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

PRAISE FOR THE LITTLE BOOK OF COMMON SENSE INVESTING

"Jack Bogle′s remarkable career spans the spectrum from lonely iconoclast to celebrated rock star. His conception and development of index funds transformed the investment world for individuals and institutions alike. Countless millions of investors have purchased index funds because of Jack. But, simply being an indexer is insufficient. Successful investors embrace the principles undergirding the rationale for index funds and understand the pitfalls hindering the effective execution of an investment plan. The Little Book of Common Sense Investing provides the tools required to implement a winning portfolio strategy. Read it and win!"
DAVID F. SWENSEN, Chief Investment Officer, Yale University

"What Gutenberg was to the printing press, Henry Ford to the automobile, and Shakespeare to the English language, Jack Bogle is to finance. The Little Book of Common Sense Investing packs into 270 short pages the distilled genius of the nearly seven decades he′s spent revolutionizing the process for everyone, from the smallest IRA holder to the largest pension and endowment funds. Read, enjoy, and profit."
WILLIAM J. BERNSTEIN, bestselling author of The Investor′s Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

"One hundred years from today, historians will remember only two investors from this era Warren Buffett and Jack Bogle. The two books they will note? Buffett′s bible, Ben Graham′s The Intelligent Investor, and . . . anything written by Jack Bogle. In a world of investment foxes, Jack remains a stalwart hedgehog. The Little Book of Common Sense Investing, updated here, will prove timeless as it thoughtfully articulates Bogle′s one big idea how investors can get their fair share of market returns."
STEVE GALBRAITH, Managing Member, Kindred Capital

"Jack Bogle′s thin Little Book is thick with wisdom. It′s informative, insightful, and opinionated with the added advantage of being correct! As Bogle explains, the road to investment failure is paved with expensive advice, expensive investments, and expensive advertising (urging you to buy the first two). Bogle suggests a very different course for investors, virtually guaranteeing investment success."
TED ARONSON, CFA, founder, AJO

Introduction to the 10th Anniversary Edition xv

Chapter One A Parable 1

Chapter Two Rational Exuberance 9

Chapter Three Cast Your Lot with Business 25

Chapter Four How Most Investors Turn a Winner s Game into a Loser s Game 39

Chapter Five Focus on the Lowest–Cost Funds 53

Chapter Six Dividends Are the Investor s (Best?) Friend 65

Chapter Seven The Grand Illusion 73

Chapter Eight Taxes Are Costs, Too 85

Chapter Nine When the Good Times No Longer Roll 93

Chapter Ten Selecting Long–Term Winners 111

Chapter Eleven Reversion to the Mean 127

Chapter Twelve Seeking Advice to Select Funds? 139

Chapter Thirteen Profit from the Majesty of Simplicity and Parsimony 153

Chapter Fourteen Bond Funds 167

Chapter Fifteen The Exchange–Traded Fund (ETF) 179

Chapter Sixteen Index Funds That Promise to Beat the Market 195

Chapter Seventeen What Would Benjamin Graham Have Thought about Indexing? 209

Chapter Eighteen Asset Allocation I: Stocks and Bonds 223

Chapter Nineteen Asset Allocation II 237

Chapter Twenty Investment Advice That Meets the Test of Time 259

Acknowledgments 269

JOHN C. BOGLE is founder and former chairman of the Vanguard Group of mutual funds and President of its Bogle Financial Markets Research Center. After creating Vanguard in 1974, he served as chairman and chief executive officer until 1996 and senior chairman until 2000. Bogle is the author of ten books, including Enough: True Measures of Money, Business, and Life, The Little Book of Common Sense Investing, and Clash of the Cultures: Investment vs. Speculation, all published by Wiley.