Five Principles for Investing by Jack Bogle

John Clifton "Jack" Bogle — founder and former chief executive of The Vanguard Group — gives five simple principles for investing at the World Affairs Council of Philadelphia event in 1997.

The Five Principles

1. Invest you must

The biggest risk is the long term risk of not putting your money to work. Never think you know more than the market does. You're apt to be wrong if you do.

2. Give yourself all the time you can

Compound interest is a miracle. Time is your friend.

3. Have rational expectations about future returns

In good times and bad times alike, this too shall pass away. Your emotions can kill you. Impulse is your foe.

Interestingly, the adage above is also referred to by Benjamin Graham — Warren Buffett's mentor — in framing his own "central concept of investment".

"In the old legend the wise men finally boiled down the history of mortal affairs into the single phrase, “This too will pass.” Confronted with a like challenge to distill the secret of sound investment into three words, we venture the motto - Margin of Safety."
Benjamin Graham, Chapter 20: “Margin of Safety” as the Central Concept of Investment, The Intelligent Investor.

4. Rely on simplicity

Basic investing is simple. Remember sensible asset allocation, middle-of-the-road selection, careful balancing of risks and returns, and costs (of excessive trading, active fund management etc) which can kill long-run returns.

5. Stay the course

No matter what happens, stay the course.

Bogle, Buffett and Graham

There are many similarities in the investment principles of Bogle and famed Value Investor Warren Buffett (who Bogle himself refers to in the above talk); as well as those of Buffett's mentor, Benjamin Graham.

For starters, Bogle and Graham have expressed very similar views on the issue of Timing vs Pricing in investing.

Bogle about Graham

In his Foreword to the 2005 reprint of Graham's original 1949 edition of The Intelligent Investor, Bogle himself writes:

"The basic principles of in­telligent investing that [Graham] set forth... have remained virtually intact and unassailable."
John Bogle, Foreword (2005): The Intelligent Investor by Benjamin Graham.

Index Funds — which Bogle is credited with the creation of — were also the very first of the investment strategies recommended by Graham.

Graham Resources