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The Little Book of Common Sense Investing (2007)

by John C. Bogle

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8521525,676 (3.88)5
Business. Finance. Nonfiction. Economics. HTML:

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 Little Book of Common Sense 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: "If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack 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.

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    » See also 5 mentions

    Showing 1-5 of 15 (next | show all)
    Information value: 7.5 / 10
    Prose: 8.5
    Content density: 8.5

    My first investing book. Highly recommended, though the main premise of investing in low-cost index funds can be a bit repetitive at the beginning. Don't worry, it gets better. ( )
      MXMLLN | Jan 12, 2024 |
    I read this book in 8th grade, and I honestly didn't learn anything from this book since I've been a nerd about this stuff years before. It's a great book for those new to investing and have no idea what to invest in.

    Book summed up in 1 sentence: Invest in indexes with low expense ratios, low turnover costs and sales charges (e.g. VOO, VTI).

    Here are some other takeaways so you don't have to read this book:
    -Inflation and expense ratios can diminish the after-cost return, which factors in expense ratio, sales charge, and turnover costs. These costs are too large to be ignored. For instance, a 9.5% return could very quickly result in a real return of 4.5% after 2% expenses and 3% inflation. Another thing to consider is that as costs increase, so does volatility and risk—where volatility is a measure of risk. This measurement can be used to calculate the risk-adjusted return.
    -Low-cost index funds negate these effects with expense ratios as low as 0.04% and leave you with the fair share of low-cost equity returns: they outperform high-cost index funds and actively managed mutual funds after all factors considered. Note that the reason mutual funds carry higher expense ratios is since they require more hands-on management.
    -“In the short run the stock market is a voting machine…in the long run it is a weighing machine.”-Benjamin Graham
    -Don't look for the needle; buy the haystack ( )
    1 vote siamm | Aug 20, 2023 |
    I came to this after reading Tim Hale's "Smarter Investing”, where John Bogle's name was mentioned several times. The goal of this book is to convince the reader that "the classic index fund is the only investment that guarantees the achievement" of investment success and the author sets about his task with zeal. It’s a short volume that gives a good, straightforward overview of the arguments as to why index funds make sense for most (all ?) investors who are looking to invest in equities (and bonds as well). The writing style is clear and logical (if sometimes repetitious) with plenty of data to support the argument. Each chapter ends with a selection of quotes from market practitioners and academics and is a good source of bibliographic material.

    I would have liked more discussion of asset allocation than just the few pages in the last chapter (although to be fair it is a short book) and I thought that the author was overly dismissive of Exchange Traded Funds (ETFs). He's also not shy in name-dropping his own company Vanguard and their range of index funds. (Vanguard are an extremely impressive company however !)

    Overall, this book is interesting reading and achieved its aim of convincing this reader. Worth buying. ( )
      JamieStarr | Jul 15, 2023 |
    recommended by Warren Buffet; excellent, common sense advice ( )
      pollycallahan | Jul 1, 2023 |
    This is the first of several books on investing that I plan to read to better educate myself and take greater personal control of my finances. If John Bogle had his way, it would probably be my last. That is because his investment strategy is rather simple. He thinks most investors should pick a very low-cost index fund, his pick would be the S & P 500 or a total market fund, both of which are near identical. He advises you to purchase this as early as you can and then hold onto it for as long as you can, basically until you retire. With this simple strategy, he argues you will capture most of the growth of the total market, which is better than the vast majority of investors who believe they can beat the market through timing, stock picking, having talented money managers, or some other strategy. This value strategy may be a bit boring, but he makes a strong argument, through pure math and statistics, that it is sound. If you're really into cryptocurrency, poker, trying to figure out what company or sector will be the hottest, or other high stakes and exciting gambles, you won't necessarily gravitate to this kind of investing. It's just too plain vanilla and dull and won't give you the returns to turn on your adrenaline. On the other hand, this slow and steady approach to wealth-building might just be the advice that you should follow. ( )
      OccassionalRead | Sep 30, 2021 |
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    Business. Finance. Nonfiction. Economics. HTML:

    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 Little Book of Common Sense 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: "If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack 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.

    .

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