Summary of The Little Book of Common Sense Investing

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9 Overall

10 Applicability

8 Innovation

8 Style


Author John C. Bogle is the former chairman and CEO of The Vanguard Mutual Fund Group, the world's largest pure no-load mutual fund company. In 1976, he conceptualized, developed and introduced the world's first index fund for the individual investor. This brand new investment product revolutionized the financial marketplace. In the words of Dr. Paul Samuelson of M.I.T., "The creation of the first index fund by John Bogle was the equivalent of the invention of the wheel and the alphabet." Today, index funds account for $1 trillion in invested funds. Everyone from investment genius Warren Buffett to Nobel Laureates Samuelson, William Sharpe and Daniel Kahneman recommend index funds for the typical investor. Bogle explains what index funds do and why they are reliable investments in this exhaustively researched, carefully reasoned, highly accessible, common sense book. If you are an investor, getAbstract believes you should take Bogle seriously; after all, he invented this alternative.

In this summary, you will learn

  • What an index fund is;
  • Why index funds are reliable investments;
  • How index fund returns compare to individual stocks or other funds;
  • How emotion, management fees and short-term thinking affect your investments; and
  • Why you want to avoid exchange traded funds and other forms of short-term stock picking.

About the Author

John C. Bogle is the founder and former chairman and CEO of one of the largest mutual fund companies in the world. He is an author of numerous popular books on investments. In 2004, TIME named him as one of the world's 100 most powerful and influential people.



Intelligent Investing

Benjamin Graham's Intelligent Investor was published in 1949. He was considered his era's most astute money manager, and his book is a classic of sound investment advice. He points out that most investors do not have the professional training, expertise, or time to analyze the worth of companies and the value of their current stock offerings. Nor do they have the ability to predict what a company's stock value will be at some future point in time. He therefore advised his readers to be consistently conservative in their stock choices. He advised investing in a "defensive portfolio," an overly broad selection of diversified stocks which, once purchased should be held on to for the long term.

Graham warned investors against relying too heavily on brokers who make their money through trading commissions. He pointed out that such brokers' short-term financial interests clearly conflicted with their clients' long-term investment goals. Graham further explained that, mathematically, the odds never favor the individual broker or investor. While Graham wrote positively about mutual funds, he pointed out that from 1937 to 1947, the typical mutual fund ...

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