 We've got a combination of questions from the attendees, the forum, and we have some late submissions, so I'll improve particularly. The first question is from, got there late, Jack, first of all, thank you again for founding Vanguard and devoting your professional life to helping the little guy in investing. What can we little investors do to help ensure that Vanguard remains Vanguard? And what do we need to watch out for? And how can we and our decision to preserve this wonderful company that you started protected from potential threats from road movement and without? Well, that's a challenging question. That's why you got a first, Jack. First, I think the potential threats for without are the minimalist, and maybe the non-existent, and who's going to be able to do what we do better than we do it. I know that a lot of people can do it, but they can't do it better. And that's just bragged ocean. If I was a money manager, say Peter Lynch, I'd say nobody can do it better than I can. You shouldn't believe me. I'm just talking about the math facts. I've said 10,000 times the relentless rules of humbler arithmetic. So how about from within? That's the biggest threat from within. Well, first in size is basically Vanguard has two modus operandi. One is on the investment side, and I think that's the without. I don't think that's the challenge. The theories are right. The numbers are right. The people are right. Because of the insight, how do we keep the values we have as we go from 27 crew members from me to 1,000, and then to 5,000, 10,000, and now to 13,000, or rated growths. But people, and so do a lot of the technology, probably have twice as many assets under management per main course, remember, as we did 10 years ago, something like that. And then there were quite a few. So there's a little bit, I have to say, I don't know what all those people do. I wonder what else they do around. Maybe Mike Nolan knows. But how do you keep that? And what happens here is, I spent a lot of time talking to our crew members, and we have Frank, but not for that long. And the problem is, famous within Vanguard, saying from JCB about 15 or 20 years ago, for God's sake, let's always keep Vanguard in place where judgment has at least a fighting chance to triumph over process. And at 27 people, 28 people, that's pretty darn easy. A thousand people, that's pretty darn easy. But if you go up this, let's call it all, all judgment over here, all process over here, that line of sentence. How far does it end? Moving up to the CEO, he loves the process. He'll be out here, and he hates the process. He'll be in here, but we'll never get back to there. He just can't do that for a big company without many people. And in the rules, in the bureaucracy, you really need them. You need guidelines, and all those things that, frankly, are hypothetical. They're everything I don't believe, but they're right for them, so you can't really fight that. You can try and limit it. You can try in various incentive ways. I'm not necessarily talking financially, so that's all I have to be honest with you. Just make sure that we get people in a position, I don't believe in our mission, to come to work committed, eager, looking forward to an enjoyable day, and make the life a little bit better for our investors. I talked to thousands of English members, literally, each award for excellence winner I talked to for an hour, and it takes a lot of time, by the time you go through one of these cycles, you've got eight or four, and I'm still too busy, but I'd love to do that, I would cut out any, avoid that, and then go on to the retirement party, or anniversaries, 25th anniversaries, or something. I'll be invited to talk to the people in that department, the group, whatever you call them, and I always do that whenever I'm asked, because when it's physically possible for me to do it, and so I get to talk to them that way, and chat with them before and after. And so, you know, I'm still trying to spread the humanity, the humanity of the organization, but it gets more and more difficult for my successors to do it, and it's not their fault, but they have to balance priorities, and my priorities might have been a little bit different from theirs, I don't know, but so I guess it's mainly, don't get complacent, be aware, be aware that there's always human beings that are key to how an operation works, and I think we do it very well in that score, just firsthand contact with so many people. What can you do about it to help? Well, one thing I think we are a little deficient in is transparency. You know, when I was running in place, my compensation was always disclosed, but we don't disclose all of this compensation anymore, and I think he had a bunch of bubbles along. Honestly, how much of them say that? When they say, well, for competitive reasons, look, every corporation in whose stock we hold reveals all of their executive compensation, and as they said, we prefer to have our privacy. Do anybody prefer to have my privacy? I would prefer to have my privacy, but you know, you get that kind of a role, you have to be prepared for a little public attention, and not always happy public attention. So I think that should be the case. If you feel that way, I'm not suggesting I can't write a campaign or something. But as we go on, think about transparency. Are we saying everything you need? Either the dumb thing, that willing and fun, be increased. A few years ago, we were reducing fees, and it seemed like every 20 minutes, I was at the top SOB with willing and fun. And the way I got it done mostly was say, willing and fun was $400 million, and I'd say, well, we're going to go to three basis points, over five billion. So