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Summary: Not sexy BUT powerfull common-sense principles for investing
Review: This book has some basic, common-sense and powerfull principles. It is full of technical detail that is sometimes hard to follow for the layman but nevertheless is explained simply enough to have the ring of truth about it.It's basic principle is that for your investments to provide wealth in the long-term you must abandon the current casino-style gambing on the latest mutual fund fad and invest in solid, low-cost, no-load funds. This book is not for the total beginner since it probably has too much detailed technical data for the few pearls of wisdom -- albeit priceless pearls. However, given the huge mutual fund industry that mostly disagree with John Bogle, the amount of technical information is probably necessary. Unlike the four "Common Sense" pamphlets written by Thomas Paine to inspire the regular citizen to reject British imperialistic rule, this book is too technical to spark a popular uprising against the over-priced mutual fund industry of today. However the fact that Bogle practices what he preaches and has built a company 'Vanguard' on his beliefs gives his book an authority missing in much writing. For the beginner, a book I read that really did change my life is "Personal Finance for Dummies" by Eric Tyson.
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Summary: Wisdom repeated to the point of boredom
Review: Bogle has some very compelling points to make that would greatly simplify investment decisions and lower the stress levels of many investors. His main point--buy and hold a low-cost, tax-efficient, no-load, broadly-based U.S. market index fund for the long haul (hint: consider Vanguard)--could have been stated once or twice prominently instead of boringly dozens of times with endless charts and statistics. I also found his references to the stock market and inflation rates dating back to the 1800's to be largely irrelevant given the changes in the nature of the markets and economy since then. While Bogle makes a particularly good point about how management fees really eat into bond fund returns, he doesn't really acknowledge the long-term advantages to holding bonds outright over holding them in mutual funds at all. You can glean Bogle's key points of wisdom with a quick skim of the book; if you need to be convinced over and over and over again from different angles--and many of the same ones--then by all means consider this as good bedtime reading.
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Summary: Brokers Hate This Guy - He Deserves 6 Stars
Review: If we were not a democracy someone would lock this guy up. He has spilled all the beans on the fake financial advisors and financial and insurance sales people that want to sell you the grotesque front end loaded mutual funds and those annuities that make piles of money for everyone except for the investor. Bogle founded one of the biggest mutual fund groups in America - the Vanguard Group - and he is a burr under the saddle of many financial people. His advice saves you money at the expense of the broker. The bitter truth is that over the long haul only 10% of mutual funds outperform the conservative S&P 500 index. So why pay some company a front end load fund of 5-7% to under-perform the S&P 500 plus an annual fee of 1.5% when you can buy S&P index shares or Vanguard mutual funds that have no load fees, and have very low annual expenses - often less than 0.5% per annum. You end up giving away a chuck of your money if you do not follow his sound advice. Bogle of course does not want to stop there. He wants to reign in all those CEO perks and huge bonuses and use the leverage of the mutual fund shareholders. All great stuff, This is a case where Amazon.com should have a special 6 star category. Jack in Toronto
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Summary: Excellent Review of Mutual Funds
Review: John Bogle, founder of the Vanguard Group which is the known for its low cost index funds as well as simply being one of the two largest mutual fund organizations, makes his simple but undeniable arguement. 1. The administrative costs of a mutual fund makes a huge impact on returns. For example, a 1% administrative fee eats away at least 10% of the fund's yearly return if it earns 10%. 2. Index funds have consistantly outperformed other managed funds. 3. Given #1, the managment fees for managed funds are a double burden because they reduce returns that are already typically below what a low cost index fund can offer. Bogle also touches other topics on the mutual fund industry. I found that he hammered the same points home again several different ways. This made some parts of the book drag, but I suppose it is useful for those who may be skeptical about index funds to see the evidence presented in several formats. Bogle also touches upon the (mis?)-management of mutual funds. Fees have gone up despite the proven inability of funds to beat the market despite the supposed skill of their managers, funds turnover their securities rapidly leaving the unprepared owner (invester) with capital gains nightmares as well as lost returns due to trading costs. Also interesting, Bogle reviews his life in the mutual fund industry. I feel Bogle hits us with a little too much data and not enough of the drama of the industry. For example, does Bogle's fellow fund managers believe they have the skill to beat the market or do they know they are ripping people off by creating and marketing funds with excessive fees and unproductive churning of assets? How can what is supposed to be one of the most free and efficient of all markets experience increasing prices (fees) coupled with products that have lower quality (i.e. lower returns and/or higher risk)? Despite these minor flaws, I have to recommend Bogle for everyone who has an interest in securing an excellent retirement (or at least a decent one). As we enjoy longer lifespans, we are discovering that our retirement is also expanding. This, coupled with the gradual shrinking of social security/medicare benefits means that everyone must take on more responsibility for their final years. If you just read the advertising material given to you by your broker or your 401K administrator, you are going to be losing some of your returns on excessive fees and poorly managed funds.
