The two pioneers of index funds have a message for long-term investors: the tech stock boom is nothing new.
“One of the really key points is, it’s been a tech world for several decades. Tech stocks typically start low and get big,” said Mac McQuown, co-founder of Dimensional Fund Advisors and one of the inventors of index equity funds.
The recent excitement over FANG stocks is the latest in a long trend of technology companies seeing rapid growth in stock price. McQuown was joined by his counterpart in index fund innovation, Jack Bogle, the founder of Vanguard Group. The two were honored with the Melamed-Arditti Innovation Award at this year’s Global Financial Leadership Conference.
Bogle gave his classic view for long-term investors that led to his thinking behind index funds. “There’s no point in betting. Own the market. Hold it. Keep the cost down, and don’t peek.”
Regardless of an investors approach, Bogle underscored that investing is always a give and take relationship, where one person’s investment is another person’s cash.
“One thing one has to realize very early in the game in the investment world is every purchase is a sale. So if some crazy guy is bailing out on the market at the low in February 2009, some brilliant guy is bailing in.”