Nearly all errors and mistakes in investing comes down to human emotions.
That’s according to Jack Brennan, chairman emeritus and former CEO at The Vanguard Group, one of the world’s largest investment companies with more than $6 trillion in assets under management. Brennan, who was Jack Bogle’s hand-picked successor, joined Vanguard in 1982, was elected president in 1989. He served as chief executive officer from 1996 to 2008, and served as chairman of the board from 1998 to 2009.
He explains why “how markets traded today” is not as important to investors as it seems. Still, if and when markets become so volatile they cause you to lose your ability to sleep, you have a problem to manage. You can do that by either lowering your risk levels or accepting that volatility and drawdowns are part of investing/ Either way leads you towards the goal of being a successful long-term investor.
By not panicking in the Fall of 2008, Vanguard calculated their own investors saved about a trillion dollars in trading losses.
Brennan also 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.
A list of his favorite books is here; A transcript of our conversation is available here.
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.
