The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock...

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns ... | John C. Bogle | I now sleep without worry.

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The Little Book of...

	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 78 reviews view larger image
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highly recommended

Want to Sleep at Night and Pursue Other Hobbies?

As expected, Bogle believes in the efficient market theory, meaning you cannot consistently and over the long haul beat the market. But even if you believe you can beat the market, or that you have developed a system that when backtested against market data, you can show that you beat the market, you still lose in the real world, where there are transaction fees, and worst of all, taxes. It might seem obvious, but taxes eat up a hefty portion of your gains, and most of the "systems" that beat the market statistically require you to be able to trade as soon as their indicator tells you. In the real world, this doesn't happen. You might decide to try to hold on for long term capital gains only to see your winnings evaporate. Or, if you take the trade, you must deduct immediately the taxes due. And now you must get lucky again on the next stock you put the money into, but with 45% less (Fed + CA state). Maybe noone has calculated how much your next stock has to gain just to make up the tax loss. And that is what Bogle points out is the folly of following systems that try to beat the market (assuming someone has one that works consistently).

In the real world, investors consistently time the market incorrectly. Bogle shows mathematically that you are not guaranteed to even get the return that the fund shows as an average, if you're always buying at the top. Indeed many mutual funds expand and shrink as their relative performance goes up or down. Therefore the majority of the investors in that fund got in near the peaks, and tend to exit when the fund goes down. People are constantly switching to the Morningstar 4 or 5 star funds, not realizing that they are not getting the average gains that attracted them because they put their money in after the gains have already occurred.

Finally, as he has preached over and over again, expenses are like this little cancer that truly can devastate any actively managed fund. Expenses can eat up what dividends are paid, and reduce the amount of your capital to be put to work in compounding (assuming you reinvest).

EFT's can work for you if you buy and hold. However their very format of being traded in the secondary market encourage frequent trading. Bogle is not a fan of market timing, and this includes sector investing, which is a form of market timing. The pletora of index EFT's of all different colors and stripes allow people to easily invest in sectors that are hot and dump them when they are not. Problem again, taxes, transaction costs, and bad timing.

I suppose the old adage, "simple is best", rings true here. Bogle does admit that being humans, we would get bored if investing were only so simple. So he suggests that you split your money into Serious Money Account (95%) and Funny Money Account (5%). Then after one year, five years, ten years, compare your results. Don't forget the taxes, make sure to set them aside immediately from your profits (move them to another account, so you can't cheat!). Bogle is betting that if you put your Serious Money Account in indexs you will beat your Funny Money Account. I'm thinking you'll also sleep better and have time to pursue other hobbies, as well as have it easier during tax time. Do I follow his advice myself? Well I haven't for more than 20 years, and honestly I'm not beating the market, as the -$3000 which shows up most years tells. Problem is knowing what to do, and giving up on the dream of being above average. You do know that everyone can't possibly be above average, right? Sleep tight and get rich, what are you waiting for?

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I now sleep without worry.

Book explains how to recover what is ours from the world of business. I wish I would have read it 20 yrs. ago. Explains how Harvard and many large endowments invest. Why pay a broker 70% of the income from growth and dividends for a 10% chance of beating a stock index when you can buy the indexes for 0.2% in yealy fees.

Common Sense Investing

Great book for newbies (and others too) wanting to learn about investing, especially INDEXING. I enjoyed it thoroughly! John Bogle does an excellent job explaining the simplicity and benefits of INDEX FUND investing.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Book Big Profits)

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Sensible Investing Advice for Low Risk Investors

Bogle's book provides great advice for those seeking low maintenance, low risk investments. This is a book that I wish I had gotten my hands on years ago, but it's practical advice for all ages. Bogle is able to dumb down the merits of index fund investments so that most minds, regardless of their financial IQ, can comprehend his arguments.

Nice Book

Estoy leyendo este libro y me parece genial es la misma receta de los autores que creen que los mercados son eficientes podria decir que es tan bueno como cualquier libro de Malkiel sin embargo quiero decirles algo, seguramente estos autores tengan razon en lo que dicen pero le quitan la magia al juego, leer este tipo de libros es como ver los trucos de todos los magos, simplemente la inversion pierde su chiste, su sazon.

Definitivamente te lo recomiendo, metaforicamente hablando es del tipo de libros que te explican que la comida chatarra es basura y que lo que importa son las ensaldas, el atun, las proteinas etc. a fin de cuentas sabes que tienen razon, pero y que pasa con esos sitios secretos del comer delicioso que has encontrado durante un largo andar por la vida?

La leccion es: renuncia a todo eso, come bien y viviras muchos años mas.

Compralo no te arrepentiras !!!

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