it's an easy sale for some of the spending, four hundred billion of money. But then we get to, you know, 58 billion, 63 billion, 64 billion, and that's the increase. I said to the SEC, we shouldn't have sort of shareholders who are changing the management contract, because we're slowly reducing fees. But I bailed, I bailed, and to say, of course we're going to raise fees, but we've got to stockholders. So we've got to free raw the increase, because I don't like that much. But at least they should be better than page 11 in the annual report, and they should be called attention to, and I'm really putting on it, so that the lack of transparency worries me. I understand people don't want people to know this and that kind of thing. I think we need better reporting on what we're doing with companies when we don't do proxy vote and make our influence tell in other ways, like I mentioned earlier. You know, we have to be responsible for open citizens. And we're the largest owner of stocks in the United States of America. We've got about five percent of every company in the country. It comes responsibility. And it's not just true of us, it's true of our competitors. Nobody is very active. No mutual comment I know of has ever submitted proxy proposal. Maybe it's the IA aircraft, but they don't have a big institutional business. And we ought to be honest about that conflict between wanting to manage it and institutional money and being willing to take the risk of losing that institutional account if we put in a proxy report against the management of that country. That's what's going to happen. It has happened and will happen. So you have to be shy about that. It doesn't matter to us, we have Chinese quality of debt. People know how the system works. You don't need a lot of rules to keep them doing APC. It just works the way it will. And I always get in trouble for saying here is one of the other things and then it's agreed with me then. I always say there are only two kinds of clients who are the execution owners of an event. Actual and potential. But there's a non-client A so you're voting against a client. It's pretty obvious. They're not going to be too interested. So we do a very good job on transparency. We have to do it in my opinion. Whenever you see any, I get lots of letters and shareholdings almost all nice. And I just forward them on the map. I mean I always acknowledge them and thank them. I send them all these things like you can do a better job or statements or whatever. I send them on I don't usually hear what any happens. But I think we can do it. And I also think this came out of my story the other day. I don't see why we don't make animal shares shareholder notion rather than a one share notion. So if you've got a million dollars and let's say index $500 or an animal shareholder you've got $10,000 at wins or two instead of going to $11,000 and going into animal and then back to $9,000 going into regular and then back and forth as those numbers change. It's a tiny part, small part and already part of your business. If you're a million dollar shareholder what the heck? You're a million dollar shareholder. So like the corporate fund fund can be afforded or maybe afforded for the one but I think we have to look for ourselves a little bit. Always a good idea for any company at any time including Payne-Darth today that was born. Beyond that I don't have an answer to your question. We have three questions that are very similar and I can only read one it's Herbert or Hubert Cook the other two I can't read the question but they're all very similar. They're assuming that those who are comfortable do you feel certificate to deposit or acceptable substitutes or bond index and along that same line would you condone a 0% as an allocation of fixed income or a 58-year-old retiree because the artificial growing interest rate would be high? Well let me answer the second question and I'll quickly know. I think as someone said this in my first book there's a 50% in stocks for bonds and why is that? There's unexpected things happen things you can't imagine there's also the kind of reversion of the main of these returns over time and we don't know what's going to happen tomorrow and it may be if you're a pure investor you never look to the stock market never peaks as I say and probably the fluctuations that get you is for your behavior you see something drop way down and you go oh my god I better get out and that's the problem with ETS and it's on the contrary when something gets in your mind I better get in or getting out the day is the darkest and getting in when the morning is the brightest is the situation and you would not think eventually and that's not a good place to be to get ready for retirement so it's a little psychosomatic and it takes a little bit of the volatility out of your portfolio as much as you want but a little bit uncertainty about the future and I don't know how to deal with that we could be facing as I said we could be facing an apocalyptic event apocalyptic events almost never happen almost never happen so you're protecting against something that may never need to be connected to your buying insurance policy for the hope that you don't die something like that allows them to burn down so it's just cautious and you should take into account everything I just said I do very conservative at first you know my childhood depression and I look at things very differently when people have had great wealth and families have had great wealth and I also think about you all and what kind of advice can I give you it's pretty much eternal doesn't change and that's something to do with age based allocation not overwhelming because as I said in Social