Common Sense on Mutual Funds (Wiley Audio) [Abridged, Audiobook] [Audio CD]

John C. Bogle (Author), Grover Gardner (Narrator)

Book Description

Publication Date: April 2000 | Series: Wiley Audio

The pioneering visionary of The Vanguard Group guides investors through the realities of selecting mutual funds today. Incisive analysis of the nature of market returns, the importance of asset allocation, and the benefits of wise fund selection. Insights on the benefits of simplicity in investing, the consistency of index funds, the importance of low costs in shaping investment returns earned by fund shares, the role of bond funds in portfolios, and hidden costs of taxes. Implications for investors of giant fund size, the spread of information technologies, and the passive role of fund directors. Reflections on what it means to create a mutual fund complex focused on the interests of share holders. Approximate running time: 180 minutes. Three compact discs.

Editorial Reviews

Amazon.com Review

Invoking the words and spirit of Thomas Paine, investor-turned-historian John Bogle concedes that his ideas for revamping the mutual-fund industry are perhaps "not yet sufficiently fashionable to procure them general favor." But despite likening the "ills and injustices suffered by mutual fund investors" to those "our forebears suffered under English tyranny," Bogle--founder of the Vanguard Group--makes a strong case for index funds with this exhaustive study of investing.

He begins with primer-like essays on investment strategy, championing mutual funds for their inherent investment value, and then grinding each point home with a bevy of graphs, charts, entertaining anecdotes, and common sense. He repeatedly stresses time as a basic tenet for investing, listing these simple rules: "Time is your friend"; "Impulse is your enemy"; "Stay the course." And then he proceeds to blast fund managers, who have become marketers rather than managers.

The trade-off between the profits that accrue to fund shareholders and the profits that accrue to the fund management companies seems subject to no effective independent watchdog or balance wheel, despite the fact that the shareholders actually own the mutual funds.

It's an interesting concept: smart, reasoned investors can all but secure their financial future, but the system itself, run unchecked by fund managers, needs a major overhaul. And considering the amount of reasoned, historically based support he includes, readers will have a hard time finding fault with the sometimes controversial Bogle. Equal parts instructional and crusade, Common Sense on Mutual Funds deserves the attention it's likely to receive. Recommended. --Rob McDonald --This text refers to the Hardcover edition.

From Publishers Weekly

Not that many years ago, an average bookstore might have had two or three books on mutual funds filed away in the business section. Today, as the number of Americans who invest in mutual funds continues to grow, such books take up several aisles in a section of their own. There are guides for data junkies and mathphobes, books that tell how to make a killing and books that tell how to avoid the coming disaster. A few classics stand above the clutter. Bogle on Mutual Funds is one of them. Now the same author has added another. While the first book aimed at educating beginners, the new one seeks to persuade experienced investors to discard received wisdom that isn't so wise after all. While no 450-page work on mutual funds with lots of charts can be considered fun summer reading, the book is always informative and the writing never worse than painless and sometimes quite lively. Bogle speaks with a rare authority. On one hand, he is the founder of Vanguard mutual funds, the second-largest mutual fund company in the world. So he knows the business from the ground up. On the other hand, Vanguard has always been famous for running the lowest-cost mutual funds, funds that eschew loads, engage in sensible strategies and return all profit to the investors. So Bogle is also a leading consumer advocate. That rare combination, mixed with years of serious research and a dash of style, makes Bogle an unparalleled guide to the world of mutual funds. Money Book Club alternate.
Copyright 1999 Reed Business Information, Inc. --This text refers to the Hardcover edition.

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Product Details

• Audio CD
• Publisher: Wiley Audio; Abridged edition (April 2000)
• Language: English
• ISBN-10: 1560159529
• ISBN-13: 978-1560159520
• Product Dimensions: 5.7 x 5 x 1 inches
• Shipping Weight: 6.7 ounces
• Average Customer Review: 4.4 out of 5 stars  See all reviews (75 customer reviews)
• Amazon Best Sellers Rank: #2,093,073 in Books (See Top 100 in Books)

More About the Author

John C. Bogle (Bryn Mawr, PA) is Founder of The Vanguard Group, Inc., and President of the Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as Chairman and Chief Executive Officer until 1996 and Senior Chairman until 2000. He had been associated with a predecessor company since 1951, immediately following his graduation from Princeton University, magna cum laude in Economics. The Vanguard Group is one of the two largest mutual fund organizations in the world. Headquartered in Malvern, Pennsylvania, Vanguard comprises more than 100 mutual funds with current assets totaling about $742 billion. Vanguard 500 Index Fund, the largest fund in the group, was founded by Mr. Bogle in 1975. In 2004, TIME magazine named Mr. Bogle as one of the world's 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award. In 1999, FORTUNE designated him as one of the investment industry's four "Giants of the 20th Century." In the same year, he received the Woodrow Wilson Award from Princeton University for distinguished achievement in the nation's service."

