Welcome to the Bogleheads Chapter Series. This episode was jointly hosted by the South Florida and New York City Bogleheads local chapters and recorded November 2nd, 2022. It features Eric Balchunas, a senior ETF analyst for Bloomberg Intelligence, discussing his recent book, The Bogle Effect. Bogleheads are investors who follow John Bogle's philosophy for attaining financial independence. This recording is for informational purposes only and should not be construed as personalized investment advice. Welcome to the Bogleheads Chapter Series meeting. We are really delighted today to host Eric Balchunas, who is from Bloomberg Intelligence. He is the ETF expert or researcher with Bloomberg Intelligence. I like that title, Eric. And am I pronouncing your name correctly? It is Balchunas. Yeah, no, that's better than most. Okay, good. We are delighted to have you here. Eric is the author of this wonderful, wonderful book, The Bogle Effect. It is a, I love the book. It's a great read, Eric. It's easy, well written. I really, really appreciate it. I learned so much about the history of, well, the financial industry, as well as Vanguard, index funds, and Mr. Bogle also. As everyone knows, we are the Bogleheads and we follow the investing philosophy of Jack Bogle. Jack Bogle created Vanguard and he also basically created the index fund for retail investors. Eric, we also have, not with us tonight, but we do have a Boglehead who invested in 1976, 1977 with the Vanguard first, it's called Vanguard first index investment trust. And he was an airplane pilot. And he invested then and he still owned it until the Vanguard opened their total market index fund. And then he thought that was a good idea. I asked him on the forum, why did you, how did you even invest in that? Where did you even find that fund? And he said, he found it like on the Wall Street Journal or Money Magazine. He just read a little bit about it and he thought that makes perfect sense. And everything that you wrote in your book shows how everything came together for creating that fund. Anyway, let me go forward here. I'd like to introduce our helpers tonight. Gory is going to coordinate the meeting and ask the questions. Gory is from New York City. We have Alan from Tampa, Tampa chapter. Carol from the Dallas chapter. Kip is joining us from Wyoming. And he said it is going to be the first snowfall tonight in Wyoming. I hope you're ready for that, Kip. We are, we are. We also have Jim from Chicago, he will be doing the recording. This meeting will be recorded from beginning to end and it will then be posted on the Bogleheads calendar and the Bogleheads YouTube. In addition, we have several other guests. We have Mel Lindauer, who is one of the creators, the founders of the Bogleheads. Hi, Mel. He's here. We also have from Germany, Mary, who joins us from Germany. And we welcome tonight the Japan Bogleheads. Mayumi is here from Japan. And Eric, Mayumi worked for Vanguard from 2008. Yes. Until 2017. Yes. Mr. Bogle several times on the Vanguard campus. Yes. So I visited Vanguard campus several times and I met with Bogle several times and I impressed his talk very deeply. So I left financial industry last year, but I'd like to introduce Bogle's philosophy in Japan. So we decided to establish Bogleheads Japan chapter last year. Thank you. Thank you so much. Very nice. Thank you for coming. We really appreciate it. Okay. Let me see what else. Zoom tips. Everybody probably knows how to use Zoom. You can keep your video off. Please keep yourself muted unless you're speaking. What we are going to do is hold the questions until the end of the presentation. Is that okay, Eric, that we hold the questions until the end? Yeah, sure. Okay. Probably easier and I'm going to go very quickly. Okay. So just jot down your questions and then we can hit them at the end. Right. I'll put your questions in the chat and we will be monitoring the chat. We'll get to them in the end. Okay. So we can save the chat throughout the evening. People will be posting things on the chat links. Don't worry. Don't have to write them down. You can save the chat by bringing the chat window up and then the lower right are the three ellipses. Click on that. And it will have an option to save the chat. The chat will be saved as of the time you click it. So do it at the end of the meeting. You can also move the goalposts of Eric has slides, Eric's slides are here. You can move that goalpost so that you can enlarge his slides. And the disclaimer is that this is for informational and educational purposes only. We are not giving investing advice. Okay. Is there anything that I didn't cover? Goree Allen Carroll. I think you got it all. As far as I'm, okay, for me, go, why don't you take over Eric? I already mentioned that I liked your book very. And why don't you take it over, Goree. Fantastic. Thank you. Fantastic. Thank you, Miriam, and thanks to the team that helped put this together. And Eric, it's so great to have you here. Thanks for being here. So for folks who haven't seen or read Eric's book already, I will put it, put the cover on the screen while I read, while I further introduce Eric a little beyond what Miriam already mentioned. So this description is straight from Eric's book. Eric Belchunis is a senior ETF analyst for Bloomberg Intelligence where he writes for and leads the fund research team. He has more than 15 years experience working with ETF data, designing new functions, and writing research and articles. He also helped to create the first TV show solely focusing on the opportunities, risks, and current events in the ETF industry, Bloomberg ETF IQ, as well as a podcast trillions. He's a Bloomberg opinion contributor and the author of the institutional ETF toolbox published by Wiley in March 2016. Eric holds a bachelor's degree in journalism and environmental economics from Rutgers University, currently lives in Philadelphia with his wife and two sons. And as folks mentioned earlier, is in tune to the World Series game going on. So for folks who haven't read the book yet, I'm happy to say it reads and flows really well. I could see it appealing to both nerds, self-proclaimed nerd, and it would appeal to non-nerds as well. It basically anyone who's interested in a good story, it reads like you're watching a documentary. So for housekeeping, before I turn it over to Eric in terms of what to expect, like Miriam said, Eric will present at first after which I'll ask a few questions and Miriam will ask a few questions and we'll turn it over to questions from the chat. So again, folks should feel free throughout the evening to submit questions via chat. With that, I'll turn it over to Eric. Thank you very much. Both of you guys. I'm going to share my screen real quick and just make sure we have the PowerPoint up and then we'll get going here. So let me share a screen. It says host disabled participant screen sharing. Can you allow me to share it? Hold on. Hold on. Sorry. Okay. Okay. There you go. Let's try it now. I got it. Good. We're all good. Okay. So I'm going to share and then I'm going to go like this. Let's go. My desktop is very busy. You can see. I don't delete a lot. Okay. Can you see the full PowerPoint here? Yes. Okay. All right. Let's get started. So thank you for the introduction and I'm a big fan of the Bogleheads and for those of you who heard me speak at the dinner that was at the banquet, the Bogleheads conference. Some of this will be redundant but you can just tune into the affiliates game while I talk and then come back in after. But this is a bridge version. I'm not going through every slide. So I also wanted to just, I heard Mel was on the call and Taylor who were really came ahead of me in that banquet and I just want to say how awesome it is that they started this really cool organization and Taylor in particular who I interviewed for the book was really helpful in my section on the Bogleheads. And again, it wasn't just because of him but I dedicated the book to the World War II generation. I know he was in Battle of the Bulge. The Bogle, in my opinion, when I went to hang out with him multiple times, I felt like I was kind of hanging out with my grandfather or at least somebody from that generation. My grandfather was in the war. He was not a boomer and so I just felt Bogle's character and his wit was very much from that generation and that's why I dedicated the book to my own grandparents. Thank you for asking me here and look, this PowerPoint is rapid styles but I'm going to go very quickly and if you have a question, we'll go to the end. So this is the cover of the book which you just showed so I won't spend much time here. I'll just go into why I wrote the book. People know who Bogle is. I'm a guy at Bloomberg. Why would this happen? The main reason is, see this dictaphone here during the pandemic. That's my jar of pens which is the cute little ceramic clay thing my son made when he was like eight years old. And the dictaphone was just gnawing at me and Jack had passed away maybe a year before and that dictaphone contained about three and a half hours of me and Bogle just going at it both in agreement and disagreement and debates and discussions and I felt, especially the last interview, I felt he said some things about the future that were just so interesting and I thought, you know, I really should get that on paper and I knew I had the data. I'm a fund analyst who does nothing but look at funds data and I'm blown away. Even as much as I look at it year after year, I'm still blown away at the amount of money Vanguard takes in every year. It is unbelievable. In any other industry, this would be a way bigger deal, but Vanguard isn't a public. So it isn't as examined or studied as much. In fact, in my research department, the woman who covers asset managers only covers the public ones, BlackRock, Goldman, T-Row price. She doesn't know a lot about Vanguard. It's not even on her dashboard. And I'm like, that's crazy. That's like not knowing about Amazon. So I thought if she doesn't know much about this company, there's probably other people who don't know a lot and I could combine the interviews with the data and as Gory said earlier, I was always surprised there was never a documentary on Jack or Vanguard given the incredible influence and the fact that we finally have a happy Wall Street story. I would just think this would just really attract the creative types, but there isn't one. So I wrote the book as a documentary with me as the narrator and I interviewed 50 different people for the book. And if you read it, you'll realize you could almost turn this into a script for a documentary. So if anybody on here knows anybody at Netflix, Gory has my email. Vanguard is also a great vehicle to talk about the changing financial industry and the ecosystem. So it's not just funds. It's the advisory business. It's ETFs. It's behavior. It's trading. There's so much going on that Vanguard allows you to talk about here. And I think it's a good business case study. The moral of the story here is treat your customers well. Throw them a bone now and then and they will stick with you. If you take all the money, they won't. And this is a great tale of that. And I think a lot of younger people who are into the sort of more populism themes will identify. Here's a picture of me and Jack from, I believe, the second interview or might have been the first one. I can't remember. All I know is I'm 20 pounds skinnier. Just why that's half the reason I like this picture. Yes, it's with me with this legendary guy, but I'm also probably in the best shape I've been for the past couple years. I had to gain a few pounds during the pandemic. Anyway, this office, if you've ever been there, is really cool. There's papers flying all over the place. There's oil paintings. There's like a pillow of like Confederate flag United States. Again, it's a very old school room and it's a special room and I really enjoyed going there. But I was shocked