The Little Book of Common Sense Investing
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Review : The best-selling investing "bible" offers new information, new insights, and new perspectives The Little Book of Common Sense Investing is the classic guide to getting smart about the market. Legendary mutual fund pioneer John C. Bogle reveals his key to getting more out of investing: low-cost index funds. Bogle describes the simplest and most effective investment strategy for building wealth over the long term: buy and hold, at very low cost, a mutual fund that tracks a broad stock market Index such as the S&P 500. While the stock market has tumbled and then soared since the first edition of The Little Book of Common Sense Investing was published in April 2007, Bogle's investment principles have endured and served investors well. This tenth anniversary edition includes updated data and new information but maintains the same long-term perspective as in its predecessor. Bogle has also added two new chapters designed to provide further guidance to investors: one on asset allocation, the other on retirement investing. A portfolio focused on index funds is the only investment that effectively guarantees your fair share of stock market returns. This strategy is favored by Warren Buffett, who said this about Bogle: "For decades, Jack has urged investors to invest in ultra-low-cost index funds.... Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me." Bogle shows you how to make index investing work for you and help you achieve your financial goals and finds support from some of the world's best financial minds: not only Warren Buffett but Benjamin Graham, Paul Samuelson, Burton Malkiel, Yale's David Swensen, Cliff Asness of AQR, and many others. This new edition of The Little Book of Common Sense Investing offers you the same solid strategy as its predecessor for building your financial future. Build a broadly diversified, low-cost portfolio without the risks of individual stocks, manager selection, or sector rotation. Forget the fads and marketing hype, and focus on what works in the real world. Understand that stock returns are generated by three sources (dividend yield, earnings growth, and change in market valuation) in order to establish rational expectations for stock returns over the coming decade. Recognize that in the long run, business reality trumps market expectations. Learn how to harness the magic of compounding returns while avoiding the tyranny of compounding costs. While index investing allows you to sit back and let the market do the work for you, too many investors trade frantically, turning a winner's game into a loser's game. The Little Book of Common Sense Investing is a solid guidebook to your financial future. Read more
Review : When someone as successful as John Bogle attempts to impart knowledge in the form of a book, people ought to listen and heed his advice. This is the man who practically invented the index fund, after all. While there's much wisdom to be found in The Little Book of Common Sense Investing, the first third to half of the book is dedicated to discussing the sheer arithmetic of how actively managed funds eat away investors' gains: fees, taxes, and all. I cast no doubts on the value of these discussions, particularly to readers for whom the topic of index fund investing is novel in its entirety. That said, this first part could have been significantly shortened without much loss to its value, if at all. After tackling the disadvantageous arithmetic of actively managed funds, Bogle dedicates a few more chapters to drive his point home and details how these funds consistently fail to match the returns of the index. Two-thirds into the book, commentaries on and new information about other matters such as investment advisors, bond funds, and ETFs finally surface. Beyond a critical assessment of non-index ETFs, little explanation of the tax differences between long-term index fund and long-term index ETF investing is offered before the book circles back to theme, with a section on what the great Benjamin Graham would have said about index funds promptly following. For the uninitiated, The Little Book of Common Sense Investing serves as a good resource to explain the how's and why's of index funds. For individuals who have read enough about index funds as to already be invested in them, however, four-fifths of the book may feel little more than one thick advertisement, living up to "The Only Way to Guarantee Your Fair Share of Stock Market Returns" well. But what about the last few chapters? This is where the earlier-mentioned "much wisdom" enters the equation, with Bogle providing timeless insights on assembling portfolios, building them efficiently, customizing them for retirement, and a myriad other ideas that can only come with maturity and experience. For these alone and despite all my ramblings above, I recommend alloting space in one's collection and a few hours of one's time for this book.
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