Rating: 
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.
Rating:
Summary: Other books to consider
Review: John Bogle is a nice guy, but he is dead wrong about the stock market and about active management of mutual funds. His thesis: All performance regresses to the mean, therefore you cannot beat the market over time. Better to buy the market via index funds, do so at lowest cost, and hold for the long term. That approach guarantees slightly better than average performance. Much better approach: rank order all no-load mutual funds by alpha, and select a diversified portfolio of those at the top according to your asset allocation profile. Monitor alphas over time. Periodically rebalance, but especially replace any mutual fund when its alpha falls below 0 with one that has a positive alpha. You will end up with a dollar balance far above that following Bogel's advice. I am surprised that Don Phillips, head of Morningstar,Inc. does not know this.
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