at how much this guy knew about everything in the ETF industry. He knew a thematic ETF that was launched earlier that week that nobody cared about. He wanted to complain about the oil ETF right off the bat and the dollar weighted returns and he showed me papers. I was just like, wow, this guy's in his 80s and he's like kind of looking at the same stuff I am every day. And so that's sort of how our relationship began over the next five years. And I'll end with that. So the book project was born out of that. So what I'm going to do in this presentation is give you 10 takeaways from the book that might be obvious, but I think most are not obvious. They're things that I think would be big themes if you were to read it. And I'll start with this one, which is that indexing needed Vanguard way more than Vanguard needed indexing. It's ironic, but the index funds got way too much credit for the index fund revolution. They simply wouldn't be a big deal unless Vanguard's mutual ownership structure existed. That's the real change agent. I would also add to that Bogle's unique structure. Those two unique structures to me exploded to create everything we're seeing today. Indexing just got lucky to be around at the time to be indexing almost surf the Vanguard wave in a weird way. And so I speculate the book that if Bogle and Vanguard hadn't existed, indexing would happen. I mean he had invented it, but it would only have 4 to 5% of the assets as of today, maybe 500 billion versus 12 trillion. And I point to this, there's a couple pieces of evidence here. I point to this quote from the Jack points out meeting Jonathan Lovelace in an airport in 1974 when Lovelace heard that Vanguard was formed as a back office company that was mutually owned. This was two years before they launched the index fund and four months before Jack read the article in the journal that gave him the idea for the index fund. So this was purely based on the structure.  He nailed it all the way back in 1974. Now the industry isn't destroyed, but it is on its way to being completely disrupted. And it's this chart here, which I think if you were to take one chart that defined Bogle's life's work, it's probably this one. This is the average fee of a Vanguard fund versus that of the average active fund. And you can see the natural gravity for the industry is to charge more, because they're in a business. They're trying to serve these other people who aren't the investors. Vanguard obviously has this one master thing, and they continually vote down to lower the fee over the years. It also shows that indexing wasn't dirt cheap from the get go. It got that way over many years. I'm talking decades. It wasn't until 2010 that it was below 10 basis points. That's when it really took off. So this chart to me shows that it's the mutual ownership structure that brought indexing to a cheap point, which is when it really took off. I just don't think it gets cheap without it. And here's an example. If you look, there are many index funds today that are not cheap. In other words, it's not the guarantee that if you have an index fund, it's automatically cheap. This is just what Bogle did in Vanguard. I think if Bogle hadn't existed, index funds would be out, but they'd be 80, 90 basis points. They'd be used by institutions and fans of the efficient market hypothesis. And the one I highlight here is the Wells Fargo. This is the second index fund ever launched, and it still charges 44 basis points. And that's with Bogle and Vanguard in the picture. So imagine without, I say it's probably double and nobody really cares. It's not a big deal. Now, some people say, let's say indexing didn't exist at all. Let's say nobody had even thought of this as a concept. Bogle starts Vanguard and he ends up starting to lack active funds eventually. I know he couldn't do it at first, but let's just say he could. I've premised that Vanguard would be the biggest active fund manager six times over if indexing never happened. They're already the third biggest. And that's with Vanguard crapping on active for 35 years. So you think about if he was praising active or cheap active, if you will, I think Vanguard would have taken off because all studies point to the fact that the lower your fee is as an active fund, the higher or better chance you have of being the benchmark over 10, 20 years. So the 10 to 20 year speed of reports, if you will, would show Vanguard active funds at the top, and the word would get out and ultimately they'd get the majority of the flows. So again, this speaks to the mutual ownership structure is the thing. And here's another great example. The Wellington fund is an active fund, as you all know. It was launched in the 20s. And I actually looked at all the funds launched in the 20s. We'll call these the early pioneer funds. They're all 90 plus years old. And you can see here, Wellington has 90% of the assets of those funds. First of all, half of them closed and the half that exists only have 10% market share between them. So this to me is a great point. A, it shows you if Vanguard only had active, they would dominate. And B, it shows you that Vanguard today is going to dominate in the future too. Because this shows you what they can do when that structure is applied to their home team, if you will. They're just ultimately going to win out. Okay, number two, Bogle's mission not yet realized.  You buy what you don't, you pay, you get what you don't pay for, you know, all these, those are the Ben Franklin type quotes we all know. But there was a quote I read in character counts that I was like, I never read before. And I was like, holy moly. And it's this one here, which is the first sign that Vanguard's mission has created a better world for the investor will be when our market share begins to erode. I've, yeah, I've asked many people, I've been on like 25 podcasts, people who know business. Can you find a CEO in the history of time who has ever rooted for their market share to erode? Again, if you can find one, let me know. I still have not found one. Speak to the different trip this guy was on. Because what he knew back in 1991, by the way, when they were still small, was that ultimately, if you offer this great deal, people will come, right? You build it, they will come and they did. But it won't be until other people do it, and they get cheap, and they become good stewards that Vanguard's market share will plateau and ultimately erode. So you can see he was on a, quote, mission beyond just making a big company to actually completely change the industry. This is why, and the Bogleheads are also why at the beginning of the book, I compare Bogle to be a combination of Steve Jobs, because he put actual products that people could use in the marketplace. And Martin Luther, the reformation guy who stuck the thing right on the church door and preached this stuff right to the people in the church, pissed everybody off. But you can see he created a new religion in a way. And so I think that's sort of why this story was so attractive to me. There was multiple elements to it. And Vanguard's market share is not eroding. In fact, it's only growing. Right now, it's about 27, 28% of all US fund assets. So that's double the old high watermark held by any other company. Fidelity was 14% in 1992, I think, since then it's been all Vanguard. And they take in more money than everybody else. And so until that changes, they're going to continue to grow the market share, obviously, especially in bear markets. The number, the line at the bottom is the percent of the industry's revenue they account for. So you can see that they account for 5% of the revenue, but 27% of the market share, that gap also doesn't really exist in any other business. It's weird. But that, in my opinion, this chart, I would say is the scariest chart on Wall Street because it speaks of the pain that's to come, which I will feel, my company will feel. I write this book, not as somebody who is necessarily rooting for this because I feed off of the active fund industry in many ways in the trading world. But I'm an analyst and I'm just trying to give it to people straight. So is my analyst hat that I'm trying to explain all of this? And I'm also trying to warn our clients, you have better have a plan for this. This is a big deal. It's like not having a plan for Amazon if you're in the retail business. And here you can see Vanguard's flows. They always take in more money than everybody else. They've taken a 2.4 trillion over the past 10 years, which is $920 million a day. So almost $1 billion a day for a decade. The next most flow getter is BlackRock with half. And then you need binoculars to see third place. And then many have seen outflows. So again, this deserves to be studied. If you look at the top funds in the United States by assets, now the top 10 are all cheap index funds. And eight of the top 11 are Vanguard's. The three that aren't Vanguard are people who just copy them. So that would be Fidelity, Spider, and let's say the one I shares.  These companies all had to copy Vanguard to get money. I just looked at Fidelity's flows recently. They've taken in $64 billion in their index mutual funds, but they've seen $30 billion out of their active funds. And this is a pattern we've seen all year. Fidelity looks like it's having good years because it's flat or a little bit in terms of positive flows. But if you unpeel that, all the money that they get is into their low cost index funds, which on one hand, it's like, if there's ever a compliment, it's that Fidelity has gone here. But it's also smart of them. They sold their pride. They used the trash index funds, and now it's helping save their business in a way, at least on assets. And so a capital group has three in the top 15. Obviously, all those are below the top 12. I think those will probably be pushed off in the next couple of years, be 15 out of 15 at some point. And just so you know, of all the passive assets out there that are low cost, Vanguard has half, right? The other half are other people. So Bogle would have loved this. I think Bogle loved that Fidelity did it, and like Goldman did it, and Spider did it. He was happy to see this. Number three, Vanguard wouldn't exist, if not for a ton of serendipity. I didn't know everything about the story. So when I researched it and I read all these books about it, I was just amazed at how many little moments it could have gone the other way and we would not have a Vanguard. So the first moment would be when Jack's looking for a thesis to write. He goes to the library at Princeton in December 1949. He finds this magazine Fortune. He reads it and he finds an article on mutual funds in there and says, oh, this is interesting. Let me write about this. I looked at other magazines that would have been laying around the library in December 1949. And on time, the cover was Conrad Hilton, the hotel guy. So I tell anyone I know in the hotel industry, you guys dodged a major bullet because we would have probably had low-cost hotels if he had picked up this magazine. Who knows? But you can see, isn't it funny how life works like that? Sometimes your whole life can be just what you pick up versus not. I just think it's pretty wild. Another moment of serendipity was when Bogle was searching for a partner in the 60s because his Wellington fund was boring and everybody wanted growth stocks. So he felt he needed to partner with an equity manager. He said he wanted a middle-of-the-road equity manager. So he went and he asked Capital Group. They said, no. He asked Incorporated Investors. They said, no. He asked Franklin. They said, no. It wasn't until fourth in the list, Thorndike, Doran, Payne and Lewis, they said, yes. They were like Kathy Wood. They were like the arc of that era, small but very growthy.  