The Little Book of Common Sense Investing : The Only Way to Guarantee Your Fair Share of Stock Market Returns.
Bogle, John C.
The Little Book of Common Sense Investing : The Only Way to Guarantee Your Fair Share of Stock Market Returns. - 2nd ed. - 1 online resource (305 pages) - Little Books. Big Profits Series . - Little Books. Big Profits Series .
Cover -- Title Page -- Copyright -- Contents -- Introduction to the 10th Anniversary Edition -- Chapter One A Parable The Gotrocks Family -- Get rid of all your Helpers. Then your family will again reap 100 percent of the pie that corporate America bakes for you -- Chapter Two Rational Exuberance: Shareholder Gains Must Match Business Gains -- "Over time, the aggregate gains made by . . . shareholders must of necessity match the business gains of the company -- Reversion to the mean -- "It is dangerous . . . to apply to the future inductive arguments based on past experience." -- The dual nature of stock market returns -- Enter speculative return -- A return to sanity -- Combining investment return and speculative return: total stock market returns -- Accurately forecasting short-term swings in investor emotions is not possible. But forecasting the long-term economics of investing has carried remarkably high odds of success -- The real market and the expectations market -- The stock market is a giant distraction to the business of investing -- Chapter Three Cast Your Lot with Business: Win by Keeping It Simple-Rely on Occam's Razor -- Occam's razor: When there are multiple solutions to a problem, choose the simplest one -- The Total Stock Market Index -- Returns earned in the stock market must equal the gross returns earned by all investors in the market -- If the data do not prove that indexing wins, well, the data are wrong -- Active funds versus benchmark indexes -- The record of an investor in the first index mutual fund: 15,000 invested in 1976 -- value in 2016, 913,340 -- A caveat and a caution -- Chapter Four How Most Investors Turn a Winner's Game into a Loser's Game: "The Relentless Rules of Humble Arithmetic" -- Before costs, beating the market is a zero-sum game. After costs, it is a loser's game. We investors as a group get precisely what we don't pay for. If we pay nothing, we get everything -- "The relentless rules of humble arithmetic." -- It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it -- 10,000 grows to 294,600 . . . or to 114,700. Where did that 179,900 go? -- You put up 100 percent of the capital and you assume 100 percent of the risk. But you earn less than 40 percent of the potential return -- Costs make the difference between investment success and investment failure -- Fund investors deserve a fair shake -- Chapter Five Focus on the Lowest-Cost Funds: The More the Managers Take, the Less the Investors Make -- Fund performance comes and goes. Costs go on forever -- Costs are large, and too often ignored -- Costs matter. A lot -- The magic of compounding, again -- Low costs and index funds -- If the managers take nothing, the investors receive everything: the market's return -- Chapter Six Dividends Are the Investor's (Best?) Friend: But Mutual Funds Confiscate Too Much of Them -- An astonishing revelation -- Actively managed equity funds confiscate your dividend income -- Chapter Seven The Grand Illusion: Surprise! The Returns Reported by Mutual Funds Are Rarely Earned by Mutual Fund Investors -- Hint: Money flows into most funds after good performance, and goes out when bad performance follows -- The dual penalties of costs and investor behavior -- Inflamed by heady optimism and greed, and enticed by the wiles of mutual fund marketers, investors poured their savings into equity funds at the bull market peak -- When counterproductive investor emotions are magnified by counterproductive fund industry promotions, little good is apt to result -- Investor emotions plus fund industry promotions equals trouble. Chapter Eight Taxes Are Costs, Too: Don't Pay Uncle Sam Any More Than You Should -- Managed mutual funds are astonishingly taxinefficient -- Bring on the data! -- Fund returns are devastated by costs, adverse fund selections, bad timing, taxes, and inflation. -- Nominal returns versus real returns -- Chapter Nine When the Good Times No Longer Roll: It's Wise to Plan on Lower Future Returns in the Stock and Bond Markets -- Both common sense and humble arithmetic tell us that we're facing an era of subdued returns in the stock market -- The arithmetic behind the caution: the sources of stock returns -- Future annual investment return-6 percent? -- Future annual speculative return- minus 2 percent? -- If you don't agree with my 4 percent expectation, "do it yourself." -- The source of bond