Security you've got to capitalize over the capitalized value over $300,000 200% 300,000 stocks you're 50-50 and that Social Security screen is going to be fixed but even if it's not fixed you're going to get 70% of what you're getting today it's not as if it's going to be obliterated it's going to be reduced but I don't think that's going to happen but there's still a lot of money there so you want to think about pension that's something else unless the company goes out of business you've got the federal government that can guarantee insurance policy or something like that and that's where the graveyard of pension fund is and they're deeply profoundly in debt so you don't really quite know what you're going to rely on so you diversify it with another asset class just make sure that that dividend charge you get the most money the most return out of that asset and that cover a multitude of cents think about that how easy it is to add 1% to your annual return but that's technically the additional risk there is such a thing as a free rush so I really can't prove on that but it's basically explained, cautious and always worried there's more for you than for myself although I'm extremely conservative as I mentioned earlier so I'm not happy with where I am and I don't have to worry if stock market is up a lot I wish I had more stocks stock market is way down I'm glad I have so much in bonds and if I ever start to think in the moments of trouble in the stock market I've got to get out I'm full of an anonymous I read both of those books and I decide not to get out I'd like to follow up on something you just touched on there there's a major controversy among global heads and that is counting your social security as bonds because the main parallel is that it puts people in a large, retired people in a large equity position much more than they're comfortable with so how do you address that those people who are concerned about losing a large percentage of their wealth well that's a good question and there's no really easy answer to it, but the reality is you should do a fewer investments as providers return and social security is going to give you x per month and if the stock market goes way up and way down that doesn't usually influence your return except for that one year I showed you in the financial system California dividends were about 21% you know if you look at your retirement wealth accumulation as how much income is generated or how much return is generated social security check is going to keep coming in for as far ahead as we can see and you can say it's not going to and we just have a difference of opinion so if your dividends get cut from your mutual funds, that's a matter of significance even if you paid so much that you don't pay any dividends anyway that's why I have that question but you shouldn't worry about the capital value you should worry about what income it generates and because the capital value whether those PEs, speculative return goes up or down we're going to take care of themselves in the long run you saw that speculation that counts for nothing in the market in the long run so maybe you've got to have a strong stomach, guts maybe you've got to be oblivious maybe you've got to follow on both other rules don't do something, just stand there and that's generally much better advice don't stand there, just do something because we have met the enemy and they are us we have met the enemy and they are us and we're going to make them sort of the haters but don't let yourself be in one or try and avoid it read a ball of book if they get nervous this is a good question Jack and I think you in one of your interviews I think I saw you touch on this if you could go back to the early start of year's event what would you do differently maybe something in the corporate structure would you say that you wish you had kept more ownership or you still have some I'd still say I'm tongue in cheek I read that and I said I said it which was unfortunate because I did so I think John was saying something he shouldn't have said and I just say kind of certainly tongue in cheek perhaps I should have kept an ownership of 1% of Bangor we've been only only 99 but it doesn't really work I never considered it at the time so I think if you look at it tongue in cheek what would I do differently I kind of touched on this before just about everything I did for marketing reasons I would not do it again you know I was thinking about should I have created that value index funds you know it's okay I'm not going to do anybody irreparable harm but is it wise to encourage people to think they can track the market the sectors of the market and I think it is unwalked this is the reaction now which I told you about about income when you're older when you're younger I'm not sure anybody bought it for that reason I bought something called Bangor sector funds this is really an amusing and ironic story and we had four or five sectors we didn't want to do it the way that I already did I convinced myself we were doing it differently we only created five the service economy fund there was an energy fund there was a gold precious metals fund and it bombed out and nearly all of those six or seven or eight series are gone except one the health care fund which is probably paradoxically the most successful mutual fund in the history of the industry that has made more money but more people real in fact in America made money for people and I don't think anybody else can duplicate the record the number of dollars so out of this chaos came this brilliant health care fund so if I want to pat myself in the back I forget the ones that failed and the ones that succeeded and what else is there and I