Vanguard of wealth

Piling up profits in passive investing

Good morning, astute asset allocators. This is your Stock Market Rundown for March 13th, 2024. Thanks for reading. Let’s get started:


There’s a old story of a visitor to New York who was being shown around the financial district. When his tour guide pointed out the bankers’ and brokers’ yachts in the harbor, the naive visitor asked: “where are the customers’ yachts?” 

The investment industry is rigged in favor of those proffering advice—not their clients. In fact, most investment managers underperform broad stock market indexes. So you’re literally paying more, to do worse.

But there is an alternative, and for that, you can thank Jack Bogle. In 1974, Bogle founded Vanguard to offer low-cost index funds to investors. Index funds are designed to—like the name says—track a broad market index, such as the S&P 500. 

They’re based on a set of mechanical rules, rather than the whims of a portfolio manager who might make a mistake if he has indigestion from too many food-court french fries at lunch. By launching Vanguard, Bogle popularized passive investing, which emphasizes reducing transaction costs and holding a diversified portfolio. 

Fast forward to today, and Vanguard is an investing powerhouse managing $8.7 trillion, with 20,000 employees globally. (If you’re seeking opportunities in the C-suite, apply now: Vanguard is on the hunt for a new CEO.)

Even Warren Buffett is a fan: his holding company, Berkshire Hathaway, owns the Vanguard S&P 500 ETF. “In my view, for most people, the best thing to do is own the S&P 500 index fund,” Buffett quipped in 2020. Even the world’s best-known active investor isn’t opposed to occasionally getting passive.

What do you think? Chat with me in the comments:

  • Costco is on sale: the retailer’s shares took a dive as it missed earnings due to lower gas revenue. Clearly, the price of the stock is more volatile than that of the $1.50 hot dogs.

  • Taiwan Semiconductor is getting $5 billion in federal grants to build a chipmaking plant in Arizona. Maybe they should change the name to Tucson Semiconductor.

  • Ross Stores said it expects its 2024 results to miss estimates. With inflation pressuring household budgets, customers aren’t rushing to splurge on items like an Ed Hardy loofah or Tony the Tiger wallet

  • iPhone sales are down double digits in China thanks to competition from domestically-made Huawei smartphones. I’ll try them if they don’t autocorrect my swearing… I have never in my life intentionally texted the word “ducking”.

That’s me signing off for today, shipmates. Let's reconvene tomorrow morning for more of the same. Yours in capitalism, The Axe

 PS: how am I doing? I value your feedback, and I read every email, so hit reply and say hello — I’d love to hear from you.

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