Why Does a Picture of Jack Bogle Hang in the Bound Office?

If you stopped by Bound’s office in London, you’d see this photo-shopped picture of Jack Bogle hanging on the wall.

It’s a little irreverent. We know that. We intend no disrespect. On the contrary, this is our style of praise. We’re big fans. 

Who is Jack Bogle?

Jack Bogle is the founder of Vanguard and generally credited with popularising the index fund for stock investors. Few of us probably think about this now, but it was only 30-40 years ago when people started investing widely via index funds and ETFs.

Before that investors needed to pick stocks themselves - read the news, peruse some quarterly reports and form an opinion on which companies and industries are on the rise. Or maybe investors would hire an advisor or fund to help them pick stocks or completely manage their investments for them.

Today, millions of investors collectively invest trillions of dollars into tools that are specifically designed to avoid the alchemy of picking winning stocks. These tools are generally low-fee, automated products that optimise for wide market exposure and auto-adjust themselves for diversification, rebalancing, etc.

These tools preach a simple gospel: If you’re not a professional investor, don’t try to pick stocks. Adjust a few settings then automate a simple, long-term-focused investment strategy. Keep it simple. Just put your money in. Pay a small fee. Let the thing run for the next 10-20 years. Whatever you do, don’t pick stocks.

Equity investing best practice in-a-box.

So, why do we love Jack Bogle so much? 

We view what we’re building for corporate treasury/finance teams to be analogous to what index funds and ETFs did for stock market investors. 

Today, treasury/finance teams  have have 2 choices:

1. Ignore currency risk. Think of exchange rates as externalities and pretend that there is nothing to be done. If significant rate swings can’t hurt your business, then this may be a reasonable approach. However, for the companies we work with, adverse movements in exchange rates could mean thousands or millions in lost revenue or rising costs. 

2. Be a Rate-Picker. This looks a lot like stock investing 50 years ago. Read about interest rates. Analyse the economic outlook of the European Union. Listen to sentiment clues in US Federal Reserve announcements. Maybe consult with your bank or a currency broker - because they know where rates are going to go ;)

3. Bound is the 3rd choice: currency conversion and hedging best practice in-a-box. Low fee, automated, simple, optimised. Set a few reasonable settings based on your risk tolerance. Input numbers into the Bound app. Don’t try to pick rates. Most importantly, make those foreign cash flows more stable and predictable so you don’t have surprises in your finances because of exchange rates.

The analogy isn’t perfect, but we draw a lot of inspiration from Mr. Bogle. 

One thing is for sure. We believe that 40 years from now, finance teams will look back and say, “I’m glad I don’t have to manually try to pick rates and time the currency markets” just like many of us feel today about having to pick investments and time the stock market.