So when the 70s hit and the bear market hit, they got into a huge fight with Bogle because Bogle thought they ruined his company. And so that bifurcation was nasty. And it was out of that bifurcation that Vanguard reborn as a solution to this nasty situation. So let's say Capital Group had said, yes, he was friendly with Lovelace. They weren't as hardcore into growth stocks. They probably wouldn't have had a falling out. Same with Franklin. Again, interesting how life works. Sometimes, you know, when one door closes, another one opens or something was just meant to be. And I found in my story here, the universe almost wanted this to exist in a weird way. The third one is now you have Vanguard and you promise the new people that you will not manage money. You'll just do back office. So he reads this magazine. I think it was the first edition of the Journal of Portfolio Management, where Sam Wilson says, look, can somebody please set up an S&P 500? He's pleased to people. Can someone do this, please? So Bogle, this is it. He thought, this is a great idea. And I can sell it to the board because we're not actually running money. It doesn't have to be managed. And as he said to my colleague, Mike Regan, in a Businessweek article, they actually bought it. So he knew he was sort of getting one by. And again, that just that little opening created a whole different change in history. So it was those three things that I think were remarkably serendipitous. All right, let's have a little fun here. I think Bogle has a lot of similarities to punk rock. Okay, let me before you like tune out, let me explain what I mean. Number one, before I interviewed Bogle, I would see him on CNBC and Bloomberg TV and he would get up there and the whole network is designed to sign where's the next hot stock sector? What do you think of the Fed?  There is no there there. There's no way around the index. He may just pour cold water just on the whole the whole network's mission really. And I was like, man, this guy is kind of punk rock. Like, he's just basically dumping on the whole thing. And he's got this nice smile on his face. He looks like Latter-day Henry Fonda. And I just found him looks like your grandfather, somebody put it grandfatherly assassin. And he would do this at events. He was at an ETF event. And he said ETF suck, great to the ETF people. He'd go to Morningstar and say active is awful, great to active managers. And I, you know, that idea of just antagonizing an audience like that is not easy. I think it actually helped him to create attention for himself and to sell indexing. But I give him credit for sort of being kind of punk like that. Most people just want to get along and not really stick out. If that were the only metaphor, I wouldn't have done it. But the other huge metaphor with punk rock is this, the birth of punk is largely the Ramones. The Ramones in 1974, by the way, three weeks between the Ramones for a show, Vanguard was formed. I think in the early 70s, a lot of things were forming that were like a let's get real reaction to the cold, the collapse of the 60s, both culturally and economically. So the Vanguard was a let's get real reaction. So was punk rock. A lot of cinema became very gritty. And those movies have held up for a long time, just as punk rock has. And you can see here Ramone, Johnny Ramone said all we did was take out the stuff we didn't like about rock and roll and use the rest. No blues influence, no long guitar solos. If you think about it, Jack's life work is taking everything he didn't like about the mutual fund industry and leaving what's left. Let's remove the expense ratio. Let's remove the transaction costs. Let's remove the brokers and let's remove the human emotion. And so you basically get addition by subtraction. And this chart, I think, is a brilliant chart that he used, which is the growth of $10,000 over 50 years, if you get 5% annually versus 7%. 7% annually is after Bogle took out everything. The 5% is when the industry gets their takes and all this stuff is in the middle. And you can see one will get you 300 grand and one gets you a little over 100 grand. And this is a powerful way to explain that those little innocuous percentage points on fees add up over the long term. I also think he was punked by this one. When he wouldn't pay brokers, again, this reminds me of Michael Corleone and Godfather II when he wouldn't give the senator who was looking for handouts and any money. He says, my offer is this, nothing. So this is a tough move, especially if you're a guy with a young family, a lot of kids would have been easier just to sort of like sell out to the man, pay the loads, get your funds and assets. And this was also in the midst of 80 months of straight outflows. Again, this is a pretty ballsy move, if I can say so. And it's ultimately saying you need to come to us. So anybody who wanted to use Vanguard had to leave the system. So I actually fathomed in the book that the RA movement should be loosely credited to Bogle. He forced brokers to leave because they knew what they were up to was bad for the investor.  Doing this made Vanguard success take a long time. It would have been faster if he took the shortcut. And that's why this stat exists, which is while, which is 97% of Vanguard's assets today came after Bogle stepped down as CEO. I looked at Apple and 83% of Apple's market cap came after Steve Jobs left. So this is even a more hardcore situation than that. Active funds root problem isn't underperformance. It is, but it isn't. The root problem with active is not sharing economies of scale. Bogle didn't even have a problem with high fees. If you were just starting out and you had to charge 1% on a small amount of assets, we'll say, in this case here, I'm showing you 1% on $10 million is $100,000. You need that money. That's barely enough to live on. Let's say you have $1 billion. Now you have $10 million. Okay, fine. You have the staff, you have the office, you're up and running. But once you get to $40 billion, $75 billion, you keep that 1%. Now you're looking at $400 million a year, $750 million a year, or in the case of $100 billion fund like Pemko and Fidelity, that's a billion a year in fees. They didn't share any of that. They could have shared just a portion of the gravy and not even cannibalize themselves. And thank Goodwill, the lower the fee would have helped their beat rates in terms of the benchmark and Vanguard wouldn't have completely utterly disrupted them. So they missed a major opportunity here. And Bogle argued to make dollar fees a bigger deal, but he couldn't even get the Supreme Court to agree to it. But I think investors over the years just sniff test-wise understood that this is a better deal. And obviously we've seen the results, but it's the dollar fees that did them in. And it reminds me of the music industry. They used a CD with $1699 for 30 years or whatever. But the cost of making a CD dropped to 50 cents. The music industry didn't share any of their economy skills. So when the MP3 came along and Napster, people were like, I'm leaving. I have no loyalty to these record companies. And the industry revenue of the music industry dropped by half. And so I think the MP3 metaphor is somewhat relevant. I think Uber to cabs, there's been many examples like this. The difference between those industries and this one though is that you can actually lose market share and still make more money in this industry. It almost should be illegal. You can see here that in 1993, passive made up only 2% of all assets, active is 98%. In 2012, passive makes up almost a quarter. Now it makes up 40%. But you can see here that active slice, even though it shrunk the pie itself through because the market doubled like 10 times. Thus, they lost customers, didn't do a good job because they end up from the benchmark yet they got more money. And again, I benefit from this. I'm not knocking it. I'm just saying it's unusual. It's almost not really fair or capitalist. But that's what happens when you have an equity market premium baked into your business. You get lucky. And this is part of why Jack said the index fund revolution has claimed no victims yet. Now a bear market is where we're going to see victims. And so I use this metaphor of the bank consolidation. It went from like 60. It's like the March madness brackets went from like, you know, 35 banks before. I think we're going to see something similar if this bear market goes on and on because they won't have the market to save them. I think we'll see like three or four mega giant asset managers controlling 70, 80% of all assets, and they'll do everything for you. They'll do the mutual funds, the advice work, yada, yada, be full service, vertically integrated kind of thing. The other 30% will be niche providers. Maybe if we compare to the airlines, those would be like your Hawaiian heirs, right? They do specialized things, arc themes, crypto, alternative stuff like that. I could be wrong. This is how I see it playing out. I asked Jack what he thought. He said it's going to go even further than this. These companies are going to have to mutualize to survive, which means they're going to have to adopt Vanguard's structure to make it. I couldn't find anybody to agree with this. I asked even his close friends, you know, Christine Benz, Bert Malkiel, Rick Ferry, even they didn't agree with this. Basically, there was three things that nobody agreed with Jack on. Mass mutualization, ETFs, and international. He was a man alone in those three areas, maybe not alone, but at least amongst his people who really liked him, definitely disagreed on those big topics. Number six, the bigger active gets, the more active will become. Like I said, Bogle effect isn't just funds. He's changing or Vanguard is changing active. What we see is the modern portfolio based on the way flows are going these days is 85% of a portfolio now is low cost cheap beta. This is your 60, 40 for like seven bits. It's a wonderful thing. Everybody's happy. The problem with it is it's boring as hell. Now for Bogle heads, you may love boring and Bogle himself would say, that's fine with me. Boring is good, but there are definitely people who want to decorate that and maybe keep themselves a little busy, have some fun in the market and speculate. What they want is something completely opposite. They want hot sauce. This would be something like Ark would fit here, thematic ETFs, crypto, I don't know, NFTs, call options, an account at Robinhood where you just trade stocks. That would be the hot sauce lane and that is a viable lane. We do see flows going there. Partially explains Cathie Wood's staying power. Ark has not seen any outflows even though they're down to 70%. My theory on that is because everybody has the serious fundamentally sound stocks covered in their Vanguard fund. They don't need her for that. They need her to be crazy and live in the future. That hot sauce plate is a little bit to satisfy your FOMO because, hey, what if this lady is right and there's robo-taxies and AI all over the place? I don't want to be sad I missed out. I think ironically, Cathie Wood's staying power is a byproduct of Bogle's success of dominating the portfolio. We know this because the number of stocks in every new equity ETF launch is going down. In other words, they're designing ETFs now, which is where all the innovation is, to have maximum pop potential. They want to be your hot sauce. They certainly don't want to compete with Vanguard. This is also why we say that if you're in the middle, you're in trouble and this is where legacy active would exist. If you're kind of near the benchmark and you charge over 20 basis points, you're probably going to go extinct. So the middle is dead, but if you're cheap or shiny, you might have a future. Okay, Bogle's relationship with ETFs was complicated. So I know I'm an ETF business.  If it wasn't for Bogle, ETFs would be a couple of percent of assets of what they are today. So for example, when S&P 500 or I say AMEX, Nate Most, wanted to launch the first ETF in the early 90s, he went to Bogle's office, said, hey, can we make the Vanguard index fund be the first ETF? And Bogle said, no way.  