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Book Summary: The Little Book Of Common Sense Investing Summary

he Little Book Of Common Sense Investing: Review, Summary & Quotes

The Little Book Of Common Sense Investing Book Review:

  1. Very informative on the logic of investing in index funds
  2. Great information on investment mistakes
  3. Quite repetitive on the same point
  4. Could be outdated as it’s published in 2007

The Little Book Of Common Sense Investing John C. Bogle:

  1. John C. Bogle had US$80 million in 2017
  2. He was the founder and chief executive of The Vanguard Group.
  3. His family was affected by the Great Depression. They lost their money and had to sell their home, with his father falling into alcoholism which resulted in his parents’ divorce
  4. During his high-earning years at Vanguard, he regularly gave half his salary to charity

The Little Book Of Common Sense Investing Book Quotes:

  1. Fund investors are confident that they can easily select superior fund managers. They are wrong !
  2. The stock market is a giant distraction.
  3. Please don’t equate simplicity with stupidity.
  4. When there are multiple solutions to a problem, choose the simplest one.
  5. The stock market is a giant distraction.
  6. If the data do not prove that indexing wins, well, the data are wrong.
  7. The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.
  8. Don’t pay Uncle Sam any more than you should.
  9. Don’t Look for the Needle—Buy the Haystack

The Little Book Of Common Sense Investing Book Summary:

SUCCESSFUL INVESTING IS ALL about common sense. As the Oracle has said, it is simple, but it is not easy.

Index funds eliminate the risks of individual stocks, market sectors, and manager selection. Only stock market risk remains.

Index fund is indeed the only investment that guarantees you will capture your fair share of the returns that business earns. Thanks to the miracle of compounding


The Little Book Of Common Sense Investing Chapter 1:

The lower the costs that investors as a group incur, the higher rewards that they reap.

Successful investing is about owning businesses and reaping the huge rewards provided by the dividends and earnings growth of our nation’s—and, for that matter, the world’s—corporations.


The Little Book Of Common Sense Investing Chapter 2:

Business Reality Trumps Market Expectations

Accurately forecasting swings in investor emotions is not possible. But forecasting the long-term economics of investing carries remarkably high odds of success.

In the short-term, stock prices go up only when the expectations of investors rise, not necessarily when sales, margins, or profits rise


The Little Book Of Common Sense Investing Chapter 3:

We investors as a group get precisely what we don’t pay for. So if we pay nothing, we get everything.

Costs make the difference between investment success and investment failure.


The Little Book Of Common Sense Investing Chapter 4:

Surprise! The returns reported by mutual funds aren’t actually earned by mutual fund investors.

The reality is considerably worse. For in addition to paying the heavy costs that fund managers extract for their services, the shareholders pay an additional cost that has been even larger.

Money flows into most funds after good performance, and goes out when bad performance follows.

Fund returns are devastated by costs, taxes, and inflation.


The Little Book Of Common Sense Investing Chapter 5:

Surprise! The returns reported by mutual funds aren’t actually earned by mutual fund investors.

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.


The Little Book Of Common Sense Investing Chapter 6:

Managed mutual funds are astonishingly tax-inefficient.

Fund returns are devastated by costs, taxes, and inflation.


The Little Book Of Common Sense Investing Chapter 7:

Unless the fund industry begins to change, the typical actively managed fund appears to be a singularly unfortunate investment choice.


The Little Book Of Common Sense Investing Chapter 8:

Funds with long-serving portfolio managers and records of consistent excellence are the exception rather than the rule in the mutual fund industry.

To build a well-diversified portfolio, you might stash 70 percent of your stock portfolio into a (Dow Jones) Wilshire 5000-index fund and the remaining 30 percent in an international-index fund.


The Little Book Of Common Sense Investing Chapter 9:

In selecting mutual funds, most fund investors seem to rely, not on sustained performance over the long term, but on exciting performance over the short term.

With each passing year, the reality is increasingly clear. Fund returns seem to be random.

Under normal circumstances, it takes between 20 and 800 years [of monitoring performance] to statistically prove that a money manager is skillful, not lucky.

Indexing wins hands-down. After tax, active management just can’t win.


The Little Book Of Common Sense Investing Chapter 10:

Index funds endure, while most advisers and funds do not.

The best, and only, way to make sure that you and your adviser are on the same team is to make sure that he is ‘fee-only,’


The Little Book Of Common Sense Investing Chapter 11:

Common sense tells us that performance comes and goes, but costs go on forever.

The index fund’s risk-adjusted return: 194 percent; average managed fund, 154 percent.


The Little Book Of Common Sense Investing Chapter 12:

Hold Index Funds That Own the Entire Stock Market.


All index funds are not created equal. One example: the difference between $122,700 and $99,100.

Your index fund should not be your manager’s cash cow. It should be your own cash cow.


The Little Book Of Common Sense Investing Chapter 13:

Over the ten-year period 1988–1998, US bond index funds returned 8.9 per cent a year against 8.2 per cent for actively managed bond funds (with) index funds beating 85 per cent of all active funds. This differential is largely due to fees.”


The Little Book Of Common Sense Investing Chapter 14:

Put your dreaming away, pull out your common sense, and stick to the good plan represented by the classic index fund.


The Little Book Of Common Sense Investing Chapter 15:

“It would be unfortunate if people focused pin-point bets on very narrowly defined ETFs.

These still involve nearly as much risk as concentrating on individual stockpicks. . . .

You’re taking extraordinary risk


The Little Book Of Common Sense Investing Chapter 16:

What would Benjamin Graham have thought about indexing?

The majority of investors should be satisfied with the reasonably good return obtainable from a defensive portfolio.

The real money in investment will be made not out of buying and selling but of owning and holding securities.


The Little Book Of Common Sense Investing Chapter 17:

The two sources of the superior returns of the index fund:

(1) the broadest possible diversification; and

(2) the tiniest possible costs.


The Little Book Of Common Sense Investing Chapter 18:

In your Serious Money Account, allocate 50 percent to 95 percent in classic index funds.

In your Funny Money Account, allocate not one penny more than 5 percent.

Start to invest at the earliest possible moment, and continue to put money away regularly from then on.

Investing entails risk, but not investing dooms us to financial failure

The Little Book Of Common Sense Investing PDF Download

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