The little book of common sense investing : the only way to guarantee your fair share of stock market returns / John C. Bogle.

Format:

Book

Author/Creator:

Bogle, John C., author.

Series:

Little Books Big Profits Series

Language:

English

Subjects (All):

Stock index futures.

Portfolio management.

Index mutual funds.

Physical Description:

1 online resource (305 pages).

Edition:

Tenth anniversary edition, updated & revised.

Place of Publication:

2017.

Hoboken, New Jersey : Wiley, 2017.

Summary:

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--Jacket

Contents:

Cover

Title Page

Copyright

Contents

Introduction to the 10th Anniversary Edition

Chapter One A Parable The Gotrocks Family

Get rid of all your Helpers. Then your family will again reap 100 percent of the pie that corporate America bakes for you

Chapter Two Rational Exuberance: Shareholder Gains Must Match Business Gains

"Over time, the aggregate gains made by . . . shareholders must of necessity match the business gains of the company

Reversion to the mean

"It is dangerous . . . to apply to the future inductive arguments based on past experience."

The dual nature of stock market returns

Enter speculative return

A return to sanity

Combining investment return and speculative return: total stock market returns

Accurately forecasting short-term swings in investor emotions is not possible. But forecasting the long-term economics of investing has carried remarkably high odds of success

The real market and the expectations market

The stock market is a giant distraction to the business of investing

Chapter Three Cast Your Lot with Business: Win by Keeping It Simple-Rely on Occam's Razor

Occam's razor: When there are multiple solutions to a problem, choose the simplest one

The Total Stock Market Index

Returns earned in the stock market must equal the gross returns earned by all investors in the market

If the data do not prove that indexing wins, well, the data are wrong

Active funds versus benchmark indexes

The record of an investor in the first index mutual fund: 15,000 invested in 1976

value in 2016, 913,340

A caveat and a caution

Chapter Four How Most Investors Turn a Winner's Game into a Loser's Game: "The Relentless Rules of Humble Arithmetic"

Before costs, beating the market is a zero-sum game. After costs, it is a loser's game.

We investors as a group get precisely what we don't pay for. If we pay nothing, we get everything

"The relentless rules of humble arithmetic."

It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it

10,000 grows to 294,600 . . . or to 114,700. Where did that 179,900 go?

You put up 100 percent of the capital and you assume 100 percent of the risk. But you earn less than 40 percent of the potential return

Costs make the difference between investment success and investment failure

Fund investors deserve a fair shake

Chapter Five Focus on the Lowest-Cost Funds: The More the Managers Take, the Less the Investors Make

Fund performance comes and goes. Costs go on forever

Costs are large, and too often ignored

Costs matter. A lot

The magic of compounding, again

Low costs and index funds

If the managers take nothing, the investors receive everything: the market's return

Chapter Six Dividends Are the Investor's (Best?) Friend: But Mutual Funds Confiscate Too Much of Them

An astonishing revelation

Actively managed equity funds confiscate your dividend income

Chapter Seven The Grand Illusion: Surprise! The Returns Reported by Mutual Funds Are Rarely Earned by Mutual Fund Investors

Hint: Money flows into most funds after good performance, and goes out when bad performance follows

The dual penalties of costs and investor behavior

Inflamed by heady optimism and greed, and enticed by the wiles of mutual fund marketers, investors poured their savings into equity funds at the bull market peak

When counterproductive investor emotions are magnified by counterproductive fund industry promotions, little good is apt to result

Investor emotions plus fund industry promotions equals trouble.

Chapter Eight Taxes Are Costs, Too: Don't Pay Uncle Sam Any More Than You Should

Managed mutual funds are astonishingly taxinefficient

Bring on the data!

Fund returns are devastated by costs, adverse fund selections, bad timing, taxes, and inflation.

Nominal returns versus real returns

Chapter Nine When the Good Times No Longer Roll: It's Wise to Plan on Lower Future Returns in the Stock and Bond Markets

Both common sense and humble arithmetic tell us that we're facing an era of subdued returns in the stock market

The arithmetic behind the caution: the sources of stock returns

Future annual investment return-6 percent?

Future annual speculative return- minus 2 percent?

If you don't agree with my 4 percent expectation, "do it yourself."

