Don't Count on It!

JOHN C. BOGLE is the founder of the Vanguard Group of Mutual Funds and President of its Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as chairman and chief executive officer until 1996 and senior chairman until 2000. In 1999, Fortune magazine named Mr. Bogle as one of the four "Investment Giants" of the twentieth century; in 2004, Time magazine named him one of the world's 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award. In 2010, Forbes magazine described him as the person who "has done more good for investors than any other financier of the past century." Mr. Bogle graduated from Blair Academy cum laude in 1947 and Princeton University in 1951, magna cum laude in economics. In 1999, he received the University's Woodrow Wilson Award for distinguished achievement in the nation's service. Don't Count on It! is Mr. Bogle's ninth book. His earlier books include Common Sense on Mutual Funds, The Battle for the Soul of Capitalism, The Little Book of Common Sense Investing, and Enough.

“Don’t Count on It! is a wise book. As most traders and investors remain convinced that they can beat the market, it’s always sobering to hear a compelling voice from the other side.” (Seeking Alpha) "If Bogle writes it, it’s worth reading. His latest, Don’t Count On It, is a collection of 35 essays, every one of them filled with wisdom and insight. . . While I have read Bogle’s views on these issues many times, I’m always impressed with the quality of his writing (Where else can you read quotations from Adam Smith to Winston Churchill to Cato?), the wit and humility he shows and his passion to help investors. The book is a compelling read, one that in effect tells the story and mission of a great man. We’re lucky and privileged to have him fighting on our side.  As Bogle noted in his book, Machiavelli “described the accumulation of worldly ‘glory’ as the motivating principle that drives leaders to undertake ‘great enterprises’ and do ‘great things’ on behalf of their fellow citizens and not just themselves.” Hard to find a better description of Bogle himself." (MarketWatch)“Mr Bogle’s prescription for a better system is relatively simple: to demand proper fiduciary management from money managers. They must prioritise client interests, act as responsible corporate citizens, charge reasonable fees and eliminate conflicts of interest. Amen to that. It may sound like nostalgia from an old-timer, or idealism from a visionary. But without such changes, investors and society will continue to be short-changed as the financial community carries on regardless.” (Financial Times)“In Don’t Count on It! Reflections on Investment Illusions, Capitalism, “Mutual” Funds, Indexing, Entrepreneurship, Idealism, and Heroes, Bogle hammers at what he labels the cost matters hypothesis: Whether markets are efficient or inefficient, investors as a group must fall short of the market return by precisely the amount of the aggregate costs they incur. It is the central fact of investing. Not surprisingly, the book deals extensively with the low-cost innovation for which Vanguard is best known: the stock index mutual fund. When the company first made indexing available to small investors in 1975, critics derided the notion as “Bogle’s folly.” To Bogle, however, the benefits to investors were irrefutable. . .  The impact of indexing has been so great that a second, hugely important contribution by Vanguard has been overshadowed. Vanguard originated the now standard segmentation of bond funds into short-, intermediate-, and long-term varieties. Bogle was enshrined in the Fixed Income Analysts Society Hall of Fame for this innovation. The author of Don’t Count on It! does not dwell on such honors, which include being named one of the world’s 100 most powerful and influential people by Time magazine. In fact, Bogle devotes the final section of his book to tributes to four of his own heroes: Walter Morgan, economist Paul Samuelson, investment guru Peter Bernstein, and Dr. Bernard Lown, a Nobel laureate whom he credits with keeping him alive in defiance of a mystifying heart ailment. Bogle also shows modesty in sharing credit for his contributions to the field and in downplaying his own theoretical expertise. His unashamed display of such old-fashioned virtues, as well as his heretical view that running a business is not entirely about maximizing the wealth of the owners, has earned him the nickname ‘St. Jack.’” (Financial Analysts Journal)

• Foreword xiIntroduction xvA Note to the Reader xxxiPart One. Investment Illusions 1Chapter 1 Don’t Count on It! The Perils of Numeracy 5Chapter 2 The Relentless Rules of Humble Arithmetic 25Chapter 3 The Telltale Chart 49Chapter 4 A Question So Important That It Should Be Hard to Think about Anything Else 71Chapter 5 The Uncanny Ability to Recognize the Obvious 87Part Two. The Failure of Capitalism 97Chapter 6 What Went Wrong in Corporate America? 101Chapter 7 Fixing a Broken Financial System 123Chapter 8 Vanishing Treasures: Business Values and Investment Values 137Chapter 9 A Crisis of Ethic Proportions 157Chapter 10 Black Monday and Black Swans 161Chapter 11 The Go-Go Years 187Part Three. What’s Wrong with “Mutual” Funds 203Chapter 12 Re-Mutualizing the Mutual Fund Industry: The Alpha and the Omega 207Chapter 13 A New Order of Things: Bringing Mutuality to the “Mutual” Fund 237Chapter 14 The Fiduciary Principle: No Man Can Serve Two Masters 273Chapter 15 Mutual Funds at the Millennium: Fund Directors and Fund Myths 297Chapter 16 “High Standards of Commercial Honor . . . Just and Equitable Principles of Trade . . . Fair Dealing with Investors” 317Part Four. What’s Right with Indexing 347Chapter 17 Success in Investment Management: What Can We Learn from Indexing? 351Chapter 18 As the Index Fund Moves from Heresy to Dogma, What More Do We Need to Know? 369Chapter 19 “The Chief Cornerstone” 393Chapter 20 Convergence! The Great Paradox: Just as Active Fund Management Becomes More and More Like Passive Indexing, So Passive Indexing Becomes More and More Like Active Fund Management 409Part Five. Entrepreneurship and Innovation 435Chapter 21 Capitalism, Entrepreneurship, and Investing: The 18th Century versus the 21st Century 439Chapter 22 Seventeen Rules of Entrepreneurship 455Chapter 23 “Vanguard: Saga of Heroes” 469Chapter 24 When Does Innovation Go Too Far? 493Part Six. Idealism and the New Generation 507Chapter 25 Business as a Calling 511Chapter 26 The Right Kind of Success 517Chapter 27 “This Above All: To Thine Own Self Be True” 521Chapter 28 “Enough” 529Chapter 29 If You Can Trust Yourself . . . 535Chapter 30 The Fifth “Never” 543Chapter 31 “When a Man Comes to Himself ” 549Part Seven. Heroes and Mentors 557Chapter 32 Walter L. Morgan 563Chapter 33 Paul A. Samuelson 569Chapter 34 Peter L. Bernstein 575Chapter 35 Bernard Lown, MD 581Index 587