Here's a couple of ideas on your design. So Nate Most goes to the State Street with the same pitch and they buy it. But when SPI comes out in 1993, the expense ratio is 0.20%. Why? That is where Vanguard 500 index mutual fund had been mutually owned structured down to in 93. So SPI launches because it wants to be able to get the same price point as Vanguard. Major had SPI launched at 80 or 90, the ETF business would not see what it is. It started out on third base because it was 20 bits and then Barclays comes along and see it was originally designed to be a trading tool. But Barclays comes along and sees it as something that can spread to retail because it's low cost, tax efficient, yada, yada. So that's sort of a major contribution to the ETF market that he did not like at all. I sometimes equate Bogle's relationship to ETFs is like this, like the index mutual fund was like his first born daughter who he just loved. And the ETF was like the sort of tatted up bad boy that she married. So he didn't like it, but he's in the family now and he has to deal with it. And he would wrestle with it for the rest of his life. And he could never get comfortable with it. He would offer an olive branch a little bit sometimes, but then he would go right back to how it trades too much and he didn't like trading and he'd just never get comfortable with it. And now ETFs are bigger than traditional index funds in assets.  In two years, they're going to pass BlackRock, who is the white line, in assets there. And again, on one hand, ETFs spread indexing to more people. How can you hate that? On the other, they do trade and he was against trading. So you can understand his point of view. A lot of times in the book, when Bogle would go savage, unless it was against dollar fees of high cost managers, I agree with him completely there, I would sort of just lay out both points of view because he would fight with Vanguard and ETFs. And I'm like, I don't know. Here's his take. Here's some other people's take. You be the judge. But anyway, Bogle, I think also beyond the trading of ETFs, he didn't like the innovation. And so he said he felt like Dr. Frankenstein, where he had created a monster. And Gus Souter and Rick Ferry, they agree. They think ETF industry has gotten too crazy, all kinds of weird stuff coming out that are based on the index funds. And they're sort of riding the index funds success a bit because they're technically passive, but they're far from it in spirit. So I kind of understand what he felt here. But I will say the bulk of the money in ETFs goes to very boring vanilla cheap beta. So I think his influence is bigger than even he might think. And this is a funny story. Our last podcast with him, which was six months before he passed away, he was 89, I believe, or 88. At the end of our ETF podcast, we ask every guest a fun question to end it on. We say, what's your favorite ETF ticker? Because ETFs have some funny tickers. He thinks for three seconds, he goes CRZY, which isn't a ticker, by the way, it's just his take on ETFs. But in a ticker form, which again, we thought was just really funny and witty, especially for someone of that age. His mind was sharp as a tack. And he could, you know, have a sense of humor, because he just got done ranting against them. And then he's able to sort of have fun with it and move on. Number eight, most passive worries are overblown. I'll go fast through this. The idea that pass is going to take over the stock market and ruin everything is just wrong. If you look at the ownership of the stock market, households own 40% of all stocks. Mutual funds and ETFs that are passively managed own about 17, 18%. If we add institutions, we might get to 25%. But even if mutual funds and ETFs were 100% passive, that would still be only 40% of the stock market. So you're still looking at at least half would be trading. Bert Malkiel, Gus Souter, even Bogle thought you can get way over 70% and still be fine to have price discovery. Speaking of price discovery, I don't think index funds are really ruining fundamentals. We've seen time and again, a stock price like GE here will crash essentially over like a 10 month or 18 month period because of bad earnings. Meanwhile, the blue bars are showing you flows into index funds and ETFs that own GE. So clearly the tail cannot wag the dog. It's just not enough muscle power to make that stock not be react to bad news. Now with the stock have gone down 50% instead of 45% because there was a bid coming in from passive maybe. But I would almost argue that's a good thing. I think passive and the relentless bid can sometimes put a floor on a sell off which helps everybody. So I have no problem with it. I'm a big sniff test guys. If stocks don't move on earnings the way they should, then I think we need to start looking at this more.  The one that that I tend to find most legitimate is that you have a concentration of voting power. Vanguard owns 8.4% of most stocks. They are now the top owner of 69% of the stocks in the S&P 500 and BlackRock is 7%. So the two of them own 15% of every company in America. And their little corporate governance group, which is made up of a couple people, are voting 8% of that share that's 30 million investors getting voted on by like five people. I don't I don't even like that. I think there's something wrong with it. But Vanguard actually today came out and said we're going to try to do a pilot program where we let people have a choice on how they're going to vote. So like if you want to have a third party do it or you want we'll do it if you want or you can opt not to vote. I think it's a practical solution to help solve this concern over this because that 8.4% is going to grow because they take in more money than everybody else. So it could get to 15, 20% at some point. So anyway, I think this is an issue we're going to see. But what they're doing, what they did today will go a long way in staving off potential regulation. And this brings me to my Warren Buffett quote. Like I said, I interviewed 50 people. One of them was Warren Buffett, who answered my email within like half a day, by the way, I was told he will never reply to me because I'm like nobody. But he did. And he answered four or five questions because he said he loved Jack. Anyway, one of the questions I had was do you think passive is getting too big? And he said if index funds continue to grow, there will be public policy issues down the line. But that's a subject for another day. So I do think at some point, we have a team on our team, it's the only thing that can stop Vanguard is regulation. And at some point, I think they'll be regulated. But here's the thing, it doesn't even matter because every firm now has low cost passive funds.  That again is why I call the book Vogel Effect and not like the Vanguard story. Number nine, a cheap index fund is way under accredited for improving investor behavior. There's all these books on behavior and psychology and all these advisors, I think they take a lot of credit for behavioral coaching, but try doing that when the person's in a high cost active fund that's underperforming the market. That is hard, but in a cheap index fund makes behavior very easy. And we know this because the flows go into index funds and ETFs, even when the market's down. Index fund investors are the best behaved. They're like Navy SEALs level discipline. And same thing this year, they're not leaving. They're fine. They don't just, he can't be because you know why they've resigned to the fact they have the best possible deal. They probably think to themselves, oh, the market's down. What am I going to do? Jump out of this three basis point total market fund and hop into some hot manager who happened to pick like managed futures or like inverse strategy and having, no, because I know they'll underperform eventually. I'll just stick where I am. And that's that.  And that has, but so just by providing a cheap index fund, he radically made behavior way more easy. And he should get more credit. I think the academics don't really give him enough credit for that. And I like to look at Vanguard's flows during 2008. I mean, this, this should be in a hanging in our gallery. They took in money every month. That's just insane. Even in October, when the market was down 70%, they took in cash. That is, this just, it's crazy. So again, this deserves to be studied. It's not normal. And this is a quote from Michael Lewis, who gave this knock-on effect of Vanguard about how once you have this great resignation, you can just stop looking at this stuff. And for him, he said it made him a better writer. He became a Vanguard investor in the 80s, actually. And he says, I don't have to worry about this. I can focus on my job, my family, whatever. And that's a beautiful thing. Again, it's an unmeasured benefit. And I think this takes you in the mindset of the great, the resigned Vanguard investor. That's to say, sometimes it's not easy to do this because free trading, you've got the media focuses on like trying to scare you or give you FOMO. So there are definitely elements that can make this tough. But I think a chief index fund has been able to overcome all those. And for the young people that have gone crazy trading over the past decade, the Robinhood Army, we look at their, they make up 24% of all equity trading in 2021. That was the height of the Robinhood Army thing. That's up from 10% a decade ago. But you see how it's fallen off because they got a bear market. It's a lot harder to be a day trader when a bear market hits. It sobers you up. So I think the whole day trading thing is just a young person's thing. I did it in the 90s as a Gen Xer. And then I got handed a bear market, realized I'm not a genius. And I got a family, a house, and I can't just be like wasting money gambling on the market. So these young people are going to find what Dave Nading calls bubble tech, which reminds me of the scene in war games, when the computer figures out that when it comes to nuclear war, the only winning game is not to play, which I think is where you eventually get to as an investor, a young person who tried it the other way. So I do think that this is sort of the natural state of things. But it does make it way easier not to play if you have a three basis point index fund, a little harder when you're only dealing with like a fidelity active fund. And then finally, the Bogle effect is much bigger than Vanguard, and it's only just beginning. I think that the Bogle effect is going to hit the advisory business next. Here's the assets and Vanguard's personal advisory service, which charge you between five and 30 basis points. I think advisors that charge 1% are probably in trouble. There's some that are specialized, it's going to be fine. But there's a middle I think that's going to be disrupted by Schwab, Vanguard, Wellfront, Betterment over the next 20 years. This is the next big area and they manage 26 trillion in assets. So there's a lot of money here at play. I also think overseas, right now, the Bogle effect is just barely, barely even cracking the surface in Europe, in South America, in Asia. So here's a chart. The further right this chart is, the more passive the country is. Japan is not really, it's an outlier because the bank of Japan bought a bunch of ETFs. It's not really that high. But you can see the US is pretty much the furthest along. We think all of this is going to go to 75% at least before it finds some medium. But it will take 10 years probably because overseas, there's still brokers who rely on kickbacks and mutual fund or think their value at it is to pick an active fund manager. And again, in the US, we were all pushed into being somewhat intelligent on investing because we had to, they have 401k here, the 401k market. So US investors are smarter than other investors because other investors get defined benefits. And pensions. And so they never really have to learn about what fees mean and all this stuff. So that's another challenge for overseas. But ultimately, I'm a big believer in value and technology.  