STEVEN M. FALK / Philadelphia Daily News
Gus Sauter: He's a big fan of roller coasters, but not the financial kind.
Big ideas and the people behind them
Gus Sauter
The Vanguard managing director is the steady hand behind a steady-on investment philosophy.
The big idea: To calmly espouse the Vanguard Group Inc.'s dull-as-dishwater, invest-for-the-long-haul strategy, even when the market was tanking.
"It's boring," Sauter acknowledges, and a little scary to follow. "We just keep saying, you know, 'Stay the course.' "
During the last year of market turmoil, the company has been saying it in reassuring briefs on its investor Web site - "right on the home page," Sauter said. "If we've had a tough week, typically we try to get something out by the end of the week. . . . You always have to keep reminding people to fight their tendencies to overreact."
Emotional rescue: Especially after a prolonged downturn, people can feel tempted to cut their losses, he said. "But, really, the investors that fare the best are the ones that avoid those urges."
So, along with the financial nuts and bolts of managing people's money, Vanguard works to temper their feelings. "We just constantly try to urge people to smooth out their emotions: When they're feeling distraught, try to smooth that out, and when they're feeling overly optimistic, try to knock that down, too.
"We just say, 'Don't think too much about the stock market,' " he said. "Establish the plan in a rational moment, and then don't revise it in an irrational moment."
The man behind the message: "I think people would say that I'm pretty laid-back," Sauter said. "I grew up in Ohio."
The finance bug bit him when he was 8 years old and started a bank for the neighborhood children. At 12, he bought his first stock - in the Cleveland Cavaliers.
He studied economics as an undergraduate at Dartmouth University and got his M.B.A. in finance from the University of Chicago.
His snappy catchphrase: "Investors should establish a long-term asset allocation that's appropriate for them, taking into account their own needs and their own tolerance for risk."
When someone he meets at a party asks for stock market advice, "I go into the same boring line," he said. "Think of your long-term asset allocation . . . ." Then he watches their eyes glaze over.
His wife, Karen, while also laid-back, is "much more social," Sauter said. "I guess we just don't overreact."
The trading day that rattled even him: The Monday after the Bear Stearns Cos. Inc. collapse in March, when no one knew how the market would react to the Federal Reserve's interventions.
"I'd have to say that was the scariest day of my professional career," Sauter said. "I started here two weeks before the crash of '87, and that day was scarier."
Another thing that gets his heart racing: Roller coasters.
"Oh yeah," he said. "I love roller coasters." The Ohio town where Sauter grew up was 60 miles south of Cedar Point. "And that is the granddaddy of the roller-coaster parks."
His all-time favorite thrill ride is the Spider-Man attraction at Universal Studios in Orlando, which gives riders the sensation of diving from the top of a building straight to the ground. "Unbelievable!"
One more unexpected twist: "A lot of people are surprised when I tell them that I was a gold miner who lived in Las Vegas," he said.
Sauter's first job out of business school was to develop commercial real estate. (Behind the calm exterior he is extremely competitive, he said.)
But he left that to pursue "a supposed deal of a lifetime," putting together a venture capital effort to start a gold mine outside Sin City. "It was a total flop," Sauter said.
A friend persuaded him to try money management instead. "He knew my personality."
Big idea he wishes he had had: The fuel cell or some other transformational technology.
