860, 11900889, 11900755, 11600992, 11606100
Evaluation Parameters:

Declaration:

I declare that this Assignment is our group work. I have not copied it from any other
student’s work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for me by any other person.

Evaluator’scomments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of assignment

 Evaluator’s Signature and Date:

Marks Obtained: Max. Marks: …………………………

PEER RATING: Group 11

Name Registration no. Marks

Ashish kumar 11606100 10

Ankush Ranjan 11900889 10

Vishnu Prasad 11900755 10

Sarim Hussain 11600992 07

Manglam Kumar 11900860 10

Personal Profile and Professional Growth of “John C. Bogle”

Mr. Bogle was born May 8, 1929, in Montclair, New Jersey. He worked his way with Blair
Academy and Princeton University as a waiter and additionally managed Princeton’s athletic
ticket office. A tall, athletic man who sported a crew reduce for most of his life, Mr. Bogle
performed squash, tennis, and golf, and also enjoyed sailing. He was basically described as a
“fierce competitor” on the courtroom and course, a demeanor he also maintained on the job.
Reading used to be among his pleasures, as was once The New York Times crossword puzzle,
which he regularly completed in much less than 20 minutes.In 1956 he married Eve Sherrerd.
They had six children, daughters Barbara Bogle Renninger, Jean Bogle, Nancy Bogle St. John,
and Sandra Bogle Marucci and sons John C. Bogle Jr. and Andrew Armstrong Bogle. They had
12 grandchildren and six great-grandchildren.

Jack Bogle made an impact on no longer solely the whole funding industry, however more
importantly, on the lives of limitless folks saving for their futures or their children’s futures. He
was a notably intelligent, driven, and gifted visionary whose thoughts completely changed the
way people invest.

Mr. Bogle, a resident of Bryn Mawr, PA, began his profession in 1951 after graduating magna
cum laude in economics from Princeton University. His senior thesis on mutual dollars had
caught the eye of fellow Princeton alumnus Walter L. Morgan, who had situated Wellington
Fund, the nation’s oldest balanced fund, in 1929 and was once one of the deans of the mutual
fund industry. Mr. Morgan hired the formidable 22-year-old for his Philadelphia-based
investment administration firm, Wellington Management Company.

Mr. Bogle labored in several departments earlier than becoming assistant to the president in 1955,
the first in a sequence of executive positions he would maintain at Wellington in 1962,
administrative vice president in 1965, executive vice president and in 1967, president. Mr. Bogle
became the driving force in the back of Wellington’s growth into a mutual fund family after he
persuaded Mr. Morgan, in the late 1950s, in order to start equity fund that would complement
Wellington Fund. Windsor Fund, a value-based equity fund started in 1958.

In 1967, Mr. Bogle supervised the merger of Wellington Management Company with the Boston
investment firm Thorndike, Doran, Paine & Lewis. 7 years later due to a management dispute
with the principals of TDPL led Mr. Bogle to structure Vanguard in September 1974 to operate
with the administrative functions of Wellington’s funds, while TDPL/Wellington Management
would preserve the funding management and distribution responsibilities. The Vanguard Group
of Investment Companies started operations on May 1, 1975.

In order to define his new venture, Mr. Bogle created a term “The Vanguard Experiment.” It was
a kind of experiment in which mutual funds would function at cost and without any dependency,
with their own directors, officers, and staff. An entire change from the typical mutual fund
company structure, whereby an exterior administration business enterprise ran a fund’s affairs on
a for profit basis.

After the conflict Mr. Bogle created a new and better way of going for walks a mutual fund
complex. The Vanguard Experiment used to be designed to show that mutual funds could
function independently, and will provide advantage their shareholders. In 1976, Vanguard added
the first index mutual fund “First Index Investment Trust” for individual investors. The fund
accrued a mere $11 million in the course of its initial underwriting. Now recognized as Vanguard
500 Index Fund, it has emerged to be one of the industry’s largest, with greater than $441 billion
assets. Nowadays, index fund account for extra than 70% of Vanguard’s $4.9 trillion assets
underneath management, they are proposed by many different fund agencies also and they make
up most exchange traded Funds. For his pioneering of the index idea for the individual investors,
Mr. Bogle was called the “father of indexing”. Vanguard is acknowledged today for keeping
funding fees amongst the lowest in the industry.
A legend of individual investor, Mr. Bogle is widely considered with supporting to bring
multiplied disclosure about mutual fund expenses and overall performance to the public. His
dedication to safeguarding interest of investors regularly induced him to talk out in against
practices that have been common among his peers in different mutual fund organizations.