Plus, as we just heard, this young woman talk about spreading in Vanguard, all these Bogle headsites are set up almost like the way a religion is spread in the early days. So I think that'll all help, which brings me to the Bogle heads quote from Jack. I use it because you guys are here. He loved you guys. I mean, if you listen to the first episode of Bogle heads podcast, he goes on and says about how big of a service the Bogle heads have been. I find it interesting, sometimes Vanguard isn't hot on the Bogle heads and there's a gap formed between you guys. And again, that was another reason I chose to go with the Bogle effect versus the Vanguard effect. Because I think Bogleism is actually much bigger than Vanguard, the company. And Bogle heads are a big part of that. I'll leave you with this. The one error, everything I just described helps half the country. Only 50% of people are invested in stocks. The bottom 50% have no exposure. They do not get the Bogle effect. So at the end, I sort of say, this is sort of the next, someone should step up and in Bogle spirit, help this. I do say when, if they come up with a plan to get the underserved into the stock market, they have a great tool awaiting them when they start. So at least there's that. But anyway, that's sort of the way I was going to leave the book at the end. And with that, I will conclude the presentation and say, thank you for your time. Turn it back to Gory. Fantastic. Thanks so much, Eric. That was phenomenal. In the interest of time, so I have a few questions that I'm dying to ask you, but I also want to turn it over to the audience. So if we could turn this into semi-speed round, and if you feel the questions just, there's not that much there, we can move on to the next one. So you mentioned that the book was in a separate talk, you mentioned that the book was originally 600 pages. What did you find toughest to cut from the book that got cut? Oh, I cut a whole chapter, which is called The Game of Basis Points. I studied the art of passive management. You know these people who make sure that the index fund tracks the benchmark, what they do every day is actually that they actually provide hundreds of millions of dollars of value to investors by securities lending, which allows you to make up a basis point. So the Vanguard Total Market Fund is three basis points, but really it's only one basis point of tracking difference, because the two basis points you get in a rebate. So I just wanted to explore that, and I thought it was an some area, but everybody I showed the book to was like, this is too boring, it's just too wonky, I don't care. And so I ended up, I whittled it down, and then I just cut the whole thing. That was probably the toughest to cut, because it was literally like 25 pages, and I spent a lot of time on it, just had to hack it. So that's why I give the book to regular people like my mom, and not just nerds. Got it, makes sense. And so I'll just squeeze in another plug for the book, just that it is not a cheerleading book about Jack, it's balanced, it's objective, it's factual, there's a lot of data in there, there are a lot of personalities commenting both pro and not necessarily our icon, but it's a story well told, and it's not all positive. So thanks, Eric, for keeping it balanced.  He flew coach when possible, not first class. He enjoyed saving overspending. Can you talk about how Jack's personality type and personal concept of enough contributed so significantly to Vanguard's unique structure in that space? Yeah, well, and to your point, I did show Jack's blemishes, including while he was immune seemingly to greed and money, like most people who go to Wall Street, and he wrote the book Enough, which was about that. After talking to people, I realized what filled him, because we all have a void inside that we need to fill was adulation. I mean, he really, he could never get enough and his kids were even like, he would stop and talk to a doorman for like 15 minutes on vacation and stuff. And I think, you know, he loved it. And so we all have different needs. He just didn't have the need of money and like power, which was what draws most people to Wall Street. And that character, I think was important because Vanguard's mutual ownership structure obviously turned over all the future profits to the investors. No normal Wall Street Titan would ever do that. And so you had to have a unique character do that. And that's why Bogle deserves all the credit really for this. Let's say there was a circumstance where somebody else created a mutual. I'm not sure they would have championed it or hung with it that long, if they were the kind of person who was going to work 12 hours a day and be a good manager of people and build this huge asset manager. But he did it. And it's just an amazing story. He ended up with 80 million, which is not bad. I mean, a house at Lake Placid, so he wasn't poor. And nobody at Vanguard is. I think when people get confused, it's like people at Vanguard don't like live in the woods and eat bugs. You know, they make decent money, but nobody's getting like Ned Johnson rich. Nobody's getting Jeff Bezos rich because the owners are the investors. Whereas in those cases, they're the owners.  And I think people really responded to that. An interesting anecdote on that, when I interviewed Michael Lewis about the book, he said, how much did Bogle end up with in his net worth? And I said 80 million.  I thought you were going to say a couple billion. And even then I was going to say he left so much money on the table. That's when he gave me the quote of the book because he's Michael Lewis. He's better at words than I am. He said, never in the history of Wall Street has so much money been touched, but so little kept. That gap, that ratio is just ridiculously off the charts. And so yeah, I think Bogle structure and discipline deserves a lot of credit. And there was many times early in the Vanguard story where they denied money because it was short term traders. I mean, his protecting of the little investor early on, it prolonged Vanguard success. So I try to tell people who read this book, it's kind of a cool book about if you do the hard road, it may take a long time. But when it finally hits, it will have real staying power. It won't be like a gimmick. Okay, fantastic. Building on that. And also Eric, the screen that I see is a red or orange. If you unshare your deck, we might have you back on camera. I'm not sure that will solve it. Hold on. I did a screen share. Let me share it and then unshare it again. I had that and then here I stopped share. It goes to red for me. I don't know why. Okay. Yeah, I saw you for a second there. Okay. We can live with that. So building on that, there are plenty of phenomenal founder leaders who build phenomenal companies during their oversight. And then things change dramatically for the worse often when they depart. In Vanguard's case, it's different. We know there was management shake-up. But in terms of what Jack ingrained in the crew that would sustain for decades this commitment to keeping costs low beyond operating costs and mutual ownership, can you comment on how Vanguard incentivizes keeping costs low? Like you said, folks are decently paid. Is there a bonus structure to reward keeping costs low? Things like that. Yes, there is. Which can be tough if you work there. I think he's had several cases where the employees felt like they were being too altruistic and they wanted money. They could make money more elsewhere. So there's a Vanguard partnership plan, which does very well. There was one report that outperformed the S&P 500, which is kind of ironic. So people have different ways to sort of get over that. But yeah, they're more incentivized to keep costs low. I personally think it's enough. If I was burning Vanguard, I would stop with the low-cost thing. It's all low enough. We're good. Put all future profits that would have otherwise gone to low-cost to customer service because that's Sir Achilles' heel. This is why Bogle didn't want Vanguard to get so big. He thought we'll stop seeing our people as human souls who have wants and needs, and we'll just see them as just 30 million numbers. And that's sort of what's happening. It's unfortunate. But even with that, they're still growing because of all of the goodwill. But that's what I would do if I ran the place. I would actually change the incentive system away from the low-cost because it's done. Everybody's happy. Move to customer service and let's spend money there. I'm not totally sure how you can get the people to sort of vote that up or maybe I'm alone and they really just want lower costs to be on three basis points. But I would do that. The whole culture is designed around that. You read the early speeches and character counts. That's really what he talks about. In fact, I have this funny split-screen image of December 1987. That's the year Wall Street came out, the movie. There was people in audiences all over America watching Gordon Gakko's greed is good speech. And it inspired all these young traders to get into the market and become masters of the universe. And meanwhile, out in Malvern, the same month, maybe even the same day, you have Bogle talking about cutting like a basis point off the fund. And if we're good stewards and hang around, we should have success. And it was such a boring, wholesome speech compared to what was happening in the 80s. And I do give Vanguard the employees and Bogle credit. It's easier to do all this now because it's kind of cool in a fashion. But in the 80s, it was way more normal to party and be decadent and then have the crash. And even the 90s were kind of decadent. And Bogle just was able to tunnel vision this idea and not have any of the cycles mess with his mind, which again, unusual and way ahead of its time. Okay, great. So I'll try to squeeze in two more questions and then we'll turn it over to the audience. This one will involve sort of your personal and professional maybe evolution. Given you were well informed about the fundamentals of investing, how did your many hours with Jack and the folks you spoke with affect you personally and professionally, either investing outlook approach or values, principles, things like that? Sure. I'm back on screen now, right? Yes. I'm going to share my screen just so you can see me. Is that worth it? Yeah. Okay. So, thank you. Yeah.  He's not serving you like like sugar or he's giving you the real deal and you feel it when you're with him. I like to sense a humor. I also enjoyed, I thought I was amazed at how good he was at separating what you did with the person you were. Because remember, he was pretty savage towards everything and everybody in terms of their livelihood active ETFs. This is my whole livelihood is ETFs and he would dump on them. But he, I could tell he generally enjoyed me as a person and vice versa. I also found it interesting when I was seeing him in the first meeting, he invited me to lunch. We go out to the lunch hall there and everybody's like, oh, hi, Mr. Bogle. And he's moving real slow, but he eventually gets into the cafeteria, goes right in the middle. I mean, he must have brought the average age in that cafeteria down to about 32, right?  