returns-the current interest yield -- With lower returns are in prospect for stocks and bonds, balanced stock/bond portfolios will follow suit -- If rational expectations suggest a future gross annual return of 3.6 percent for a balanced fund, what does this imply for the net return to owners of the balanced fund? -- Unless the fund industry begins to change, the typical actively managed fund appears to be a singularly unfortunate investment choice -- Five ways to avoid financial devastation. Only two work -- Chapter Ten Selecting Long-Term Winners: Don't Look for the Needle-Buy the Haystack -- A fund failure rate of almost 80 percent -- A death in the family -- The odds against success are terrible: Only two out of 355 funds have delivered truly superior performance -- The Magellan Fund story -- The Contrafund story -- Living by the sword, dying by the sword -- Look (forward) before you leap -- Don't look for the needle, buy the haystack. Indexing for a lifetime. Two major options: Investing in 30 or 40 active funds and managers, or in one index fund with one non-manager -- If you decide against indexing . . . -- Chapter Eleven "Reversion to the Mean": Yesterday's Winners, Tomorrow's Losers -- Reversion to the mean (RTM) is reaffirmed in comprehensive fund industry data -- A second study reaffirms the first study-with incredible precision -- The stars produced in the mutual fund field rarely remain stars -- all too often they become meteors -- Picking winning funds based on past performance is hazardous duty -- Chapter Twelve Seeking Advice to Select Funds?: Look Before You Leap -- Registered investment advisers (RIAs) can play a vital role in providing investors with assistance -- Helpers-adding value or subtracting value? -- If you can avoid jumping on the bandwagon . . . -- Average annual return of funds recommended by advisers: 2.9 percent. For equity funds purchased directly: 6.6 percent -- The Merrill Lynch debacle: a case study -- Two terrible ideas: the Focus Twenty fund and the Internet Strategies fund -- A marketing success for Merrill Lynch, an investment failure for its clients -- Investment disaster: Clients lose 80 percent of their assets -- The value of financial consultants -- The rise of the robo-adviser -- Simplicity beats complexity -- The fiduciary standard -- Chapter Thirteen Profit from the Majesty of Simplicity and Parsimony: Hold Traditional Low-Cost Index Funds That Track the Stock Market -- The Monte Carlo simulation -- The majesty of simplicity in an empire of parsimony -- My conclusions rely on mathematical facts-the relentless rules of humble arithmetic -- All index funds are not created equal. Costs to investors vary widely -- Two funds. One index. Different costs -- Your index fund should not be your manager's cash cow. It should be your own cash cow. Whether markets are efficient or not, indexing works -- International funds also trail their benchmark indexes -- Caution about gambling -- Chapter Fourteen Bond Funds: Where Those Relentless Rules of Humble Arithmetic Also Prevail -- Why would an intelligent investor hold bonds? -- A similar gap between bond yields and stock yields -- Bond fund managers track the bond market -- Bonds vary in riskiness -- Three basic types of bond funds -- Like stock funds, actively managed bond funds lag their benchmarks. Why? The arithmetic of costs -- The important role of costs in shaping bond fund returns -- The total bond market index fund -- The value of bond index funds is created by the same forces that create value for stock index funds -- Chapter Fifteen The Exchange-Traded Fund (ETF): A Trader to the Cause? -- ETF traders have absolutely no idea what relationship their investment returns will bear to the returns earned in the stock market -- The creation of the "Spider." -- ETF growth explodes -- The ETF stampede -- The renowned Purdey shotgun is great for big-game hunting in Africa. It's also an excellent weapon for suicide -- The temptation to chase past returns -- Among the 20 best-performing ETFs, for 19 funds, investor returns fell short of ETF returns -- A "double whammy": betting on hot market sectors (emotions) and paying heavy costs (expenses) are sure to be hazardous to your wealth -- ETFs are a dream come true for entrepreneurs and brokers. But are they an investor's dream come true? -- The interests of the business versus the interests of the clients -- Answering my question -- Chapter Sixteen Index Funds That Promise to Beat the Market: The New Paradigm? -- Success breeds competition -- Passive ETF strategies designed to outpace stock market returns -- Active managers versus active strategies. The new breed of passive indexers are active strategists.
9781119404521
Stock index futures.