Stock Leanings and analysis

Indexing was the purview of institutional investors, but Jack Bogle came up with the consumer
version,” said Daniel P. Wiener, the editor of The Independent Adviser for Vanguard Investors, a
newsletter and website that has tracked the company for decades. “He made people aware of
expenses, and told them that costs come right out of the bottom line.

In investing, people get what they dont pay for. Costs matter. So intelligent investors will use
low-cost index funds to build a diversified portfolio of stocks and bonds, and they will stay the
course. And they won’t be foolish enough to think that they can consistently outsmart the market.

Most fund companies spend huge sums to attract new customers. But Mr. Bogle eschewed the
product- and marketing-driven thinking of much of the industry that has spread with the boom in
mutual fund sales this decade.

Too much cash is aimed at momentary hypothesis — the seeking of speedy earnings with little
problem for the future. The financial device has been wounded through a flood of so-called
innovations that only promote hyper-rapid trading, market timing and shortsighted corporate
maneuvering. Individual buyers are being shortchanged

In investing, you get what you don’t pay for. Costs matter. So sensible investors will use cheap
index money to build a different portfolio of stocks and bonds, and they will remain the course.
And they won’t be foolish ample to suppose that they can consistently outsmart the market.

Even so, he says, long-term traders must preserve stocks, due to the fact risky as the market may
additionally be, it is nonetheless possibly to produce higher returns than the alternatives.
John Bogle and Passive Investing

John Bogle contributed notably to the reputation of index investing, in which a fund keeps a
combine of investments that tune a principal market index. Bogle’s philosophy that common
buyers would discover it hard or impossible to beat the market over time led him to prioritize
approaches to limit costs associated with investing in mutual funds. For example, Bogle targeted
on no-load money proposing low turnover and simple funding strategies.

The philosophy behind passive investing usually rests upon the notion that the expenses related
with chasing high market returns cancel out most or all of the positive aspects an investor would
in any other case gain with a passive strategy that relies upon money with decrease turnover,
administration fees, and expense ratios. Index dollars suit this mannequin properly because they
base their holdings on the securities listed on any given index. Investors who buy shares in index
dollars reap the gain of the range represented by means of all the securities on an index. This
protects against the risk that a given enterprise will decrease the overall performance of the usual
fund. Index dollars also greater or less run themselves, as managers solely need to make certain
their holdings match these of the index they follow. This continues charges decrease for index
cash than for cash with more energetic trading.

Finally, because index funds require fewer trades to keep their portfolios than cash with greater
active administration schemes, index cash tend to produce extra tax-efficient returns than
different types of funds.

Five Investment Tips

1. Don’t Try to Outsmart the Market

He strongly believed that one ought to try and stay the course, mainly at some point of the
volatile times. For him, wise traders are the ones who don’t outsmart the market. Instead, they’ll
buy index dollars for a lengthy time period and diversify. He advises long-term buyers to hold
shares even if the volatility continued in the markets, and in justification, he said, “they will
anyway produce higher returns than the different picks reachable in the market.”

2. Make Distance from Emotional Investing

If you are inclined to be a successful investor, you need to have the stomach for risk. It is no
longer something for a faint of heart. He suggests investors select a various vary of shares and
bonds, have confidence in the maths behind, and stay committed to it. While investing, cast off
emotions from your gadget is what he told to Vanguard investors.

3.Shake Hands with Time, Wave Goodbye to Impulse

The key to selecting mutual money is now not to focus just on the returns however on the
necessary parameters such as risk, cost ratio, and time. To make an funding success, time plays a
crucial role. Also, have rational returns’ expectation from your investments, and keep away from
chasing huge numbers as there is constantly a trade in the market cycle.

