The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
by John C. Bogle
30 popular highlights from this book
Key Insights & Memorable Quotes
Below are the most popular and impactful highlights and quotes from The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns:
Don't look for the needle in the haystack. Just buy the haystack!
The greatest enemy of a good plan is the dream of a perfect plan.” Stick to the good plan. Traditional
When there are multiple solutions to a problem, choose the simplest one.
The grim irony of investing, then, is that we investors as a group not only don't get what we pay for, we get precisely what we don't pay for. So if we pay for nothing, we get everything.
The two greatest enemies of the equity fund investor are expenses and emotions.
Buying funds based purely on their past performance is one of the stupidest things an investor can do.
Owning the stock market over the long term is a winner's game, but attempting to beat the market is a loser's game.
The true investor . . . will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.
The simple fact is that selecting a mutual fund that will outpace the stock market over the long term is, using Cervantes’ wonderful observation, like “looking for a needle in the haystack.” So I offer you Bogle’s corollary: “Don’t look for the needle in the haystack. Just buy the haystack!
It’s amazing how difficult it is for a man to understand something if he’s paid a small fortune not to understand it.
the great British economist John Maynard Keynes, written 70 years ago: “It is dangerous . . . to apply to the future inductive arguments based on past experience, unless one can distinguish the broad reasons why past experience was what it was.
Gunning for average is your best shot at finishing above average.
The winning formula for success in investing is owning the entire stock market through an index fund, and then doing nothing. Just stay the course.
An investment in knowledge always pays the best interest. Learning is to the Studious, and Riches to the Careful. If a man empties his purse into his head, no man can take it away from him.
It will also tell you how easy it is to do just that: simply buy the entire stock market. Then, once you have bought your stocks, get out of the casino and stay out. Just hold the market portfolio forever. And that’s what the index fund does. This investment philosophy is not only simple and elegant. The arithmetic on which it is based is irrefutable. But it is not easy to follow its discipline. So
In the casino, the house always wins. In horse racing, the track always wins. In the Powerball lottery, the state always wins. Investing is no different. In the game of investing, the financial croupiers always win, and investors as a group lose. After the deduction of the costs of investing, beating the stock market is a loser’s game.
The TIF is designed to be held for a lifetime.
Simplicity beats complexity
The relentless rules of humble arithmetic.
Your index fund should not be your manager’s cash cow. It should be your own cash cow.
It takes wisdom to know what we don’t know
In the short run the stock market is a voting machine . . . in the long run it is a weighing machine.
One academic study showed that during the strong bull market of 1990–1996 the most active one-fifth of all stock traders turned their portfolios over at the rate of more than 21 percent per month. While they earned the annual market return of 17.9 percent during that bull market period, they incurred trading costs of about 6.5 percent, leaving them with an annual return of but 11.4 percent, only two-thirds of the market return.
The best way to implement this strategy is indeed simple: Buy a fund that holds this all-market portfolio, and hold it forever. Such a fund is called an index fund. The index fund is simply a basket (portfolio) that holds many, many eggs (stocks) designed to mimic the overall performance of the U.S. stock market (or any financial market or market sector).
Professional investment advisers are best at providing other valuable services, including asset allocation guidance, information on tax considerations, and advice on how much to save while you work and how much to spend when you retire. Further, most advisers are always there to consult with you about the financial markets.
My recommendations for investors in the accumulation phase of their lives, working to build their wealth, focused on a stock/bond mix of 80/20 for younger investors and 70/30 for older investors. For investors starting the post-retirement distribution phase, 60/40 for younger investors, 50/50 for older investors.
I’ve often been cited as an advocate for a similar simple and seemingly rigid asset allocation: your bond position should equal your age, with the remainder in stocks. That asset allocation strategy can serve the needs of many—if not most—investors quite well, but it was never intended to be more than a rule of thumb, a place to begin your thought process.
William of Occam nicely expressed the virtue of simplicity, essentially setting forth this precept: When there are multiple solutions to a problem, choose the simplest one.
If you choose to invest in TDFs, I encourage you to “look under the hood” first. (Always a good idea!) Compare the costs of TDFs, and pay attention to their underlying structures. Many TDFs hold actively managed funds as components, whereas others use low-cost index funds. Make sure you know precisely what is in your TDF portfolio and how much you’re paying for it. The major actively managed TDFs have annual expense ratios that average 0.70 percent; index fund TDFs carry average expense ratios of 0.13 percent. It will not surprise you to know that I believe that low-cost, index-based target-date funds are likely to be your best option.
[fundos geridos por] jovens brilhantes e dinâmicos que prometiam realizar milagres com o dinheiro das outras pessoas, […] [mas] que no fim inevitavelmente geraram prejuízos para o público”.
