Table of Contents

Introduction xi

Chapter One A Parable 1

Chapter Two Rational Exuberance 9

Chapter Three Cast Your Lot with Business 23

Chapter Four How Most Investors Turn a Winner's Game into a Loser's Game 35

Chapter Five The Grand Illusion 49

Chapter Six Taxes Are Costs, Too 60

Chapter Seven When the Good Times No Longer Roll 68

Chapter Eight Selecting Long-Term Winners 78

Chapter Nine Yesterday’s Winners, Tomorrow's Losers 89

Chapter Ten Seeking Advice to Select Funds? 100

Chapter Eleven Focus on the Lowest-Cost Funds 113

Chapter Twelve Profit from the Majesty of Simplicity 122

Chapter Thirteen Bond Funds and Money Market Funds 138

Chapter Fourteen Index Funds That Promise to Beat the Market 152

Chapter Fifteen The Exchange Traded Fund 164

Chapter Sixteen What Would Benjamin Graham Have Thought about Indexing? 176

Chapter Seventeen "The Relentless Rules of Humble Arithmetic" 187

Chapter Eighteen What Should I Do Now? 200

Acknowledgments 215

About the Author

JOHN C. BOGLE is founder of the Vanguard Group, Inc., and President of its Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as chairman and chief executive officer until 1996 and senior chairman until 2000. In 1999, Fortune magazine named Mr. Bogle as one of the four "Investment Giants" of the twentieth century; in 2004, Time named him one of the world's 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award.

Reviews

"excellent advice in a concise and accessible manner." (The Wall Street Journal, April 10, 2007) "It's hard to argue with the eloquent logic of John C. Bogle's latest ode to index funds?Bogle's 'Little Book' offers much exemplary advice." (Bloomberg News, April 2007)

Among monetary gurus and wise men, John Bogle is a singular case. As the founder of the highly regarded Vanguard Group, he is revered for the company's commitment to providing value to its clients as well as profits to its investors. He even has his own group of fans, called "Bogleheads," who cling to every utterance and pronouncement from the great man.

In this latest entry in the Little Book series, Bogle's gentle prose contains idiot-proof advice for investors at all levels. He punctures the myth of the superiority of mutual funds and instead declares that by using a bit of common sense, low-cost index funds are the way to go for most modest stock investors. He's also wary of the ways of Wall Street and cautions investors to steer clear of its institutional con men and cautions against excessive fees and taxes that invariably eat up profits.
It's not very glamorous or exciting advice, but that's also his point: Slow and steady wins the race. (Miami Herald, April 9, 2007)

"genuinely provides investors with the ideal strategy for making the most of stock-market investing" (Motley Fool's UK website, March 8, 2007)

"It's an easy read that will, I suspect, quickly join Burton Malkiel's A Random Walk Down Wall Streetand Charles Ellis's Winning the Loser's Gameas one of the indexing crowd's favorite books."?Jonathan Clements (Wall Street Journal)

"It's hard to argue with the eloquent logic of John C. Bogle's latest ode to index funds." (Bloomberg Terminal, March 8, 2007).

"provides an opportunity to reflect on a remarkable career and legacy." (Financial Times, 19th March 2007)

"?it is John Bogle's hymn to index-tracking investment, and a fascinating read it is too." (Daily Telegraph, March 2007)

"Those who doubt my reasoning should read the Little Book of Common Sense Investing by John Bogle." (FT Adviser, 24th April 2007)

"?particularly interesting?goes some way towards discrediting the stockpicking virtues taught to me in my time as a financial journalist." (Fund Strategy, 7th May 2007)

"?wittily written, pocket-sized guide?If you want to learn how to avoid the unpredictabilities of the stock market and the fees of middle men, then this book is well worth a read." (Pensions Age, May 2007)

" ... For the individual investor, it presents a solid game plan for growing funds over the long haul." (Directorship, July 2007)

"... read Bogle's new Little Book of Common Sense Investingand you'll see how easy it is to beat the Alpha Hunters at their own game!" (MarketWatch, July 2007)