And I don't know many CEOs that would be that open to just walking right into the main place. They're usually in their private room and if they see somebody it's all orchestrated and scripted, they walk around the office and they're scurried off. He had no handlers. He was just out there. I will always remember that. Nobody is better than anybody else. I think he was genuinely felt like among the people. I do think he thought he was a legendary figure. But in terms of, I don't think his ego really let him separate himself from humanity. I think he was right there and he loved the investors at Vanguard. Those would be my things. I also, one of the things he did that you don't see anymore is the art of letter writing. It used to be you'd write these nice letters to people, thank you cards. Oh, I saw your article and here's my take on it. Nice email. He did that all the time. And I really didn't know that well, but he did that on multiple occasions with me. And then I interviewed people and I realized he did it with everybody. There was a guy who was a Bogle scholar who became a musician. Bogle asked for him to send his CD. He listened to it and gave this like three paragraph review of the CD, even though he's into opera. And this email was not meant to see the light of day. I reprinted it in my book, but I'm like taking that time after you've done all that in your life is pretty cool. And so it's those little things I think that really go a long way that influenced me is that now my personal portfolio. Yeah, I'm fully passive. It just, it's too strong of a value proposition. That said, my wife, she loves to invest in really beat up value stocks.  Should we buy some? And so we do a little of that. And every now and then I get caught up in a flyer like about the Bitcoin ETF right at the top. That's your hot sauce. Yeah, that's my hot sauce. But largely I'm happy with board. I've seen the numbers and I know I'm in the right place. So okay, great. So my last question, I have a bunch more that I'd like to ask, but we do need to switch it over. So last one for me for now, switching to Vanguard in the broader space. So it's clear Vanguard's maturing relative to its younger self, but they have a lot of runway in the US. Can you talk about the challenges they face internationally and whether that varies by country and where you see Vanguard in that space in the future? Yeah, it's what I said earlier. The plumbing over there is just, it's more like the US in the 80s and 90s where a broker gets a kickback from mutual funds or the bank and people have one bank they've been going through for like 18 generations and the bank gets a kickback and people there don't like, if you ask them, like you're paying 2%, they're like, okay, here you go crazy over two basis points. They are 2%, no big deal. So a lot more has to get out that they are getting ripped off. I think it will. The numbers are showing as a decline, I mean, incline in passive assets, but it just takes a while. So I think the ultimate thing you need to see first is the move from brokers to advisors from the suitability to the fiduciary model. Once that switch is over, the rest will fall in place because the intermediaries will be shoulder to shoulder with their own clients. And of course, they're going to pick the chief funds. They know they're not dumb. And so I think that's what we're looking at. So I track that percentage of broker to fiduciary because to me, this pretty much informs where we'll see passive go. This is why in many countries, ETFs are big with institutions, but not yet retail. Okay, thanks for that. Excellent. So Miriam, turn it over to you. Thank you. Thank you, Eric, what a nice presentation. Very interesting. I do have a question. I did notice that your dedication in your book was to your grandparents and the rest of the World War II generation. And as we know, Jack Vogel and Taylor Laramore were part of that generation. Taylor moved to Miami when his parents and grandparents lost their lost everything up in the Northeast. Is it possible? And also, John Vogel was intensely interested in American history. And do you think that it is possible that his past and his interest in American history and his generation has spilled over into his views of international stock investing, where he thinks that we really don't need international. You can stick with an American stock portfolio. That's a good question. Maybe. I think he just looked at the numbers and said, okay, 40% of the revenue from S&P 500 stocks comes from international anyway. And so it's all linked together. And like Buffett, we know that American innovation is almost peerless. So is there really a point to add international? And the same reason that investors are just content to pay 2% in Europe is also the same reason I think you don't see like Amazons and like Apples coming out of Europe. They're just not that like motivated, I think in general. And so I kind of, America is a special place, not to say they're not good companies elsewhere. This is why ESG, in my opinion, is much easier in Europe than here. Because you don't have to worry about missing out on an Apple, Amazon or Tesla, one of these companies that changes the world in intense innovation. So I would argue he has a point. But again, most people I talked to thought they wanted international just in case as Dan Egan of Betterment said, Rome fell, which means it's possible America has a decline and they want, you know, you want to be diversified. So but I see his point. If you had done nothing but international since when he said that you've actually been a better place today, I can't guarantee that going forward, but you would have been in a better place like he kind of was right. I don't know if it was his World War II upbringing that caused that. And maybe he was a little more patriotic than people today. I don't know, it's a good question. I think the World War II thing more informed his character in terms of not getting too high on himself, wearing the same khakis for 40 years, being thrifty, being patriotic, liking history, you know, just just having that nuclear family kind of thing. You know, his wit, he had a wit that like, I remember when I asked him about like, when he talked about thematic ETFs, he'd be like, he'd be like, he called like the lunatic fringe or fruit, fruit cases and nut cakes or something. And his, his language around some of this stuff was really funny.  Like there was a certain savagery to the wit that I felt Bogle shared as well. He just applied it to the stuff in the investing world. And I thought that was, it was fun. And this is, I think part of why I couldn't find anybody to really talk too much trash about them because even when I said, look, Bogle said this about your life, your neck of the woods. They'd be like, yeah, it's just Jack being Jack. I love him anyway. You know, there was something about that kind of wit where I knew my grandfather didn't not love me, but it's just funny. I mean, it's just, so I think some of that is lost today.  So those would be some of the things I think the World War II generation is still on him. I don't know if the international thing is related maybe. Yep. Do you have a question? I do, Eric. So thank you so very much. That was a great presentation and very entertaining. And I have to say, I hope this wouldn't make it, your book would make a great Netflix special. Sadly, I don't know anybody at Netflix. If it does become a Netflix special, you need to be in it because you're a very entertaining public speaker. It's really refreshing. So my question is this. And you talked about how Vanguard will dominate the future. But they were the disruptor of their time. Arguably, they still are a disruptor now, but we can all look what's going on with Facebook and Metta and all this stuff. So what might be coming next? So, for example, in terms of robo-investing, the role of AI, I guess on the technology side, it just feels as though there's so much coming so quickly. Can you apply a little bit on Vanguard's role in that? Do you get the sense that Vanguard is positioned for that? Yes. This is where I think you should be happy that other people were running Vanguard. Because I don't think Jack would have done a lot of this stuff. I don't think he would have launched DTS. We know he wouldn't have. He wouldn't have launched the advisory service. Maybe he would have done it for special cases or something, but he didn't want to get bigger. So I think what Vanguard is doing is smart. They're vertically integrating. They'll give you the digital robo, the full service advisor, the ETFs, the funds. BlackRock does the same thing. And we're going to find a couple of vertically integrated companies that will do anything you want. They bought a direct indexing platform. I think direct indexing is overrated. That's where you all get your own separate account and you pick out stocks based on your values. It's so overrated because it's active management disguise and the tax efficiency is overrated. And most people don't really need customization. I mean, you could arguably customize your portfolio using ETFs right now. They're pretty specific. So I think that's overrated. But the fact that Vanguard bought a DI platform shows you they're ready in case technology does change it quickly. They also are going into the private equity area because they know that the number of public stocks has declined over the last 10 years. There's only 4,000 public stocks. There were 7,000 companies are going public less. They don't want the headache and stuff. So that is probably good because if you are an investor who wants diversified portfolio, you may want a slice of PE because that is capturing American capitalism. And so again, this is Vanguard. The company is going, you're going to see them do all this and try to keep up all of this. Some of the Bogleheads are going to go, that's not my Vanguard. But to your point, would you rather them not do it and not have the Vanguard effect sort of going into private equity? Maybe private equity needs a little Bogle effect there. So it's a complicated topic. But I do think technology will make things easier. But at the end of the day, nothing, even if technology happened, like if technology would have happened regardless. But I still, I do not think we're anywhere near three basis point portfolios without Bogle and the Vanguard effect. Low cost, I think, almost should be entirely attributed to him. But technology certainly is going to continue to change things. I just think we're far away from tokenization or even the direct indexing concept. I think people are very happy to have five funds in their portfolio. It's very simple. I'll outsource all of that stuff to them. It's a great deal for the cost. I just think we're going to be here for a long time. Some people try to look for the next thing that's going to disrupt. But I'm like, wait a second. Mutual funds hung around for 100 years. ETFs and low cost, like I said, funds didn't get below 10 basis points until 10 years ago. So I would say the cheap beta is going to last 50, 80 years at least in the form probably of the ETF. So I would say that disrupting that they're doing is just getting started. So I don't know if there's really much else to disrupt for a while. I think we're in a good spot. I think how they're able to get information to you and how you're able to look at your portfolio I think will become easier and easier though and more convenient through technology. Thank you so much, Eric. And again, it's a privilege to have you with us. Great job. Thank you. Eric, you mentioned in your book about Jack Bogle being a force of nature. I like that because one could see that he was a force of nature. And he also, do you think he really relished the idea of being a force for the average investor? That you mentioned that in your own family, you have a family, you have things that you have to do. You cannot spend your whole day watching stocks, worrying about your stocks, individual stocks, selecting your own portfolio of stocks. And it is difficult to raise your family, especially nowadays without pensions. You have to create your own pension. You have to have a retirement fund. What asset allocation? How much stock? How much bond? How many bonds? How do you buy your bonds? And Jack Bogle, he was so interested in the average person. And what I have read about people who interviewed with him when they applied for jobs, his first questions were not about their experience in the financial industry. It was how did you grow up? Did you work when you were in high school? He was interested in the person. And he wanted to make investing simple. And yet he knew the simple was the best. That you could have your index funds on hold. You could just have them in your portfolio and basically not worry about them. And when you retired, you would have a nice pot of money there for your family and for you and for your retirement. Yeah, the word I think that he would describe as predictability. Index funds had predictability, which active funds do not. And that's really helpful in their staying power and their ability for you to just tune out. And like Michael Lewis said, it's an unmeasured benefit. And it's great. I mean, again, there's so many dimensions to this story. Your idea of him hiring characters, I think that was important because he also wanted to hire people who probably would get psychic income from working at Vanguard because you're not going to make the most money on Wall Street there. But you're going to feel good about what you do. And you're probably going to settle down in Malvern, get a family, a suburban house, and be less likely to get hired away. So it makes a lot of sense, even if that wasn't his main motive. I also think that like one of the stories I heard a lot, which I had to come from the book was he really likes sports. So like, I think Gus Souter came in with a tennis racket in his bag or he had basketball shoes on that he forgot to take off. There were a couple stories of key executives at Vanguard who got hired simply because they came with something sports related hanging off of them. And Bogle went right to that. Oh, what do you play? How do you play? Because Bogle loved playing squash. And so he liked that competitive nature.  