The secret to winning? The index.

books:

	• The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns ... John C. Bogle Wiley, 2007 - 208 pages average customer review:based on 79 reviews view larger image
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highly recommended

Simplified investing

I really liked this book. His method of buying a market index made a lot of sense to me.

a worthy advisor on investments

John Bogle's book is very simple to understand and its content is quite astounding. Bogle has a way of saying things that might irritate some people - "What I say is the truth and everybody else is wrong."

He does support his data with a number of charts. So I suggest that rather than just believing his words, readers redo the math to reassure themselves that this book is not the ranting of some crotchety old man.

All I needed is knowledge of simple arithmetic, and the formula for compound interest. So far I havent spotted an untruth.

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Sound advice, poor reading

Bogle makes a compelling argument that investing in broad index funds provides good long-term returns. He clearly explains the reasons why actively managed funds are inferior to index funds: 1) high turnover of holdings causes losses due fees and taxes; 2) componded impact of management fees; 3) chasing "the best" funds results in poor timing and returns. Bogle admits that broad indexing might not be the single best investment strategy, but clearly explains that it outperforms the vast majority of investment portfolios and "styles" of investing. The beauty of indexing is in its simplicity, and that one does not need to spend time researching the various stocks for picking the winners. Therefore, non-experts with essentially no knowlede or effort can have better returns than the majority of expert portfolio managers do. Broad indexing is a buy and hold strategy. The book is written in a style that is very easy to understand, even for an 8th grader. However, the book is boring, extremely repetitious, and could have been cut back by at least a third. Each chapter ends with "Don't Take My Word For It" - quotes from reputed experts supporting Bogle's indexing approach. What is missing from the book is any reference to dissenting opinions. For example, Bogle argues the virtue of broad diversification. Some investors disagree with Bogle on several key points, including the broad diversification, but they are not quoted. For example, Bogle did not quote James P. O'Shaughnessy's book "Predicting the Markets of Tomorrow". O'Shaugnessy explains why broad indexing may produce inferior returns if one invests around the peak of the stock market cycle. The approximately 20-year cyclicity of the stock market is not even mentioned in Bogle's book. This is most unfortunate. Bogle misleads the reader when he reiterates that the real reaturn of the stock market is about 7%. Whereas this is true for a period of 80 years, the typical investor's horizon is much shorter than that (about 20 years), and that has a major impact on the returns within a 20-year market cycle. O'Shaughnessy's approach of favoring a blend of large-cap value and small-cap value index funds (ETFs to be held for about the next 15-20 years) in the current phase of the cycle appears to be a better advice than the broadest index fund. I expected to see a more rigorous analysis from the Author, and on that account, I was disappointed. Bogle's advice is nevertheless definitely worth considering.

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Index fund genious

The index fund is that great thing that no one has discovered. The idea of the index fund is to get around the fees of the mutual fund but still offer the investor protection against loses in individual stocks by spreading the investment over an entire inudstry or index or country. So one can buy an index that tracks small caps, or oil or Israel or the Dow. Almost everything is indexed these days. The idea that is that by spreading the risk one can gain the 10% a year average S and P gains that have been the norm since 1930.

This book is a good introduction to understanding value investing and why to stay away from the high fees of mutual funds.

A really interesting and brilliant little book, that truly should beat the market, or at least achieve similar results.

Seth J. Frantzman

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The secret to winning? The index.

This little book is a quick read to investing strategies for index funds. The idea is simplistic and the book itself is based on common sense. I think for the most part we just need someone to tell us to confirm what we already know -- own public companies, the cheapest way possible and hold it.

This is a definite must read and should be part of your investment library.

-Matt
Contributor for Complete Guide to Real Estate Tax Liens and Foreclosure Deeds: Learn in 7 Days-Investing Without Losing Series

reviews: 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, page 14, 15, 16

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