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The Little Book of Common Sense Investing by John Bogle

posted onFebruary 20, 2019

First published in 2007 and with a second updated & revised 10th anniversary edition out in 2017, The Little Book of Common Sense Investing, is much more than a book on index investing. 

Written by John Bogle, the founder and former CEO of the Vanguard Group, the world’s largest mutual fund organization which now has $5.1 trillion in assets under management, the book
introduces you to low-cost, passive index funds as a sustainable investing strategy and guides you how to get smarter about the stock market. 

The book is divided into eighteen chapters, spelling out the ideas behind the philosophy that one should invest in low-cost index funds as an alternative to actively, poorly managed, overpaid funds.  

Chapter One: A Parable.
Chapter Two: Rational Exuberance.
Chapter Three: Cast Your Lot with Business.
Chapter Four: How Most Investors Turn a Winner’s Game into a Loser’s Game.
Chapter Five: The Grand Illusion.
Chapter Six: Taxes Are Costs, Too.
Chapter Seven: When the Good Times No Longer Roll.
Chapter Eight: Selecting Long-Term Winners.
Chapter Nine: Yesterday’s Winners, Tomorrow’s Losers.
Chapter Ten: Seeking Advice to Select Funds?
Chapter Eleven: Focus on the Lowest-Cost Funds.
Chapter Twelve: Profit from the Majesty of Simplicity.
Chapter Thirteen: Bond Funds and Money Market Funds.
Chapter Fourteen: Index Funds That Promise to Beat the Market.
Chapter Fifteen: The Exchange Traded Fund.
Chapter Sixteen: What Would Benjamin Graham Have Thought about Indexing?
Chapter Seventeen: “The Relentless Rules of Humble Arithmetic.”
Chapter Eighteen: What Should I Do Now?

At the end of each chapter, there is the “Don’t Take My Words for It” section, where Bogle quoted some of the world's best financial minds in support of the arguments presented in the chapter.

“There are a few investment managers, of course, who are very good – though in the short run, it’s difficult to determine whether a great record is due to luck or talent. Most advisors, however, are far better at generating high fees than they are at generating high returns. In truth, their core competence is salesmanship. Rather than listen to their siren songs, investors – large and small – should instead read Jack Bogle’s The Little Book of Common Sense Investing” Warren Buffett, Chairman of Berkshire Hathaway, wrote in his 2014 annual shareholder letter.

The life and legacy of John Bogle

John “Jack” Bogle, one of the greatest investors of all-time, passed away on January 16, 2019, at his home in Bryn Mawr, Pensylvania. He was 89. Bogle was born in Montclair, New Jersey, on May 8, 1929, along with twin brother David, to William and Josephine Bogle. His family had been deeply affected by the Great Depression.  

Bogle attended high school on the Jersey Shore. In 1947, he graduated from Blair Academy, a prestigious private school where he had earned an academic scholarship and was accepted at Princeton University, where he studied economics and investment.

After graduating magna cum laude from Princeton in 1951 with an economics degree, he was hired at Wellington Fund. A management dispute resulted in Bogle's firing from Wellington in 1974.

In January 1975 Bogle founded Vanguard, where he served as CEO and senior chairman until 1999. In the same year, Fortune magazine named him one of the investment industry's four "Giants of the 20th Century."

John Bogle wrote 13 books on investing. He is also credited with the creation of the first index fund available to individual investors. 

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