4. Beware the Experts

He grew to be a tough critic in the later years of his existence and was once completely against
the excessive value of fund management. The occasion of 2008 startled him as he mentioned that
most of the cash managers neglected all the warning signs before the crises. He questioned, “how
may want to so many notably paid experts, professional money managers failed to notice the
toxic-filled leveraged balanced sheets of Citibank and so many different banks and funding
banks?” From 2017, he waved the pastime of younger traders away from the financial advisors
and requested them to are seeking for assist from robo-advisors.

5. Keep the Cost Low

He made countless affords to make investing more cost effective for the people. He was
instrumental in breaking the industry tradition by way of providing mutual dollars directly to the
buyers in 1977 and didn’t choose advertising and marketing them via the broker chain, bringing
the price down via around 30-40 percentage in the US MF industry. He was once completely
against the high rate which used to be charged from the buyers in the identify of stock picking.
He advised investors to decide for less expensive index mutual dollars to build a diversified
portfolio consisting of bonds and stocks.

Not solely in investments, but he additionally has countless existence lessons for people like you
and me. No matter whether you are a risk-taker or risk-averse investor, you pick out to invest in
SIP or lump sum, the factor is that you must no longer hinder yourself from investing. Go with
what Bogle suggested, he said, “... stick to the routine you’ve set for yourself, no depend what.
It’s that hobbies of work that will take you the place you favor to go.” With this, we, at
MySIPonline, pay tribute to the legend. The trailblazer in the mutual fund enterprise has made
funding simpler, so let’s take the advantage of the opportunity he has left for us. Invest in the
great mutual dollars endorsed via experts. You can even connect with us to seek a personalized
recommendation.

Investment Strategies Analysis

Mr. Jack Bogle, the legendary American investor had a very simple advice or strategy for its
investors to buy and hold the stocks and bonds for long term. The long term investors must hold
stocks even though the market is risky or volatile, because they are still likely to produce better
returns than the alternatives. In the long run, even if the market becomes uncertain the investors
should not change their decision seeing the uncertainty as Mr. Bogle clearly added that short
term betting is never a good choice. As stated by him clearly in a interview that “if you hold the
stock market, you will grow with America.” There is a strong correlation between the stock
markets and economic growth. So the investor shouldn’t change his minds and “Stay the
course” even if the situation becomes volatile. Taking a real time example of the long term rate
of return has been moderately consistent for stocks it has fluctuated altogether in shorter terms.
Undoubtedly, one standard deviation was 16.9%, implied the average annual returns extended
from 9.9% to +23.9. The longer the duration of holding the stocks in the portfolio, the lower will
the volatility or risk. After only five years, the standard deviation falls considerably, and
following 10 years, significantly once more. Speculators who can hang on for a long time will
encounter volatility of just 1%.

The second most important strategy that Bogle advised to its smart investors was to use their
“common sense and to keep the costs down.” The common sense tells that the simplest and
most efficient investment strategy is to buy and hold the stocks at a very low cost. That is the
reason Jack Bogle recommended its investors to invest in low cost invest funds and hold a
diversified portfolio with many stocks and operate it with minimal expenses.

The third important strategy implemented by Jack Bogle was advising the young and smart
investors to beware of the experts. As per the fact in 2008 financial crisis that many of the
highly paid securities analysts and researchers failed to show any warning signs about this
economic slowdown. Jack Bogle instead advised to consult with the robo or AI based advisers
instead of wholly getting dependent on the financial experts. In his statement : “ How could so
many highly skilled, highly paid securities analysts and researchers have failed to question
the toxic-filled, leveraged balance sheets of Citigroup and other leading banks and
investment banks?”

Finally, the important strategy that he advised to its founded company Vanguard investors is that
to eliminate the emotion while investing on the stocks by stating a quote that “Impulse is a
person’s enemy”. The investors should be basically calculative in their approaches and believe in
their basic arithmetic calculation while they invest in a diverse selection of stocks and bonds.
Jack Bogle in an interview with Wall Street has stated that only way to succeed in your
investment is to own the entire stock market and hold the stocks for a longer duration to get a
better return.

Practical Application of Strategies

➢ He used to say that the Investors should diversify, especially in equities. According to
him Wall Street very often charges too much for services that can be of dubious value.
Also low-cost, passively managed index funds with relatively low turnover should be
among an investor’s best friends.