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Summary: Index funds are still managed! C'mon Bogle.
Review: In waging his crusade against actively managed funds, Bogle loses sight of the fact that even index funds are managed nonetheless. Take the popular Vanguard 500 Index Fund, which is indexed to S&P 500. He still cannot dodge the question: Who decides which stock gets listed or delisted? It's S&P itself, which manages the index. But why does he suppose that S&P is always a better managing institution than the best mutual fund companies that actively manage their funds?
Arguably, most fund managers can't outperform the indexes, but that does NOT mean that no managers actively managing their funds ever outperform the indexes. If you have to put money in the market, why not go for the best? And sure, managers can blow up too, but you can still diversify amongst the best managed funds. As to costs, sure, index funds have small expenses compared to actively managed funds, but index funds have a serious drawback--usually a lot more volatility that makes owning them riskier. Investing is not just about keeping expenses to a minimum--important as it is. Neither is it merely about performance. It's also about controlling risks and preserving capital. I for one wouldn't want to own a fund--even for the long term and however cheap--if it's up 40% one year, down 30% the next, and then up %25% still the next and so on. I'm willing to pay more knowing that my capital would be preserved even in a down market. No index funds can be compared to the safety and nonvolatile nature of such funds as SGENX, OAKBX, MERFX and MVALX, which have very low betas. Bogle's indexing approach is for me a sure path to mediocrity. If you have to put money in the market, why not go for the best funds with a long-term market-beating track record and consistent returns? To reduce management-related risks, why not also diversify amongst the best managed funds? That said, I don't mean to say that you should not own index funds at all.
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Summary: One of the best on mutual funds
Review: It took me years to finally figure out that "passive" investing in mutual funds is the absolute best way to build a retirement fund. Mr. Bogle has an intimate relationship with index funds because he, via Vanguard, blazed the path when all others doubted indexing. As a CPA and MBA and CFP to boot I have spent a fair amount of time and effort trying to "beat the market" only to learn that matching the market is the best strategy for the long haul. Had I simply invested according to his precepts I would have parlayed a lot more money with a lot less effort. It IS a hard book to read for those not used to technical terms. But "stay the course" as John would say, and you (and your money) will be amply rewarded.
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Summary: Superb, even if a bit Repetitive
Review: Despite the prosaic title of the book, and the conservative investment philosophy of its author, "Common Sense on Mutual Funds" has a revolutionary aim. Vanguard founder John Bogle believes the mutual fund industry must make major changes in order to faithfully serve its customers and, by explaining his investment philosophy, he shows both why radical change is necessary for the industry and helps to precipitate it by encouraging individual investors to follow his investment advice. Bogle thinks too many mutual fund investors are being scammed by professional managers of funds who reward their companies instead of their investors' portfolios. High fees, outrageous expenses, rapid turnover, unneeded "products", marketing costs -- all are used by countless mutual fund companies to inflate their bottom lines to the detriment of their investors' needs. Several reviewers here have noted that Bogle repeats several key points throughout the book, especially the importance of keeping costs as low as possible. This is true. But important lessons need to be stressed, especially with so much evidence that the average investor still doesn't understand them. Perhaps Bogle feels it's a lesson that can't be said enough. After all, why would you pay more for less, unless you simply don't understand what is being done to you? This book was somewhat prescient. Published near the end of the long bull market of the 1980 and 90s, "Common Sense on Mutual Funds" called out -- in its own quiet and understated way -- for reform of the mutual fund industry before it became fashionable to do so. While Bogle's book doesn't have an angry tone, its recommendations are essentially more radical than anything now being considered by New York's attorney general in his drive to reform the industry.
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Summary: Other books to consider
Review: Bogle's book is a classic. It eloquently discusses mutual fund fundamentals and makes a strong argument for indexing. If this topic is important to you, try also "The Great Mutual Fund Trap", "The Intelligent Asset Allocator" (emphasis on asset allocation and indexing), and the free material at ABetterWayToInvest and ETFResources.
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Summary: another seminal work by Bogle
Review: John Bogle has done more to benefit investors than any 10,000 brokers, business talking heads, high-priced fund managers, or how-to investment books.
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Summary: Exposes The Fanatasy Aspects Of Investing
Review: The fund industry sells the fantasy that everyone can beat the market. What nonsense, since we are, in the aggregate, the market. Don't be sucked in! Listen to Bogle; he understands investing and offers great advice. My only disagreement is that, I believe, investors need greater exposure to international assests.
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