Electronic books.
HG6043.B645 2017
332.63/27
The Little Book of Common Sense Investing : The Only Way to Guarantee Your Fair Share of Stock Market Returns. - 2nd ed. - 1 online resource (305 pages) - Little Books. Big Profits Series . - Little Books. Big Profits Series .
Cover -- Title Page -- Copyright -- Contents -- Introduction to the 10th Anniversary Edition -- Chapter One A Parable The Gotrocks Family -- Get rid of all your Helpers. Then your family will again reap 100 percent of the pie that corporate America bakes for you -- Chapter Two Rational Exuberance: Shareholder Gains Must Match Business Gains -- "Over time, the aggregate gains made by . . . shareholders must of necessity match the business gains of the company -- Reversion to the mean -- "It is dangerous . . . to apply to the future inductive arguments based on past experience." -- The dual nature of stock market returns -- Enter speculative return -- A return to sanity -- Combining investment return and speculative return: total stock market returns -- Accurately forecasting short-term swings in investor emotions is not possible. But forecasting the long-term economics of investing has carried remarkably high odds of success -- The real market and the expectations market -- The stock market is a giant distraction to the business of investing -- Chapter Three Cast Your Lot with Business: Win by Keeping It Simple-Rely on Occam's Razor -- Occam's razor: When there are multiple solutions to a problem, choose the simplest one -- The Total Stock Market Index -- Returns earned in the stock market must equal the gross returns earned by all investors in the market -- If the data do not prove that indexing wins, well, the data are wrong -- Active funds versus benchmark indexes -- The record of an investor in the first index mutual fund: 15,000 invested in 1976 -- value in 2016, 913,340 -- A caveat and a caution -- Chapter Four How Most Investors Turn a Winner's Game into a Loser's Game: "The Relentless Rules of Humble Arithmetic" -- Before costs, beating the market is a zero-sum game. After costs, it is a loser's game. We investors as a group get precisely what we don't pay for. If we pay nothing, we get everything -- "The relentless rules of humble arithmetic." -- It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it -- 10,000 grows to 294,600 . . . or to 114,700. Where did that 179,900 go? -- You put up 100 percent of the capital and you assume 100 percent of the risk. But you earn less than 40 percent of the potential return -- Costs make the difference between investment success and investment failure -- Fund investors deserve a fair shake -- Chapter Five Focus on the Lowest-Cost Funds: The More the Managers Take, the Less the Investors Make -- Fund performance comes and goes. Costs go on forever -- Costs are large, and too often ignored -- Costs matter. A lot -- The magic of compounding, again -- Low costs and index funds -- If the managers take nothing, the investors receive everything: the market's return -- Chapter Six Dividends Are the Investor's (Best?) Friend: But Mutual Funds Confiscate Too Much of Them -- An astonishing revelation -- Actively managed equity funds confiscate your dividend income -- Chapter Seven The Grand Illusion: Surprise! The Returns Reported by Mutual Funds Are Rarely Earned by Mutual Fund Investors -- Hint: Money flows into most funds after good performance, and goes out when bad performance follows -- The dual penalties of costs and investor behavior -- Inflamed by heady optimism and greed, and enticed by the wiles of mutual fund marketers, investors poured their savings into equity funds at the bull market peak -- When counterproductive investor emotions are magnified by counterproductive fund industry promotions, little good is apt to result -- Investor emotions plus fund industry promotions equals trouble. Chapter Eight Taxes Are Costs, Too: Don't Pay Uncle Sam Any More Than You Should -- Managed mutual funds are astonishingly taxinefficient -- Bring on the data! -- Fund returns are devastated by costs, adverse fund selections, bad timing, taxes, and inflation. -- Nominal returns versus real returns -- Chapter Nine When the Good Times No Longer Roll: It's Wise to Plan on Lower Future Returns in the Stock and Bond Markets -- Both common sense and humble arithmetic tell us that we're facing an era of subdued returns in the stock market -- The arithmetic behind the caution: the sources of stock returns -- Future annual investment return-6 percent? -- Future annual speculative return- minus 2 percent? -- If you don't agree with my 4 percent expectation, "do it yourself." -- The source of bond returns-the current interest yield -- With lower returns are in