The source of bond returns-the current interest yield

With lower returns are in prospect for stocks and bonds, balanced stock/bond portfolios will follow suit

If rational expectations suggest a future gross annual return of 3.6 percent for a balanced fund, what does this imply for the net return to owners of the balanced fund?

Unless the fund industry begins to change, the typical actively managed fund appears to be a singularly unfortunate investment choice

Five ways to avoid financial devastation. Only two work

Chapter Ten Selecting Long-Term Winners: Don't Look for the Needle-Buy the Haystack

A fund failure rate of almost 80 percent

A death in the family

The odds against success are terrible: Only two out of 355 funds have delivered truly superior performance

The Magellan Fund story

The Contrafund story

Living by the sword, dying by the sword

Look (forward) before you leap

Don't look for the needle, buy the haystack.

Indexing for a lifetime. Two major options: Investing in 30 or 40 active funds and managers, or in one index fund with one non-manager

If you decide against indexing . . .

Chapter Eleven "Reversion to the Mean": Yesterday's Winners, Tomorrow's Losers

Reversion to the mean (RTM) is reaffirmed in comprehensive fund industry data

A second study reaffirms the first study-with incredible precision

The stars produced in the mutual fund field rarely remain stars

all too often they become meteors

Picking winning funds based on past performance is hazardous duty

Chapter Twelve Seeking Advice to Select Funds?: Look Before You Leap

Registered investment advisers (RIAs) can play a vital role in providing investors with assistance

Helpers-adding value or subtracting value?

If you can avoid jumping on the bandwagon . . .

Average annual return of funds recommended by advisers: 2.9 percent. For equity funds purchased directly: 6.6 percent

The Merrill Lynch debacle: a case study

Two terrible ideas: the Focus Twenty fund and the Internet Strategies fund

A marketing success for Merrill Lynch, an investment failure for its clients

Investment disaster: Clients lose 80 percent of their assets

The value of financial consultants

The rise of the robo-adviser

Simplicity beats complexity

The fiduciary standard

Chapter Thirteen Profit from the Majesty of Simplicity and Parsimony: Hold Traditional Low-Cost Index Funds That Track the Stock Market

The Monte Carlo simulation

The majesty of simplicity in an empire of parsimony

My conclusions rely on mathematical facts-the relentless rules of humble arithmetic

All index funds are not created equal. Costs to investors vary widely

Two funds. One index. Different costs

Your index fund should not be your manager's cash cow. It should be your own cash cow.

Whether markets are efficient or not, indexing works

International funds also trail their benchmark indexes

Caution about gambling

Chapter Fourteen Bond Funds: Where Those Relentless Rules of Humble Arithmetic Also Prevail

Why would an intelligent investor hold bonds?

A similar gap between bond yields and stock yields

Bond fund managers track the bond market

Bonds vary in riskiness

Three basic types of bond funds

Like stock funds, actively managed bond funds lag their benchmarks. Why? The arithmetic of costs

The important role of costs in shaping bond fund returns

The total bond market index fund

The value of bond index funds is created by the same forces that create value for stock index funds

Chapter Fifteen The Exchange-Traded Fund (ETF): A Trader to the Cause?

ETF traders have absolutely no idea what relationship their investment returns will bear to the returns earned in the stock market

The creation of the "Spider."

ETF growth explodes

The ETF stampede

The renowned Purdey shotgun is great for big-game hunting in Africa. It's also an excellent weapon for suicide

The temptation to chase past returns

Among the 20 best-performing ETFs, for 19 funds, investor returns fell short of ETF returns

A "double whammy": betting on hot market sectors (emotions) and paying heavy costs (expenses) are sure to be hazardous to your wealth

ETFs are a dream come true for entrepreneurs and brokers. But are they an investor's dream come true?

The interests of the business versus the interests of the clients

Answering my question

Chapter Sixteen Index Funds That Promise to Beat the Market: The New Paradigm?

Success breeds competition

Passive ETF strategies designed to outpace stock market returns

Active managers versus active strategies.

The new breed of passive indexers are active strategists.

Notes:

Description based on online resource; title from PDF title page (ebrary, viewed October 19, 2017).

ISBN:

1-119-40452-5