John Bogle on Investing: The First 50 Years

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INVESTING IN THE NEW MILLENNIUM: THE BAGEL AND THE DOUGHNUT

Sunday Breakfast Club of PhiladelphiaJanuary 5, 2000

MY TITLE IS INSPIRED by William Safire's essay, “Bagels vs. Doughnuts,” published just a few months ago in The New York Times. These baked goods, Safire tells us, are similar in shape but different in character: Bagels are “serious, ethnic, and hard to digest. Doughnuts are fun, crumbly, sweet, and fattening. … The triumph of bagelism in the 1980s and early 1990s meant that tough munching was ascendant; the decline of doughnutism meant that soft sweetness was in trouble.” But, Safire commiserates, the doughnut is coming back into the mainstream. Why? Because, with the advent of—Heaven forbid!—the blueberry bagel and the bagel sandwich, “the bagel has moved toward the center, its crust going soft and spongy, and lost its distinctive hard-boiled nature.”

Well, surprising as it may seem, in all of this food for thought (pun intended), I find a message about bagels and doughnuts in each of the three subjects on which I'd like to reflect with you this evening, a year before the start of the new millennium, which, as only a killjoy would point out, doesn't begin until January 1, 2001: (1) The outlook for the stock market; (2) the coming change in the mutual fund industry; and (3) the challenges faced by Vanguard—the enterprise I founded on September 24, 1974, just over a quarter-century ago—as the new century begins.

1. The Bagel and the Doughnut in the Stock Market

During ...