What Does "Enough" Mean to You?
How Did Bogle Manage to Get $80M?
Some time ago, I read a book by John Bogle. I know many of you here will know him, but for those who don't, he is the father of index funds. He has been one of the people who has brought the most money to investors and has kept the least for himself.
Why do I say this? For a simple reason, if you are one of those who likes to search on Google: "XXXX wealth". You will see that John Bogle, before he passed away, had approximately $80M. Although it is a more than relevant amount, it is far from the amounts that people dedicated to investment banking can have.
These latter, despite managing much smaller amounts of money (Vanguard Group has over $1.5T in assets under management), have blatantly taken money from their shareholders.
However, Bogle did not do that. Bogle understood that he must leave something that endures and that allows his six children to have enough to do what they want, but not to do nothing.
You Are a Speculator
The first to make this clear was Ben Graham with 'The Intelligent Investor', where he made a distinction between being an investor and a speculator.
Today I ask you to think more deeply about something you have heard many times: "To be an investor, you have to treat your stocks as if part of the company were yours". What they don't say is that if you treat a company as your own, what you are really saying is that you want to obtain the return or profit that this company generates, no more, no less. If today you buy a share of Apple and it goes up 1%, it doesn't mean that Apple has made a 1% profit on the stock price. However, in the long run, this value will stabilize, and you will receive all the profit the company generates. Markets are very inefficient in the short term, but very efficient in the long term.
When you buy index funds, you are taking the profit of the entire market, and this is great.
In 50 years, 90% of the companies in the S&P 500 will not be in the index. In fact, it is most likely that the microcap you think will be the new Apple, will have disappeared.
If what you are doing is trying to pick the new Apple, I'm sorry to say that you are speculating.
How Did Bogle Manage to Get $80M?
As he acknowledges in his book "Enough", he did not do it through charging fees on the funds. In fact, he himself says that everything he received in this way, he donated to charity.
What he did is much simpler than all that.