prospect for stocks and bonds, balanced stock/bond portfolios will follow suit -- If rational expectations suggest a future gross annual return of 3.6 percent for a balanced fund, what does this imply for the net return to owners of the balanced fund? -- Unless the fund industry begins to change, the typical actively managed fund appears to be a singularly unfortunate investment choice -- Five ways to avoid financial devastation. Only two work -- Chapter Ten Selecting Long-Term Winners: Don't Look for the Needle-Buy the Haystack -- A fund failure rate of almost 80 percent -- A death in the family -- The odds against success are terrible: Only two out of 355 funds have delivered truly superior performance -- The Magellan Fund story -- The Contrafund story -- Living by the sword, dying by the sword -- Look (forward) before you leap -- Don't look for the needle, buy the haystack. Indexing for a lifetime. Two major options: Investing in 30 or 40 active funds and managers, or in one index fund with one non-manager -- If you decide against indexing . . . -- Chapter Eleven "Reversion to the Mean": Yesterday's Winners, Tomorrow's Losers -- Reversion to the mean (RTM) is reaffirmed in comprehensive fund industry data -- A second study reaffirms the first study-with incredible precision -- The stars produced in the mutual fund field rarely remain stars -- all too often they become meteors -- Picking winning funds based on past performance is hazardous duty -- Chapter Twelve Seeking Advice to Select Funds?: Look Before You Leap -- Registered investment advisers (RIAs) can play a vital role in providing investors with assistance -- Helpers-adding value or subtracting value? -- If you can avoid jumping on the bandwagon . . . -- Average annual return of funds recommended by advisers: 2.9 percent. For equity funds purchased directly: 6.6 percent -- The Merrill Lynch debacle: a case study -- Two terrible ideas: the Focus Twenty fund and the Internet Strategies fund -- A marketing success for Merrill Lynch, an investment failure for its clients -- Investment disaster: Clients lose 80 percent of their assets -- The value of financial consultants -- The rise of the robo-adviser -- Simplicity beats complexity -- The fiduciary standard -- Chapter Thirteen Profit from the Majesty of Simplicity and Parsimony: Hold Traditional Low-Cost Index Funds That Track the Stock Market -- The Monte Carlo simulation -- The majesty of simplicity in an empire of parsimony -- My conclusions rely on mathematical facts-the relentless rules of humble arithmetic -- All index funds are not created equal. Costs to investors vary widely -- Two funds. One index. Different costs -- Your index fund should not be your manager's cash cow. It should be your own cash cow. Whether markets are efficient or not, indexing works -- International funds also trail their benchmark indexes -- Caution about gambling -- Chapter Fourteen Bond Funds: Where Those Relentless Rules of Humble Arithmetic Also Prevail -- Why would an intelligent investor hold bonds? -- A similar gap between bond yields and stock yields -- Bond fund managers track the bond market -- Bonds vary in riskiness -- Three basic types of bond funds -- Like stock funds, actively managed bond funds lag their benchmarks. Why? The arithmetic of costs -- The important role of costs in shaping bond fund returns -- The total bond market index fund -- The value of bond index funds is created by the same forces that create value for stock index funds -- Chapter Fifteen The Exchange-Traded Fund (ETF): A Trader to the Cause? -- ETF traders have absolutely no idea what relationship their investment returns will bear to the returns earned in the stock market -- The creation of the "Spider." -- ETF growth explodes -- The ETF stampede -- The renowned Purdey shotgun is great for big-game hunting in Africa. It's also an excellent weapon for suicide -- The temptation to chase past returns -- Among the 20 best-performing ETFs, for 19 funds, investor returns fell short of ETF returns -- A "double whammy": betting on hot market sectors (emotions) and paying heavy costs (expenses) are sure to be hazardous to your wealth -- ETFs are a dream come true for entrepreneurs and brokers. But are they an investor's dream come true? -- The interests of the business versus the interests of the clients -- Answering my question -- Chapter Sixteen Index Funds That Promise to Beat the Market: The New Paradigm? -- Success breeds competition -- Passive ETF strategies designed to outpace stock market returns -- Active managers versus active strategies. The new breed of passive indexers are active strategists.
9781119404521
Stock index futures.
Electronic books.
HG6043.B645 2017
332.63/27