Jack Bogle’s last interview was about how you can’t time the markets

At a time when cagey investors are either throwing in the towel in anticipation of a wider market downturn or doubling down in hopes of a recovery, it’s the sage advice of Jack Bogle who passed away on Wednesday that come to mind, as members of the investment community pay tribute this week to the ground-breaking champion who almost single-handedly opened up the markets for the average investor.

“Jack Bogle has done for America’s investors as a whole than any other individual whom I’ve known,” said Berkshire Hathaway’s Warren Buffett in a statement. “A lot of Wall Street is devoted to charging a lot for nothing. He charged nothing to accomplish a huge amount.”

Bogle’s Vanguard Group began in 1975 as an independent, client-owned company offering low-cost services and featuring a novel creation at the time, the First Index Investment Trust, now called the Vanguard 500 Index fund, which became the first to track the performance of the S&P 500. The index fund stood as Bogle’s legacy and an expression of both his criticism of fee-gouging actively traded funds and his belief that investors — from Wall Street on down to retail — don’t really have the foresight to predict the market’s ups and downs and are better served by long-term-hold investing.

In his last interview with CNBC, recorded last September, Bogle said, “In the bad years, the crisis years, the Dow dropped by about 50 per cent and people panicked and got out, of course, even in the mutual fund business and particularly in the ETF business. A lot of net liquidations at the lows. And now we’re back, I think the gain from that level is maybe 200 per cent.”

“So it shows you that when you act on the emotions of the marketplace, you’re making a big mistake,” he said. “I’ve always said, stay the course, don’t let these changes in the market —even the big one that was a 50 per cent decline— don’t let that change your mind. And never, never be in or out of the market. Always be in at a certain level. Never be out and think that you can get back in because your emotions will defeat you totally.”

The advent of the index fund triggered a competitive decline in the fees charged by actively managed funds, with data continually proving Bogle correct that index funds generate better returns than most managed funds once fees are taken into account.

In a 2008 interview with the Associated Press, Bogle called index investing “the ultimate buy-and-hold, all-American business strategy. It is the gold standard, there is no way around it. Mathematically, indexing wins.”

At the same time, Bogle was not averse to being aware of market trends. Last October, at the annual “Bogleheads” Conference in Philadelphia, Bogle made the prediction that over the next decade, stock and bond returns would be much lower than their historical averages, amounting to just four per cent annually for stocks and 3.5 per cent annually for bonds, which is all the more reason to keep your hard-earned dollars out of the hands of high fee-charging fund managers, as Bogle would presumably say.