The little book of common sense investing- The Only Way to Guarantee Your Fair Share of Stock Market Returns is an account of why the author is in favor of using index funds when investing. In essence, the advice is simple: invest in a broad market index fund and hold for the long term.
Category: Stock
Author: John C. Bogle
Language: English
Free Download link: At the end of the post
Key Take-Aways
- You are at high risk if you are investing in single stocks. However, index funds don’t have any risk. The reason being, they invest in the whole stock market.
- Thanks to the power of compounding – a usual index fund offers huge returns in the long run.
- Capitalism is a game of positive-sum.
- Actively managed funds are bad because past profits don’t guarantee future success.
- The majority of your money is best invested in safe, low-cost index funds.
- You can’t go wrong by just choosing the cheapest index fund.
- Forget the fads and marketing hype and focus on what works in the real world.
- Overall share market returns reduce with the increase in share buying and selling.
- The changing returns are because of the emotional aspect of investing. It’s not related to the rise in dividends and earnings.
- Recognize that in the long run, business reality trumps market expectations.
Introduction
The little book of common sense investing PDF 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.
Table of Contents- The little book of common sense investing
Introduction xi
Chapter One- A Parable 1
Chapter Two- Rational Exuberance 9
Chapter Three- Cast Your Lot with Business 23
Chapter Four- How Most Investors Turn a Winner’s Game into a Loser’s Game 35
Chapter Five- The Grand Illusion 49
Chapter Six- Taxes Are Costs, Too 60
Chapter Seven- When the Good Times No Longer Roll 68
Chapter Eight- Selecting Long-Term Winners 78
Chapter Nine- Yesterday’s Winners, Tomorrow’s Losers 89
Chapter Ten- Seeking Advice to Select Funds? 100
Chapter Eleven- Focus on the Lowest-Cost Funds 113
Chapter Twelve- Profit from the Majesty of Simplicity 122
Chapter Thirteen- Bond Funds and Money Market Funds 138
Chapter Fourteen- Index Funds That Promise to Beat the Market 152
Chapter Fifteen- The Exchange Traded Fund 164
Chapter Sixteen- What Would Benjamin Graham Have Thought about Indexing? 176
Chapter Seventeen- “The Relentless Rules of Humble Arithmetic” 187
Chapter Eighteen- What Should I Do Now? 200
Acknowledgments 215
Some Great Quotes from the Book:
- “Successful investing is all about common sense”.
- “Buying funds based purely on their past performance is one of the stupidest things an investor can do.”
- “The mutual fund industry has been built, in a sense, on witchcraft”.
- “Owning the stock market over the long term is a winner’s game, but attempting to beat the market is a loser’s game.”
- “The true investor . . . will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies”.
- “The greatest enemy of a good plan is the dream of a perfect plan. Stick to the good plan.”
- “The two greatest enemies of the equity fund investor are expenses and emotions.”
- “Fund investors are confident that they can easily select superior fund managers. They are wrong.”
- “When there are multiple solutions to a problem, choose the simplest one”
About the author
John C. Bogle (Bryn Mawr, PA) is Founder of The Vanguard Group, Inc., and President of the 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. He had been associated with a predecessor company since 1951, immediately following his graduation from Princeton University, magna cum laude in Economics. The Vanguard Group is one of the two largest mutual fund organizations in the world. Headquartered in Malvern, Pennsylvania, Vanguard comprises more than 100 mutual funds with current assets totaling about $742 billion. Vanguard 500 Index Fund, the largest fund in the group, was founded by Mr. Bogle in 1975. In 2004, TIME magazine named Mr. Bogle as one of the world’s 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award. In 1999, FORTUNE designated him as one of the investment industry’s four “Giants of the 20th Century.” In the same year, he received the Woodrow Wilson Award from Princeton University for distinguished achievement in the nation’s service.”
Download The little book of common sense investing [PDF Summary file]
e4t, the little book of common sense investing by john c. bogle pdf, the little book of common sense investing google drive