Customer Reviews

Most Helpful Customer Reviews

118 of 124 people found the following review helpful:

3.0 out of 5 stars good, biased, don't read just this, June 5, 2001

By 

Justus Pendleton (Colorado Springs, CO United States) - See all my reviews
(REAL NAME)   

This review is from: Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Paperback)

I didn't find the book nearly as repetitive as some other reviewers did. Yes, Bogle continues to point out that cost matters and that you can't predict the winners in advance. But he HAS to keep repeating his point. If he didn't, opponents of indexing would (and do) say, "But cost doesn't matter as much in emerging markets because they are less efficient." So Bogle is forced to remake his point over and over and over again to show the superiority of indexing in every asset class.

Bogle has a few hidden gems in here that I haven't come across in my other reading. For instance, he points out that owning S&P 500 companies DOES give you international exposure since almost 25% of the those companies' revenues come from outside the United States. He also makes some very good points about the effectiveness of slice-and-dice efficient frontier asset allocation methodologies and how they tend to reflect the past more than the future.

On the other hand, I feel that his dismissal of international investing shows an underlying bias that isn't well founded. He points out that the EAFE failed to perform as well at the S&P 500 over the past 10 years. Yet that is a period he admits is extraordinarily favorable to US-based large-cap firms. Later he does admit that when measured from its inception in the 1960s the EAFE has almost the same returns as the S&P 500 but then dismisses the usefulness of this. Even though it provided the same returns if it has a low correlation to the S&P 500 it can be a good component in a portfolio. It is almost like he doesn't understand the entire point of risk-adjusted returns.

Another complaint is that I don't think the book is very suitable as an introduction for novices. It isn't that the material is difficult, I just don't feel it is structured very well. For instance, he starts using standard deviation to mean risk. It isn't until much later on that he mentions in passing the problems with using standard deviation as a proxy for risk. If you are a little bit familiar with investing then you'll know all of this already, but I think a novice might be left floundering or possibly mislead.

I couldn't help shake the feeling that a lot of his arguments weren't especially sound. Maybe it's because he doesn't present a lot of his data, but only his conclusions. Or maybe it's because it feels too much like he's reasoning towards a conclusion he arrived at long before the data was available. I feel that Berstein's Intelligent Asset Allocator offers a much more rigorous and sound (if slightly different) argument in favor of indexing than presented here.

Finally, I felt like the argument wasn't especially coherent. I knew what point he was trying to make but at times I just felt like the editor hadn't done a proper job of cleaning up the text. Swedroe's What Wall Street Doesn't Want You To Know has a much more coherent, straight forward structure while arguing in favor of indexing.

Despite all of that, I still think this book has a valuable place in the investor's education. If you can borrow a copy from a friend, or check it out from the library, you owe it to yourself to do so.

30 of 31 people found the following review helpful:

5.0 out of 5 stars Superb, even if a bit Repetitive, December 9, 2003

By 

Jeffery Steele (Taipei, Taiwan) - See all my reviews

This review is from: Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Paperback)

Despite the prosaic title of the book, and the conservative investment philosophy of its author, "Common Sense on Mutual Funds" has a revolutionary aim. Vanguard founder John Bogle believes the mutual fund industry must make major changes in order to faithfully serve its customers and, by explaining his investment philosophy, he shows both why radical change is necessary for the industry and helps to precipitate it by encouraging individual investors to follow his investment advice.

Bogle thinks too many mutual fund investors are being scammed by professional managers of funds who reward their companies instead of their investors' portfolios. High fees, outrageous expenses, rapid turnover, unneeded "products", marketing costs -- all are used by countless mutual fund companies to inflate their bottom lines to the detriment of their investors' needs.

Several reviewers here have noted that Bogle repeats several key points throughout the book, especially the importance of keeping costs as low as possible. This is true. But important lessons need to be stressed, especially with so much evidence that the average investor still doesn't understand them. Perhaps Bogle feels it's a lesson that can't be said enough. After all, why would you pay more for less, unless you simply don't understand what is being done to you?

This book was somewhat prescient. Published near the end of the long bull market of the 1980 and 90s, "Common Sense on Mutual Funds" called out -- in its own quiet and understated way -- for reform of the mutual fund industry before it became fashionable to do so. While Bogle's book doesn't have an angry tone, its recommendations are essentially more radical than anything now being considered by New York's attorney general in his drive to reform the industry.

26 of 27 people found the following review helpful:

5.0 out of 5 stars The Best Mutual Fund Book Written, June 15, 2001

By 

Charles (Portland, Oregon) - See all my reviews

This review is from: Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Paperback)

Critics may say the book in only trying to sell index funds, a strong suit of Vanguard. Absolutely wrong! The book's real value is explaining how the mututal fund industry works and, hence, how to follow the money. The industry extracts about one per cent each year of your money in excess expense ratios and keeps it, not to mention the hidden costs of turnover and load. That adds up over a lot of money in a life time. Read the book. Understand asset allocation, return, risk, and cost. Then, you'll understand how the money works and how to pick a fund based on its expense ratio, load, and turnover.