There are a few investment managers, of course, who are very good though in the short run, its difficult to determine whether a great record is due to luck or talent. Most advisors, however, are far better at generating high fees than they are at generating high returns. In truth, their core competence is salesmanship. Rather than listen to their siren songs, investors large and small should instead read Jack Bogles The Little Book of Common Sense Investing. Warren Buffett, Chairman of Berkshire Hathaway, 2014 Annual Shareholder Letter.
Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winners 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 losers game. Common sense tells usand history confirmsthat the simplest and most efficient investment strategy is to buy and hold all of the nations 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, theres no better mentor than legendary mutual fund industry veteran John C. Bogle. Over the course of his long career, Boglefounder of the Vanguard Group and creator of the worlds first index mutual fundhas relied primarily on index investing to help Vanguards 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 its all about common sense.
With The Little Book of Common Sense Investing as your guide, youll discover how to make investing a winners game:
- Why business realitydividend yields and earnings growthis 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 academicsfrom Warren Buffett and Benjamin Graham to Paul Samuelson and Burton Malkielhave to say about index investing
- And much more
Youll 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. Thats what index investing is all about. And thats what this book is all about.
