The Little Book of Common Sense Investing
By: John (Jack) Bogle
Genre: Business & Finances
Depending on how much you’ve read and dug into the financial world, you may or may not have heard of the author’s name. However, we all owe Mr. Bogle a debt of thanks for laying the foundation over 40 years ago for a sound financial portfolio available to everyone. Mr. Bogle was responsible for the creation of the first Index Funds available for investing in.
The more that I read and see, the more I realize that most financial hype is nothing more than burning snake oil hiding the true beneficiary in smoke. This book is different though as he isn’t trying to sell you an investment that he benefits from, but rather convince you to buy an investment that benefits you and you alone. Mr. Bogle aspired to create an investment that everyone has access to, while at the same time maximizing returns and minimizing the effects of taxes, fees and inflation. He succeeded and the index fund was born.
At just over 200 pages, there are 18 chapters in this book laid out such that any given chapter takes no more than 15 – 20 minutes to read. He wasn’t kidding when he called this a “Little Book”, but it’s packed with so much practical financial wisdom. Mr. Bogle doesn’t apologize for what he says in this book because with all of the supporting evidence he gives in the book there’s little need to.
What I appreciate most is hearing the experience, lessons and authority he has on the subject of index funds. One thing you have to realize from the version that I read was that it was copyrighted in 2007… just before the housing market collapse. Although it’s 10 years old, the performance of the market took a dip for a few years after publication, but it is now right back on course. Everything he stated 10 years ago still holds true today even after a recession.
There are faster and slower parts of this book… think of it as high tide and low tide. The more theoretical chapters (Professional Advice and Benjamin Grahams) seem to fly by whereas the more analytical chapters (Taxes, Long-Term Winners and Past Performance) take some time if you follow his calculations closely. This is by no means a bad thing as it adds credibility to his argument, but be aware of it.
Mr. Bogle’s core message to his readers can be summarized in just a few pages (in fact, he does this at the end of the book). However, to truly appreciate and understand how he arrived at the seemingly simple conclusions he sticks to; I urge you to read the book through. The “what” is simple, it’s the “why” that deserves a closer look. The wealth of experience he shares along with the diversity of the professional opinions and insights of other experts are worth the read by themselves.
Quotes from the Book That Stuck With Me:
“Don’t look for the needle in the haystack. Just buy the haystack!”
“The greatest enemies of the equity investor are expenses and emotions.”
“The greatest enemy of a good plan is the dream of a perfect plan. Stick to the good plan.”
“For investors as a whole, returns decrease as motion increases…. The way to wealth for those in the business is to persuade their clients, “Don’t just stand there. Do something.” But the way to wealth for their clients in the aggregate is to follow the opposite maxim: “Don’t do something. Just stand there.”
“It’s amazing how difficult it is for a man to understand something if he’s paid a small fortune not to understand it.”
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Do I Recommend This Book: Yes, if you are interested and want to know the simple, common-sense “WHY” behind how Index Funds are such a great investment choice. This book should take you no more than 6-8 hours to read cover-to-cover.