also started something directors kept asking me and the directors pushed me too much and it was one thing that really hurt me because finally I pushed back I don't say that's too right I must say that's too right but they wanted me to start some modern funds and we started and what's the name of it but long forgotten and then we had a fund that could buy short buy it and sell short and we had to there were all aggressive funds long forgotten and deservedly stopped it was a really stupid idea in my part but I let the you gotta do more you're losing market share you gotta do more to get in that's what happened when I did the go-go thing well I had this fund back in 1966 and it was wrong and that was wrong and it was stupid but I let myself be swayed by trying to be nice to the board another time I was swayed by the board but they still make me bothered and bothered them a lot they came into the meeting one day and said we need a retirement and I said we need to be in the pen direction you gotta be pulling my leg retirement plans for people to get their life to the company people think modest amounts of income and they go to retirement and we have an obligation to take care of and not for directies who come in here six hours a month with that and say they need a retirement plan so they made a motion to pass it I voted against it I may have stayed I certainly voted for it with my conscience we want to do that for a long time and after I was gone they did away with it well bless them but they never should have done it in the first place getting into the real estate fund closed into our EITs we have and I was persuaded the young guys said it was a new asset class well an asset class of real estate we learned first it's hard to hire a good manager be hired the best manager you can find and second real estate in a publicly traded form makes your real estate changes you don't own the asset you want a security that owns the asset and the price of that security doesn't necessarily mean you would value the asset another mistake have you got another couple of hours that would probably hold us for now Jack you mentioned John Worth and we had quite a quite a crucifying of John on the forum when he called you a rabble robber what did you feel when you read that I told him that he must have been out of the room I said it didn't bother me at all you know we all misspeak I know John will repeat to you all I know John for 25 years he's in the van going that long and I would consider ourselves friends but he don't think I use this formulation he has to represent what the company wants not what he wants like the press secretary the president of the United States the press secretary doesn't make policy the press secretary demands policy and that's the position and we called together somewhat tongue in cheek John says you know I'm really calling Iraq in a hard place and I said well that's fine John just so long as you know who Iraq is we're the hard place well I think some of us took it as a real compliment you are a rabble robber a rabble is a rabble is an undisciplined model I'll take that I think it started in the metaphor of the day a rabble robber was born but I'm such a language maven what do you guys did I just like the support I read in the room somebody said you believe that I they believe Sam I am believed that I kind of enjoyed it all of course I did and nobody likes a good fight better know Vogel he just doesn't like to lose there's a question here Jack Mr. Vogel as you consider the current environment and look to the next decade or two are you optimistic can you reflect on what might be broken your investment system or systemic changes that might most help individual investors in the year to come and I'll put one in for your last one I think that really covers that a lot but would you like to elaborate the biggest pitfall for investors to get into the speculative room they're trying to do a lot again don't just stand don't just do something stand there there's no question as to the best strategy of the worst enemies I guess I quoted Vogel we have met the enemy and he is us so we've got to get to the behavioral problems as far in the back of our mind as we can which is not easy as I mentioned it even happens to me a little bit but you have to rely on I don't know what else to do okay if certain number of options if you want to go beyond an absolute losers game of fixed dollars we won't take on that certificate of deposit thing and say you will end up with nothing when you retire and if you're in a real return of 0% it's pretty much what savings do and that may be your confidence in the future you're not going to accumulate any future any additional so you invest you must you don't make choice really and right now investors have looked at attractive to stop returning to town with positive fund returns or low and consideration of asset allocation also take into account what treasury should be with a higher corporate position which I hope will come to pass here for a long time and you have to accept the world the way it is and the investment will work except for markets what they make available to you can't change the market so then your task is to get the most out of the markets whatever it is you want to get 99 and a half percent of that return and there aren't a lot of places you can get that in the bank or they can do that so you know I can always go wrong but I look at capitalism competition not perfect free markets not totally free as the best system we have going and companies have a huge amount of capital and they invested reinvested pay dividends and I don't see that changing that may be very different for your companies because the risk in individual