Herd on the Street

In 1951, Princeton economics major Jack Bogle wrote a senior thesis extolling the virtues of the small but growing mutual-fund industry. At the time the reigning view of the stock market was that expressed 1 1/2 decades earlier by the great English economist (and speculator) John Maynard Keynes: it was a "casino," a "whirlpool of speculation," a "game of Snap, of Old Maid, of Musical Chairs." Young Bogle argued that the growth of professionally managed funds would bring a new age of calm rationality to the market and thus "militate against Lord Keynes' dismal and socialistic conclusions."

After graduation, Bogle went...