[GCA10]

Not quite sure we can credit Bogle with creating the index fund. He certainly popularized it, though.

Bill Fouse at Wells Fargo got a rather clunky version of an index fund started in 1971, based on equal weighting of all NYSE shares. It took a couple more years for various people, including Dean LeBaron (later of Batterymarch) and John Bogle to get everything working the right way with timely capitalization weighting and rebalancing. That's when the S&P 500 became the index of choice.

Getting index funds to track consistently over time takes a fair amount of market monitoring plus basic computing power. (Reinvesting dividends brings one set of headaches; so does adjusting specific stocks' weightings as individual companies either shrink their float by buying back stock or expand it by issuing new shares.)

All these calculations seem trivial today, but back in the 1970s, we didn't have up-to-the-minute electronic Edgar filings at the SEC. Or abundant computer power on everyone's desks.

[daphneokeefe]

I had the privilege of working with Bill Fouse and other brilliant people at Wells Fargo Investment Advisors in the 70s. At the time, it was a huge technical challenge to crunch the numbers for a multi-million dollar investment, and to execute it without affecting the market prices of the target stocks.

[nostrademons]

The tax reporting is also pretty nightmarish. I have a friend who once decided he could mimic an index fund without the fees by buying individual stocks in the same proportions as the index (I think his broker offered a free trades deal or something, otherwise this is an obviously bad idea). His Schedule D that year was about 60 pages long, and he decided never again. Of course, it took him years to finish unwinding all the positions and reporting all the taxes, since many times you're left with a small fraction of a share once dividends have been reinvested.

[jmccaf]

Buying individual stocks in proportion to the market-cap index is possible today as a service, and advertised by Wealthfront as "direct indexing" or stock-level tax-loss harvesting

The small tax advantage is that you can sell individual stocks for tax-loss harvesting. Fisher advisors also offers this for HNW folks.

This article criticizes this as a lock-in for wealthfront, unlike funds which can be easily transferred to brokerage "in-kind" (without 500 separate securities, or selling as a taxable event) * https://medium.com/@wwalser/the-trap-of-wealthfronts-direct-...

RIP Bogle, making the world a fairer place rather than being a billionaire. I'd like to bike from Philadelphia to Valley Forge again to make pilgrimage.

[ThrustVectoring]

Oh man you definitely want to turn off dividend reinvestment in taxable accounts, the tax reporting makes it impractical. Take dividends as cash and then roll that cash into regular periodic contributions (or distributions).