William McNabb, WG’83, began his stint as CEO of Vanguard on August 31, 2008—just two weeks before the collapse of Lehman Brothers and the beginning of one of the most devastating economic cycles ever.
But McNabb and his firm have survived the crisis. Having brought Vanguard—and the $1.6 trillion under the company’s management—through the worst of that storm, McNabb stopped by the Ambani Auditorium on February 3 to deliver a Wharton Leadership Lecture on “The Outlook for Investors.”
If that outlook were a glass of water, he suggested, in many ways it looks half empty. Confidence in the markets is shaken. The European debt crisis and uncertainty around the housing markets aren’t helping. Many state and local government finances are a mess, the financial industry’s regulatory landscape is shifting and U.S. debt levels are projected to double over the next 10 years.
All true. But there’s also a way to see that economic glass as half full. In fact, McNabb said that he’s cautiously optimistic about the U.S. economy. The current market outlook is in line with historical norms, and as an investment strategy, balance and diversification still work. Americans are saving more. And there’s always old-fashioned ingenuity; McNabb pointed out that 80 percent of the companies in the S&P 500 were formed during or within two years of a recession. He told the Wharton students in the audience he hoped “a bunch of you will add to this over the next decade.”
Perhaps not surprisingly, then, many students asked McNabb how he recommends they do exactly that. Specialized manufacturing and businesses focused on serving the needs of emerging markets were singled out as having high potential for growth. But McNabb also encouraged students to seek out a job they will be passionate about, at a company that will mirror their own own values.
Citing the contributions of former Vanguard CEO Jack Brennan, McNabb explained that Vanguard’s culture combines the intellectual rigor of Wall Street with the values of the Midwest. McNabb left his Wall Street job and joined Vanguard because he “really liked” those values.
That kind of match, he said, creates passion—and that kind of passion can lead to great things.