So I definitely heard some of those stories. There was one guy who told me stuff and one time he came in to interview with Bogle and Bogle like fell asleep during the interview. Because he's working really hard. I could see that like, you know, just kind of nodding off during the interview. That was fun. It was a good story. But yeah, no, I think those are all important things. And again, I keep going back to the word weird.  I get that. But like, think of all the big companies that have hedge funds, they're looking for people who can like apply some like complicated math and like have an edge. And that wasn't his deal. And I think you're right. He kept it simple in how he hired as well. And many of those people stayed for a long time. And many of them who went on to other things speak fondly. And I tried to find a former assistant or even like someone near him that was like dumped on or something. And I couldn't really find it. Like his former assistants were among his biggest fans.  And he was even, I mean, guys seem pretty, pretty, pretty good model of what a person should be. Like I said, he wasn't perfect. But you know, in the intro, I say, look, the net positive is the accurate framing here. It just, there are a couple people out there, Dan Wiener in particular, and this other guy from the Philadelphia Inquirer, who like they couldn't handle my take. They're like, it's too positive. I'm like, I mean, I'm just looking at the data. I'm looking at what this guy did. And I'm like, it's incredible. Like just call it. I'm calling it like I see it.  And that's why it's all corrupt. I'm like, you're looking at a tiny spec in this bigger picture. And even if they made $2 million, the fee still three bits, like it doesn't change that. So there's a lot of nitpickers, there's a couple of nitpickers to say that you could really go and you could have a negative slant on the guy and everything he did. I guess you could be very difficult. I feel like you'd have to do a lot of mental gymnastics to say this guy sucked. I just, I just don't see it. So I thought, I also want to read a book for my kids. I had a chance to hang out with this great man. He completely changed it. And I wanted to give a Gen X version of him, because like I said, he had a dash of punk rock, a real dose of populism. These things are kind of popular and interesting, because most people think of mutual funds as interesting as C-span. They think of them as like boomer. And I really wanted to sort of reframe him to a younger audience. And so my kids later, they're not interested now, but maybe they will down the road that, yeah, this is a cool story. And I framed it, you know, there'll be many books written about him. I won't be the only one. There's already been a couple. And I think down the road, there'll be more. And, you know, people can make their own decisions. I think I heard there's like 800 books written on Winston Churchill. I think Bogle could at least get a dozen. Alan, do you have a question? You're on mute. Alan, yeah. Yes. Thank you. Thank you, Eric, for an excellent presentation. Gene in the chat has a good question. Do you think Vanguard will continue to capture AUM growth at the same pace after their ETF share class patent expires next May? Yes. That patent expiration, it's not as huge of a big deal to the rest of the industry as people think. Also, you have to keep in mind that the rest of the industry that wants to use this patent, a lot of what they want to do is use it for their high-cost active mutual funds. But again, just like active.transparent ETFs, you can create cool new structures, but the metaphor I use is you can have a dog food bowl that's state-of-the-art, but the dog has to want to eat the food in it. So you could take, if an active mutual fund is seeing outflows and people are leaving, putting an ETF share class on isn't going to do much. We've seen Fidelity Magellan is a great example. They launched the clone of the Magellan Fund in an ETF format about a year and a half ago. They have no assets. Nobody cares. Most of the assets in active funds are mirage. A lot of the customers have left. What's left is just that pie chart I showed. It's just assets based on the market having gone up. So that's why if this bear market continues, and for like a two years or so, I'd say we're going to see these mirages collapse and they're going to team up and get bought. So you could see like an ETF issuer like Invesco buying T-Row price. It could get crazy. So no, I don't really think it's going to change much. And the other thing is people ask me all the time, well, a lot of people have cheap index funds and ETFs. Why does Vanguard continue taking the most money? I'm like, well, they built up a brand of being like for the little guy and low cost for 40 years before anybody else followed them. That's a 40 year head start with branding and you cannot just magically erase that. And a lot of times in the book, people would say this, they'd say Vanguard lowered fees because they wanted to, everyone else did it because they had to. And that mattered to some people. So I think for those reasons, I don't really think switching this or doing that will really change this whole trend much at all. Excellent answer.  And he said he loved it because it was and you put out the quote on your screen, individual investors helping other investors. And for the main purpose of helping each other. And he thought that when he had quotes from de Tocqueville about the American system where people band together in groups to help each other. And he really liked it. When you go on the Boglehead forum, what strikes you about the forum? And by the way, could you tell everybody how you were banned from the Boglehead forum? Maybe Lady Geek wants to go over that story, but I'll tell you anyway. I was researching the book. I had not gone to the book. I knew they existed. I knew the forum existed. I had seen it. I just wasn't on there a lot. I live in this world. So I didn't really feel the need to get an account and do that. But I will say the specificity of what's shared on there is really interesting. It's like how to roll over 401k. It's really cool stuff. Very, very useful. Again, not real flashy, but highly practical. And the website, it looks like it's stuck in 1996. No offense. But we like it. It's part of the charm because it looks like early internet. But there's nothing that there's no ads. There's just nothing. It's pure. So when I went on there, I got an account and I wanted to interview do-it-yourself Vanguard investors. I said, hey, I'm this guy writing a book on Vanguard and Boglehead. If anybody out there is just a regular Vanguard investor and like to be interviewed, let me know. And so I got an email, I think a day later from Lady Geek saying, you are disqualified. That's illegal. And you have been banned. So I was like, oh, really? I was just, you know, and I explained my case. She was, okay, I'll give you a second chance. So she did give me a second chance to her credit. But in the book, I say that after reflecting on that, I respected it because there is a rule you can't solicit. So the idea of a book is something I would make money on, even though I make very little money. The author gets very little money unless you're like Stephen King. The book would be making me money. And then you'd open a Pandora's box potentially for other people like me. And who wants that? So I actually respected the decision. And because you're going to have to be, you're going to have to be the bad guy from time to time to keep that pure. So anyway, that's my story on that. But certainly the forum is awesome. It's got a wide reach and a dentist friend of mine who I play golf with sometimes is like, I saw somebody talk about you on the forum and it was some tweet I had about, might have been about the Bitcoin, I forget, but they took a tweet of mine and he saw it on there. And so here's a guy who's a dentist who's on there and I asked him what your portfolio looks like and he's got a very good portfolio. So he worked it out to himself, not through a broker, and the Boglehead's forum helped him get there. And that's obviously not affiliated with me. He got there already when he brought that story up. Well, that is what Mr. Bogle wished, I think. That's what he wished for individual investors to create funds, the index funds, so they could do it their way or do it themselves and not be necessary for them to be, you know, pay a lot of money to brokers and to financial advisors for assets under management. Yeah, the advisor, I asked him in the last interview we had, what do you think is going to happen to the advisory world? And he said, well, I think they're going to move to a more professional way to get paid. So he thought the 1% fee that they got, even if that gets brought down by Betterment and Vanguard and such to like, I don't know, 50 bips over the next 10 years, he thinks ultimately, that's not enough, it's going to have to switch to hourly or as you go. Because if you really look at the numbers, if you go to see your doctor, the equivalent, going to see your advisor is like the equivalent of like seeing your doctor like 30 times if you have a decent amount of money.   