➢ He always focused on that the investors should aim for achieving the returns of the entire
stock market.

➢ He believed each of the stock funds should own a portfolio that includes large-cap stocks
and small-cap stocks, value stocks and growth stocks. Bogle was highly trusted for telling
the truth in an industry that doesn’t have a stellar reputation for truth-telling.

➢ He taught, rightly so, that equity funds that follow these guidelines are very likely to
deliver long-term returns in the top 10% of their peers.

➢ He also understood that investors could achieve results like that only if they stayed the
course through thick and thin, which I believe dedicated Bogle heads will do well.

➢ Bogle believed in “total market” indexes based on the capitalizations of the companies in
each index.On the other hand, he believe investors are likely to do better when they own
equal parts of four major asset classes: large-cap blend stocks, large-cap value stocks,
small-cap blend stocks, and small-cap value stocks.
 ➢ Everything he recommended can be accomplished at relatively low cost using Vanguard
funds. In the later years of his life, Bogle advocated owning just three index funds: One
for U.S. stocks, one for international stocks and one for bonds.

Wealth attained through investments and trading and his global achievements.

Net worth of Bogle was around 80 million dollar last year. He generally gave half of his earnings
to the charity. It has been said that he would be the billionaire but instead he chose that owner of
Vanguard group should be the investor. He invested his total earnings left into Vanguards group.
He maintained his personal and retirement portfolio. During 2015, bogle allocated 50percent in
equities and 50percent in bonds in his retirement portfolio. Earlier he followed the pattern of
allocating 60 percent in equities and 40 percent in bonds. His retirement portfolio was having
allocation of 80 percent into bonds and 20 percent into stocks. He doesn’t believe in any other
investment type for diversifying it. In order to maintain his wealth for grandchildren he invested
in Vanguard Balanced Index. Vandguard group is a big mutual fund company which he founded
is having 4.9 trillion assets under management.

Bogle worked in Wellington Fund which deals with managing the funds for the long period.
Later in 1967, he became the president of Wellington. He founded Vanguard in 1974 and acted
as chief executive officer and chairman. Later until 2000 he served as senior chairman. After two
year he founded First Index Investment Trust which later known as Vanguard Index Trust and
currently it is known as Vanguard 500 Index Fund. For individual investors, it was the first index
fund. Further he made changes inside the company where he eliminated the brokers and allowed
to sell mutual funds directly to the investors which reduced the sales fee of nearly 9% of that
fund. In 1991 he appointed as chairman of Securities and Exchange Commission.

During 2004, TIME Magazine gave him Lifetime Achievement award and named him in the list
of world’s 100 most influential and powerful person. In 1999 Fortune considered him among the
one of the four big giants in investment industry. For his “distinguished achievement in the
nation’s service”, he received an award named as “Woodrow Wilson Award” Princeton
University in the same year i.e. in 1999. He named in the list of financial leaders of 20th century
in 1997. For his professional excellence he received an award from Association for Investment
Management and Research in 1998. He also named in the Hall of Fame of the Fixed Income
Analysts society in 1999. He was appointed as Chairman of the Board of the National
Constitution Centre during 1999 to 2007. During 2000, he was named as Pennsylvania’s
Business Leader of the Year by the Commonwealth’s Chamber of Commerce. He also received
honorary doctorate degrees from fourteen universities. He also wrote around 12 books on
investment like some famous books are New Perspectives for the Intelligent Investor (1993), The
First 50 Years (2000), The little book of common sense investing, True Measures of Money,
Business, and Life (2008).

References

https://www.thinkadvisor.com/2018/11/27/john-bogle-rias-are-the-future-trading-is-investor/

https://www.investopedia.com/articles/financial-advisors/012716/where-does-john-c-bogle-keep-
his-money.asp

https://personalfinancenews.com/john-bogle-net-worth/

https://blog.smallcase.com/remembering-jack-bogle/

https://www.bogleheads.org/wiki/John_C._Bogle_articles_and_speeches

https://www.marketwatch.com/story/the-genius-of-john-bogle-in-9-quotes-2016-11-23

https://www.finance.senate.gov/imo/media/doc/Testimony%20-%20John%20Bogle.pdf