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The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns Hardcover – March 5, 2007
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"It's hard to argue with the eloquent logic of John C. Bogle's latest ode to index funds…Bogle's 'Little Book' offers much exemplary advice." (Bloomberg News, April 2007)
Among monetary gurus and wise men, John Bogle is a singular case. As the founder of the highly regarded Vanguard Group, he is revered for the company's commitment to providing value to its clients as well as profits to its investors. He even has his own group of fans, called "Bogleheads," who cling to every utterance and pronouncement from the great man.
In this latest entry in the Little Book series, Bogle's gentle prose contains idiot-proof advice for investors at all levels. He punctures the myth of the superiority of mutual funds and instead declares that by using a bit of common sense, low-cost index funds are the way to go for most modest stock investors. He's also wary of the ways of Wall Street and cautions investors to steer clear of its institutional con men and cautions against excessive fees and taxes that invariably eat up profits.
It's not very glamorous or exciting advice, but that's also his point: Slow and steady wins the race. (Miami Herald, April 9, 2007)
"genuinely provides investors with the ideal strategy for making the most of stock-market investing" (Motley Fool's UK website, March 8, 2007)
"It's an easy read that will, I suspect, quickly join Burton Malkiel's A Random Walk Down Wall Streetand Charles Ellis's Winning the Loser's Gameas one of the indexing crowd's favorite books."—Jonathan Clements (Wall Street Journal)
"It's hard to argue with the eloquent logic of John C. Bogle's latest ode to index funds." (Bloomberg Terminal, March 8, 2007).
"provides an opportunity to reflect on a remarkable career and legacy." (Financial Times, 19th March 2007)
"…it is John Bogle's hymn to index-tracking investment, and a fascinating read it is too." (Daily Telegraph, March 2007)
"Those who doubt my reasoning should read the Little Book of Common Sense Investing by John Bogle." (FT Adviser, 24th April 2007)
"…particularly interesting…goes some way towards discrediting the stockpicking virtues taught to me in my time as a financial journalist." (Fund Strategy, 7th May 2007)
"…wittily written, pocket-sized guide…If you want to learn how to avoid the unpredictabilities of the stock market and the fees of middle men, then this book is well worth a read." (Pensions Age, May 2007)
" ... For the individual investor, it presents a solid game plan for growing funds over the long haul." (Directorship, July 2007)
"... read Bogle's new Little Book of Common Sense Investingand you'll see how easy it is to beat the Alpha Hunters at their own game!" (MarketWatch, July 2007)
‘The one big thing that Bogle knows -- and explains so well in this slender volume -- is that buying and holding a broad benchmark of stocks while keeping fees to a minimum leads to higher long-term returns than constantly trading in a vain attempt to beat the market. Common sense? Yes. But radical too, as the entire investing establishment is designed to get investors to do the exact opposite.” (CNNMoney)
"Business books are often written by show-offs who want you to know all about their knowledge of the Greek tragedies and dark-coloured birds. So it was nice to get hold of the simply written Little Book of Common Sense Investing…Its author, John Bogle, in no simpleton. He built Vanguard into a huge fund manager...He is synonymous with index funds in the US. Vanguard's S&P 500 tracker is by far the world's largest mutual fund."—Stephen Cranston, Investor's Notebook (Jan 23, 2013)
From the Inside Flap
To learn how to make index investing work for you, there's no better mentor than legendary mutual fund industry veteran John C. Bogle. Over the course of his long career, Bogle—founder of the Vanguard Group and creator of the world's first index mutual fund—has relied primarily on index investing to help Vanguard's clients build substantial wealth. Now, with The Little Book of Common Sense Investing, he wants to help you do the same.
Filled with in-depth insights and practical advice, The Little Book of Common Sense Investing will show you how to incorporate this proven investment strategy into your portfolio. It will also change the very way you think about investing. Successful investing is not easy—it requires discipline and patience. But it is simple, for it's all about common sense.
With The Little Book of Common Sense Investing as your guide, you'll discover how to make investing a winner's game:
- Why business reality—dividend yields and earnings growth—is more important than market expectations
- How to overcome the powerful impact of investment costs, taxes, and inflation
- How the magic of compounding returns is overwhelmed by the tyranny of compounding costs
- What expert investors and brilliant academics—from Warren Buffett and Benjamin Graham to Paul Samuelson and Burton Malkiel—have to say about index investing
- And much more
You'll also find warnings about investment fads and fashions, including the recent stampede into exchange traded funds and the rise of indexing gimmickry. The real formula for investment success is to own the entire market, while significantly minimizing the costs of financial intermediation. That's what index investing is all about. And that's what this book is all about.
Top Customer Reviews
Bogle starts off with introducing index funds through a parable that describes how middle-man costs in finance eat away at investors' profits. He discusses why speculation doesn't work and why business reality (in his definition, divident yields plus earnings growth) is more important that market expectation (changes in P/E based on what investors are willing to pay for various equities).