companies I don't think has ever been higher than it is today and you see something like Eastman Kodak the bluest of the blue chips is in bankruptcy trying to sell their companies pathetic and sad and you see so many things that have come and gone and the greatest companies seem to take the biggest fall General Motors barely made it IBM a terrible failing but it came back from that extremely well but there's no escaping the rapid run speedy run of technology companies called research and motion that has the blackberry thought they had it made they opened the morning paper the next day and they see in the paper someone has invented this kind of a thing and they know they are going on I'm sure it appears a little bit so all of a sudden you realize you're going and you can't help it and that's technology and there's more global competition and I think so far the US is probably the best position in the world we have the largest technology and the largest innovation much larger in the area of technology than the rest of the world probably 18% of our market is technology in the US and maybe 7% the rest of the world we have the best innovation we have and everybody forgets this the best systems are shareable it's never known to man you have to go to some of these other countries and you really don't know what your money is going to be confiscated the dollar is going to be evaluated the argentine pay celebrate whatever you want to call it and so this is the best place to have your money in my opinion now a lot of you argued with me and should about whether you shouldn't have a much bigger international component I don't think so but what do I know I don't does that mean you shouldn't figure it out the risks are higher subtle risks the multiples are not too different for emerging markets might be quite attractive why the developed markets in the world are interesting anybody is quite problematical to me when you look through the biggest companies the index, the international index the great Britain Stumbling up with all that austerity you look at Japan they've been in trouble for a long time we're reaching society you look at France which is nice nobody works in France how are they going to do that my father and dad are in Germany they either have the American ethnic or we have the German ethnic but it's a lot of social and cultural things that make economies work that way and don't speak to the baritone these comments build up I think if you take emerging markets developed markets is pricing arbitrage for the future I think the beginning of any 10 year period which is going to do best over the next 10 years US, developed, international emerging international I think beyond 33% of the US 33% of the developed markets and 33% of the emerging markets and that's a pattern over and over again the markets are there's one place I don't want people to take my advice it's an international I want you to think it through yourself and you can have your Britain you can have your France you can have your Japan but I don't want them 35% of the international something like that so I don't like to do people my whole career is based on not giving any advice buy the market stock market and I'm very comfortable in that territory when you want to submit it segment it I'm not so comfortable because I don't know I can be credited with this demand so if you pay your money it takes your choice but I will say this it's hard for me to see if we're going into an era where emerging markets are going to do say 4% a year better than the US it could happen but if you've got 20% of your portfolio in emerging markets that's 8% to 1% so buy a cheap fund is 8% 8% to 1% cheaper is what I do so I'm still a simple guy I make no claim to prognostic the capability but I do know the fundamentals I know it's the fundamentals that corporate wealth will create returns have created returns in the past and they show that in the future like once again Jack we really really appreciate you spending time with us it's a real treat for us and I know if you're not going to be here tomorrow so we'd like to give you this momentum in what way it's 11 it's a mountain view statue the independence hall which is significant of course but also the financial independence that you created millions and millions of investors so thank you so much Jack you know I have on my mail getting kind of crowded with mobile heads guests we're trying to get them I have a love statue from last year I have in previous year right there I looked at it and it's also recent memory but there's a wonderful thing to try to go across the streets of my constitution center I've invested so much I cannot help you just fine you can't you can't reflect you just can't do what you've been doing over the years so that's kind of sad but anybody in this room I probably am now at fours this morning so all I can say is it's a very, very meaningful lovely time to do with you all and I hope to write the share always I get a lot of letters from my answer everyone and I say when they say something nice we all underline all being strengthened to carry on so thanks to you guys being strengthened to carry on for another day or week or even the rest of my life it's longer, thank you there you go so I'm going to serve right out there and bring it back in are you here Emily? yes, she's going to stand up I want you to all meet my wonderful assistant Emily Snyder she has the patience and she tolerates me every day we all work very closely together she's been a fan card around 25 year mark and it's been to me I'm pretty sure around 22 of those years and we all have to be together with Emily Snyder I can imagine so thanks Emily, let's give her another round of applause