Vanguard's Brennan Knows What Isn't Important

Almost all investing errors and mistakes come down to human emotions. So says John “Jack” Brennan, chairman emeritus and former chief executive officer at Vanguard Group Inc., which manages more than $6 trillion. Brennan, who was John Bogle’s hand-picked successor, is this week’s guest on the Masters in Business podcast.

Brennan explains why the notion of “how markets traded today” is not as important to investors as it seems. But if markets become so volatile that they cause you to lose 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 process leads you toward the goal of being a successful long-term investor. By not panicking in late 2008, Vanguard calculated its investors saved about a $1 trillion in trading losses. Brennan also discusses why “alpha” matters far less than meeting your personal goals and objectives, and managing money with purpose toward your own financial plan. The current attacks on passive investing date back to the late 1960s and when Vanguard began in 1974. He notes that critics have been proven wrong by time.

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 iTunesSpotifyStitcherGoogleBloomberg, 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 expert on real-estate appraisals and transactions, running one of the most prominent real-estate data analytics firms. Its data powers real estate brokerage research nationally. He is also sought out to appraise many of the most expensive penthouses in Manhattan.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

©2021 Bloomberg L.P.

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