Bogle spends a few chapters discussing various problems with regular actively managed mutual funds, covering issues with performance (he asserts that less than 1% of all mutual funds were able to beat the market consistently over the past half century), various costs (expense ratios, sales charges, advertising fees, turnover costs, tax implications), poor market timing, and finally the difficulty of choosing a mutual fund (he states that there's no good way to pick a fund, since we can't foretell the future, and past performance is not an indicator of what's to come). He brings the reader to the "common sense" conclusion that index funds, in their pure simplicity, are the logical choice for any investor, as they provide the diversified return of the entire market with miniscule fees and minimal effort.
The last few chapters cover bond funds, ETFs, and a few pages of investment advice - which boils down to keeping at least 50% (if not all) of your money in broad-market index funds. Interestingly, Bogle spends a chapter discussing what Benjamin Graham would have thought about index funds, citing various quotes from Graham's "The Intelligent Investor" and certain blurbs from Warren Buffet.Read more ›
The Little Book of Common Sense Investing fills that void. For Bogle fans, this is a summary of what we already know and you will not find a lot that is dramatically new or different. For readers who need a stern lecture on what is right and what is wrong, this is a perfect guide.
One nice touch in this new book are a variety of quotes Bogle uses that say "If you don't believe me" or "Don't take my word for it". He quotes Warren Buffet, Benjamin Graham and other major figures that confirm the advice he gives is right.
With all the large confusing investment books on the market today, this one provides a small friendly guide that allows the reader to focus on the behaviors that lead to success in investing. This is the finest new book on investing in 2007 and a must read for all investors who need to cut through the noise to find the truth. Thank you Mr. Bogle!
Mike Kavanagh, CFP ®
What's new is Bogle's sobering expectations for future market returns. Over the past century companies have produced a 4.5% dividend yield and a 5% earnings growth rate (9.5%) for investors - before actively managed fund costs have stripped away much of that wealth. Today dividend yields on equities are under 2%. Earnings growth rates in the future may or may not be lower than the historical average. What seems apparent is that investors are less willing to pay for those earnings than they have in the past - as measured by a decline in price earnings ratios. Bottom line: we may be looking at a period of market returns of just 7-8%, and after all the "intermediary" costs of the mutual fund industry, investors will see that return dramatically reduced. This is why costs matter. The index mutual fund is the least expensive way to get the market's return into your pocket. Unfortunately, many 401 (k) retirement plans do not include some of the key U.S. and international indexes recommended by Bogle.Read more ›
This book is for people that want to move up their financial goals by using techniques so simple, my son Kevin implemented them last year when he was in second grade. Don't confuse simplicity with stupidity, Bogle notes.
If these techniques are really so simple, why doesn't Wall Street "get it?' Because they are paid a small fortune not to understand it. In fact, it's critical that the grand illusion continue.
The book is a battle pitting the Wall Street machine, glitz, and emotion against only the relentless rules of simple arithmetic. Even Wall Street, however, doesn't have the might to overcome simple arithmetic. It's a bloody battle where most that try to disprove mathematics, end up being the casualties.
You may be thinking this book merely says to buy index funds or exchange traded funds. Actually, Bogle notes that many index funds and most exchange traded funds are the wrong thing for investors. Yes, Wall Street took his indexing concept and morphed it into vehicles that would make them rich, at the cost of the investor. These are known as "enhanced" or "specialized" funds that are far closer to active investing than many disciplined investment funds - like Berkshire Hathaway.
Bogle explains what investors should do to capture the returns of capitalism. You may be surprised to learn that he goes beyond saying only own the broad index funds. In fact he says individual stocks and active mutual funds are okay, under certain conditions. It's okay to have a little fun, he says.
If you are absolutely convinced that you or your advisor will beat the market, then don't read this book - it will only make you sick to your stomach with irrefutable logic. This book is only for those wanting to guarantee your fair share of stock market returns.
Most Recent Customer Reviews
I liked this book so much I bought several copies for my daughter, neices and nephews to read.Published 2 days ago by Connie J.
Vanguard is now very successful and of course John Bogle has his charm.
Overall this book is especially suitable for those who feel beating the market and ripping off... Read more
Lucid and logical. unless or until things change radically in the future, in ways we don't forsee, this is the best advice for the average investor who wants a long term low... Read morePublished 4 days ago by jl
ANYONE who invests really NEEDS to read this book! I lost a BUNDLE in the past year in the market. I began to think my investment advisory firm was NOT taking the best care of... Read morePublished 14 days ago by Grambo
Great introduction into Boggle and Index investing. After reading it you wonder why you would invest any other way, that being said I do like to use some funny money to stock pick.Published 15 days ago by Jeffrey K Leath
The simplest advice is often the best advice, but that doesn't necessarily mean it's taken. It's been 40 years since John Bogle launched the first index fund. Read morePublished 21 days ago by Financebookguy
i really really wish i bought and read it sooner. really. loaned it to my sister. can't keep it at home. everyone wants to borrow itPublished 23 days ago by Robert D Slay
I have read the most recent version of Malkiel’s “A Random Walk Down Mainstreet,” and it made me thankful for those people who actually go out and try to make a return for... Read morePublished 27 days ago by J. Edgar Mihelic, MBA