?The one big thing that Bogle knows -- and explains so well in this slender volume -- is that buying and holding a broad benchmark of stocks while keeping fees to a minimum leads to higher long-term returns than constantly trading in a vain attempt to beat the market. Common sense? Yes. But radical too, as the entire investing establishment is designed to get investors to do the exact opposite.? (CNNMoney)

"Business books are often written by show-offs who want you to know all about their knowledge of the Greek tragedies and dark-coloured birds. So it was nice to get hold of the simply written Little Book of Common Sense Investing?Its author, John Bogle, in no simpleton. He built Vanguard into a huge fund manager...He is synonymous with index funds in the US. Vanguard's S&P 500 tracker is by far the world's largest mutual fund."?Stephen Cranston, Investor's Notebook (Jan 23, 2013)

"excellent advice in a concise and accessible manner." (The Wall Street Journal, April 10, 2007) "It's hard to argue with the eloquent logic of John C. Bogle's latest ode to index funds?Bogle's 'Little Book' offers much exemplary advice." (Bloomberg News, April 2007) Among monetary gurus and wise men, John Bogle is a singular case. As the founder of the highly regarded Vanguard Group, he is revered for the company's commitment to providing value to its clients as well as profits to its investors. He even has his own group of fans, called "Bogleheads," who cling to every utterance and pronouncement from the great man. In this latest entry in the Little Book series, Bogle's gentle prose contains idiot-proof advice for investors at all levels. He punctures the myth of the superiority of mutual funds and instead declares that by using a bit of common sense, low-cost index funds are the way to go for most modest stock investors. He's also wary of the ways of Wall Street and cautions investors to steer clear of its institutional con men and cautions against excessive fees and taxes that invariably eat up profits. It's not very glamorous or exciting advice, but that's also his point: Slow and steady wins the race. (Miami Herald, April 9, 2007) "genuinely provides investors with the ideal strategy for making the most of stock-market investing" (Motley Fool's UK website, March 8, 2007) "It's an easy read that will, I suspect, quickly join Burton Malkiel's A Random Walk Down Wall Streetand Charles Ellis's Winning the Loser's Gameas one of the indexing crowd's favorite books."?Jonathan Clements (Wall Street Journal) "It's hard to argue with the eloquent logic of John C. Bogle's latest ode to index funds." (Bloomberg Terminal, March 8, 2007). "provides an opportunity to reflect on a remarkable career and legacy." (Financial Times, 19th March 2007) "?it is John Bogle's hymn to index-tracking investment, and a fascinating read it is too." (Daily Telegraph, March 2007) "Those who doubt my reasoning should read the Little Book of Common Sense Investing by John Bogle." (FT Adviser, 24th April 2007) "?particularly interesting?goes some way towards discrediting the stockpicking virtues taught to me in my time as a financial journalist." (Fund Strategy, 7th May 2007) "?wittily written, pocket-sized guide?If you want to learn how to avoid the unpredictabilities of the stock market and the fees of middle men, then this book is well worth a read." (Pensions Age, May 2007) " ... For the individual investor, it presents a solid game plan for growing funds over the long haul." (Directorship, July 2007) "... read Bogle's new Little Book of Common Sense Investingand you'll see how easy it is to beat the Alpha Hunters at their own game!" (MarketWatch, July 2007) ?The one big thing that Bogle knows -- and explains so well in this slender volume -- is that buying and holding a broad benchmark of stocks while keeping fees to a minimum leads to higher long-term returns than constantly trading in a vain attempt to beat the market. Common sense? Yes. But radical too, as the entire investing establishment is designed to get investors to do the exact opposite.? (CNNMoney) "Business books are often written by show-offs who want you to know all about their knowledge of the Greek tragedies and dark-coloured birds. So it was nice to get hold of the simply written Little Book of Common Sense Investing?Its author, John Bogle, in no simpleton. He built Vanguard into a huge fund manager...He is synonymous with index funds in the US. Vanguard's S&P 500 tracker is by far the world's largest mutual fund."?Stephen Cranston, Investor's Notebook (Jan 23, 2013)