The Little Book of Common Sense Investing The Only Way to Guarantee Your Fair Share of Stock Market Returns

by Bogle, John C.

• ISBN13: 9780470102107
• ISBN10: 0470102101
• Format: Hardcover
• Copyright: 2007-03-05
• Publisher: Wiley

Summary

Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner's game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser's game. Common sense tells us-and history confirms-that the simplest and most efficient investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair share of stock market returns.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 moreYou'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.JOHN C. BOGLE is founder of the Vanguard Group, Inc., and President of its 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. In 1999, Fortune magazine named Mr. Bogle as one of the four "Investment Giants" of the twentieth century; in 2004, Time named him one of the world's 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award.

Author Biography

JOHN C. BOGLE is founder of the Vanguard Group, Inc., and President of its 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. In 1999, Fortune magazine named Mr. Bogle as one of the four "Investment Giants" of the twentieth century; in 2004, Time named him one of the world's 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award.

Table of Contents

Introduction	p. xi
A Parable	p. 1
Rational Exuberance	p. 9
Cast Your Lot with Business	p. 23
How Most Investors Turn a Winner's Game into a Loser's Game	p. 35
The Grand Illusion	p. 49
Taxes Are Costs, Too	p. 60
When the Good Times No Longer Roll	p. 68
Selecting Long-Term Winners	p. 78
Yesterday's Winners, Tomorrow's Losers	p. 89
Seeking Advice to Select Funds?	p. 100
Focus on the Lowest-Cost Funds	p. 113
Profit from the Majesty of Simplicity	p. 122
Bond Funds and Money Market Funds	p. 138
Index Funds That Promise to Beat the Market	p. 152
The Exchange Traded Fund	p. 164
What Would Benjamin Graham Have Thought about Indexing?	p. 176
"The Relentless Rules of Humble Arithmetic"	p. 187
What Should I Do Now?	p. 200
Acknowledgments	p. 215
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