But that people don't see the 1%, they don't write a check. So it becomes more difficult to disrupt that. But I do think over time that will happen because there are people who are out there promoting the hourly model and ultimately you might start to see a migration over to it. But it's got more challenges than the active mutual fund world in the 90s. But it should be interesting. That's an area we watch a lot. Are there more questions from the chat? Alan, Gory? I don't see any in the chat, but I'm also not watching it closely. There's a real quick one. The person said, did I misunderstand, does a typical European really pay 2% to manage their funds? Yeah, actually a lot of times they pay more. Between the broker, the bank, the funds, it could be 5%, 6%. I went to visit Vanguard in Europe and I remember the guy going, you have no idea, it's ridiculous. And just looking at active mutual funds alone, the average fee paid over there is almost near 1%, it's like between 1.5% and 2%. It's worse than where we were in the 80s and 90s. And you see the same thing in Canada. I've traveled all over. Again, I've gone over the theories on why, but people just have way more tolerance than here in the US. And I don't know, we're the same culture though that created Amazon. We'll gladly leave them all and go to Amazon because it's cheaper and more convenient. So I give Americans credit. We are very good consumers. We are a consumer culture and we don't have much to depend on. We have to look out for ourselves. So I think that really makes a big difference because I agree with you. I would be like, it's absurd amount of money. And let's say you pay 2%. I just showed that chart with Vogel. Over 50 years, that 2% gap is worth like 200 grand. Basically, the intermediaries take 60% of your gains over 50 years. You only keep 40% of your gains based on that, just that 2%. So little bit 3, 4, 5, it just becomes like you almost forego all of your future gains, all of it. Like I said, a lot of the SEC and people in the media, they go after really crazy cases like made off, which definitely you need to call that out. But there's a general blob of money, the big blob of money, where the intermediaries, there's almost stuff that should probably be illegal. But look, it's been going on for so long and seems like no big deal. But when you convert all of that to dollars, it's crazy and it almost seems unethical at the very least. And I say that as somebody who feeds downstream from these people who are friends with active managers, some of them are very nice, but they're all caught in this incentive system that rewards all this. It's an incentive system, which is really the ultimate issue. That's why in the 70s when he decided not to pay brokers, that really fired the first shot that changed everything. Because now the incentive system, he would not be part of. So he set up camp alone outside of the incentive system. And as he quoted Field of Dreams, he built it and hoping they would come. But most people just unwilling to risk their whole career and a decade of profits for that are, like I said, it's unusual to do that. So funny, I interviewed the guy from Flash Boys, Brad Kutsuyama. He's the guy who started that exchange that is bogal-ish in a way that it doesn't take kickbacks. And when I told him that it took Vanguard 25 years to get to 10% market share, he said I made his day. Because they're having a tough time. If you operate outside of an incentive system, be prepared to be patient. And so that is the problem in Europe. But you have Vanguard and BlackRock and other companies coming in and trying to talk about this stuff and bogal heads. Ultimately, I think it'll change. But yeah, no, it's wild. I've been shocked when I actually physically go to these places and hear these stories, especially here. Because when BlackRock goes to three bits and Vanguard's two, we actually see money. I call it the power of one basis point. People here are that tuned in to cost. That they're worried about one bit or 10. And over there, 100 is no biggie. Wow. Thanks for that, Eric. I'll ask, I'll post two questions. And I see it's 940 Eastern. So you let us know when you need to jump. One is, more broadly speaking, Vanguard, you're saying is just beginning disrupting certain spaces. But overlaying your Dan Egan quote about Rome fell or empires fall applied to the US. Let's overlay that to Vanguard. And what do you think the threats are to Vanguard? Where are they vulnerable? What should they be worried about? Customer service. Even on the Bogleheads platform, and Lady Geek will tell you about this, people trash Vanguard's customer service right on the platform. And so that's not a good sign. These are supposed to be the biggest fans. And then conversely, if you go to Yelp.com, where I live in the Philadelphia area, Vanguard gets 1.5 stars. Okay. That's out of five. The reviews are all awful. You know what else gets 1.5 stars? The Walmart on Columbus Boulevard, which is like a cesspool.  It's almost like, it's just pandemonium. There's long lines, the carts don't work, there's nobody can help. So Vanguard has the same Yelp review as Walmart. So that's a big problem, but it's still not big enough yet to curb their flows. So ultimately, I think what's going to happen is regulations going to kick in and say, look, no company can own say more than 15% of a stock. And that will cat Vanguard. But again, it doesn't matter. All these little many Vanguard's have been formed in the way of other companies copying them. So the genie is out of the bottle, the ship is sailed. It's almost meaningless. In fact, I think Bogle, if he had a choice, would say, yeah, regulate Vanguard right now. We own too much.  And let these other people start getting assets into their cheap stuff. And that will, again, curb our market share, which was my ultimate dream. But outside of regulation, I'm not sure what else could do it. Okay. Great perspective. So my last question, in terms of, you mentioned Jack's commencement speeches, or you could read these things over decades sometimes and how there was this through line where he was unchanged on certain things, certain values and principles. But he also must have evolved in certain ways over those decades. So can you talk about those two contrasts? And what ways was he absolutely firm and unchanging that you haven't already covered? And then in what ways did you learn that he evolved? And just something that's fun for me to share, speaking of the early Jack, I happened to get super lucky on eBay one day and purchased Jack's graduation album from Princeton. So this is from the 1951. I don't know what's in view here there. So 1951 from Princeton. And so to give folks a sense of Jack, mind you, he autographed this when I sent it to him in 2014. Hopefully that's readable. So you see he was in student government back then as well. So he was, you know, as far as I can tell an activist at heart for a long time.  His great grandfather was a gadfly towards the fireman insurance business. And when you read his great grandfather's pamphlets, it's all bogal. It's like, gentlemen, lower your fees. That's the quote he used that he got from his great grandfather. So there was something in the bogal blood about that. And in the book, I say, honestly, he might have been miscast. As you said, I think government or military or maybe even medicine might have been a more accurate place for a guy like that. But we're actually got lucky that he ended up in this industry. This industry probably needed a weird guy like that who was miscast. But to your point about how he stayed the same, stewardship and costs seem to be constant. What changed was that he would launch like a quant fund, he launched value growth, he launched all these things. So he did change with the Times. He built a mutual fund company that had several options for you. But over the years, he would come to find them all and exercise in futility.  He didn't like the value growth funds, which are now the two biggest smart beta funds in the world. They have like 200 billion dollars each. And he thought it's just a waste. And that's how honest he was that he would, you know, obviously had problems with his own innovations over the years. And he settled into, well, you just buy an S&P 500 or total market US funds. And really, there's nothing else to do. And so that put him at odds with everybody. But the stewardship and low cost, I think that thread was throughout.   Like I said, you can be high cost if you're small, you need the money. And you can be active.  And I think when you have a, you know, when you're getting $800 million a year in dollar fees to service one fund, you're not a good steward. So again, it was all about the specific situations and the word stewardship that I think was the common thread. But the crafting on his own innovations made it again, who does that?  This, it's just very unusual for someone to level their own company and most of the work they did there. Weird guy. And you've commented in similar to Steve Jobs that ultimately it was a journey towards simplicity, right? Yeah, also Steve Jobs has this rule. If you don't cannibalize yourself, somebody else will. The first iPod comes out, it's 400 bucks, holds 1000 songs, and it's huge. Second iPod comes out two years later. It's 300 bucks, holds 10,000 songs, and it's smaller. Rinse and repeat, and nobody can catch Apple. Bogle did this.  The active mutual industry to the opposite. They kept all the money, didn't do any of that, and they paid the price. So I do think Steve Jobs had a hard core element in him that was similar to Bogle's. Although Jobs did it without the mutual ownership structure, purely just that of this makes sense business-wise. So, you know, there was a relation there. I always thought, and I thought these are two guys who started doing this early on in their life and were consistent the whole time pretty much, and put out products. He doesn't like to wear products, but I'll use it anyway. You know, just the idea of getting a eight basis point, five basis point index fund into the marketplace is such a gift for people, again, that you could talk about all this stuff, you could talk about behavior and local, but you need something practical to actually use to implement all this. So providing the product was also important. And like Jobs, who was ultimately a visionary, you ever see an interview with Jobs, he's minds all over the place. He's clearly very into the, you know, he's got a vision and he's got thoughts and he reads journals. At the same time, he could manage a huge organization to be a manager of people and a visionary. These two things don't collide a lot. Normally one or the other, Bogle also had both. So usually when you combine a visionary, someone who has academic knowledge, someone who has competitive spirit and can actually manage people without pissing them all off and create a huge structure, those people tend to change the world because they have like four or five things that normally we only have one of. Got it. Excellent. So I don't know, Miriam, if there are any other questions in the chat, but Eric, as we're 10 to 10 Eastern, before we wrap up again, I want to thank you on behalf of the Bogleheads community for phenomenal presentation in Q&A. And before you go, what's the best way for folks to find you? I would say here, I'll pull up my Twitter page here and you can find me on Twitter. Where is it? Here we go. At Eric Valchunis, I don't know why I can't click on this bad timing for my internet to not work, but at Eric Valchunis on Twitter, and let's see here, profile. Twitter's gotten a little crazy since Elon Musk took over, but I think it'll calm down. But anyway, here's my home page here if it comes up. And the other way you can find me is I have a podcast called Trillian's and I have a TV show called ETFIQ that's on Bloomberg TV every Monday at 1pm. But if you look at my feed here, you can see like it's a lot of financial information. I talked about the Vanguard story on here earlier. Anyway, I think this is a good place and my DMs are open. So if you go to message, you can message me whenever you want if you have a question. And this is all free. You can find me the terminal, but most people that are retail don't have a terminal. So I'll say that, but assuming that's not how you're going to get me. Fantastic. So thanks for sharing. And then I'll just check in with Miriam really quickly, any closing comments and thanks again to all the team that helped organize this. Yes. Thank you, Eric, so much. It was very interesting, informative, delightful. You brought Jack Vogel to life for us. It was really wonderful. Thank you again so much for giving us your time. I'd like to thank the people who came and the Vogelheads who came, the attendees. Thank you. The co-hosts. And Gory, thank you so much for your questions and for bringing Eric to us. Like us, Miriam. Thanks for co-hosting. We do have another meeting coming up. Carol