This week, we speak with Jack Brennan, chairman emeritus and former CEO at The Vanguard Group, which is one of the world’s largest investment companies has more than $6 trillion in assets under management. Brennan joined Vanguard in 1982, was elected president in 1989, served as chief executive officer from 1996 to 2008, and served as chairman of the board from 1998 to 2009.
We discuss what it was like being Jack Bogle’s hand picked successor. Bogle, who was CEO from 1975 to 1995, announced Brennan as heir apparent in 1989, in part due to concerns over his own health (Bogle had a heart transplant in 1996). Even with those expectations, Brennan felt the weight of the office of CEO and its responsibilities on his first day in ways far beyond expectations.
Nearly all errors and mistakes in investing comes down to human emotions. He explains why “how markets traded today” is insignificant to investors, but it doesn’t seem that way when markets become volatile and you lose the ability to sleep. Vanguard calculated that their own investors not panicking in the Fall of 2008 actually saved those investors about a trillion dollars in trading losses.
Brennan discusses why Alpha matters far less than meeting your personal goals and objectives, managing money with purpose towards your own financial plan.
The current attacks on passive investing date back to AT&T’s index fund in 1969 and when Vanguard began in 1974. he notes that they are off base and flawed and have been proven wrong by time. The academic critiques are similarly flawed logic and wishful thinking. Brennan observes that as soon as half of all stocks are held by passive indices, companies will have a class of “permanent owners;” this frees up corporate management to focus on the long term business management, and not on the next quarters earnings.
A list of his favorite books is here; A transcript of our conversation is available here Monday.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Jonathan Miller, co-founder of Miller Samuel. He blogs at the Matrix Blog. Miller is the go-to expert on real-estate appraisals and transactions, running one of the most prominent real-estate data analytics firm, and their data engine powers numerous real estate brokerage research nationally. He is also sought after as the go-to appraiser for many of the most expensive penthouses in Manhattan.
Jack Brennan Authored Books
More Straight Talk on Investing: Lessons for a Lifetime by Jack Brennan
Straight Talk on Investing: What You Need to Know by Jack Brennan
Jack Brennan Favorite Books
The Bully Pulpit: Theodore Roosevelt and the Golden Age of Journalism by Doris Kearns Goodwin
The Splendid and the Vile: A Saga of Churchill, Family, and Defiance During the Blitz by Erik Larson
The Earth Beneath Their Feet: The British, the Americans, the Nazis and the Mountaineering Race to Conquer the Himalayas by Scott Ellsworth