Commonsense on Mutual Funds: New Imperatives for the Intelligent Investor (Wiley Audio)

He begins with primer-like essays on investment strategy, championing mutual funds for their inherent investment value, and then grinding each point home with a bevy of graphs, charts, entertaining anecdotes, and common sense. He repeatedly stresses time as a basic tenet for investing, listing these simple rules: "Time is your friend"; "Impulse is your enemy"; "Stay the course." And then he proceeds to blast fund managers, who have become marketers rather than managers.

The trade-off between the profits that accrue to fund shareholders and the profits that accrue to the fund management companies seems subject to no effective independent watchdog or balance wheel, despite the fact that the shareholders actually own the mutual funds.

If you choose the wrong asset class, you can make great choices and greatly lag the pack. If you choose the wrong way to invest with the right asset class, you can still do poorly.

Mr. Bogle's book explains in remarkable detail (with lots of graphs and numbers to make the point) that almost everyone will lag the market averages for stocks over any multiple year period of time due to the effects of trading stocks, taxes, costs for money management, marketing expenses, and size of portfolio.

Rather than despair, he points out that we can view this as an outstanding opportunity. We can simply buy indexed mutual funds (such as the ones that Vanguard, his former firm, offers) and outperform 98-99 percent of everyone who invests for the long haul.

Unlike other books where the author touts an activity that benefits him economically, Mr. Bogle's arguement is right. For anyone with less investment skill than Warren Buffett, S&P 500 and Wilshire 5000 index funds will be a terrific solution.

New investors may find this book to have more information than they need or can easily absorb.

People who think they know all the answers will find a lot of new material to cogitate about, usefully.

Anyone who owns mutual funds is making a mistake if they do not read this book.

Anytime you start to invest on the assumption that you can beat the market easily, PLEASE QUICKLY READ OR REREAD THIS BOOK. THEN LIE DOWN UNTIL THE FEELING GOES AWAY!

He is also remarkably candid that future returns from indexing may be modest (even though you will continue to beat almost everyone else). My own reaction is that the market is really too high now to start index investing in many countries, but new cash should certainly go into index mutual funds in other countries whenever we get a decent correction down to or much closer to the more typical 14 times p/e that stocks usually sell for. Mr. Bogle also explores that point in excellent detail.

A wonderful book by someone who is really looking out for the investors' best interests!


Fantastic! A must read for every investor   January 11, 2003
 3 out of 3 found this review helpful

I have read several outstanding investment books and this is surely one among them. I have always been suspicious of all the Wall Street and City slicks making a killing out of novice investors. Mr. Bogle exposes the farce all too clearly.

This book is not only an outstanding book on mutual funds (unit trusts) but also on investment principles for a long term investor.

Even though the book in written in the US context, it is fully relevant in the UK market which parallels the US market as well as financial services offered there. It should be no problem to apply the principles and philosophies here.

A WORD OF CAUTION: The English language used in the book is very sophiticated and even more so are the discussions around the graphs, figures and numbers involved. It can be quite a challenge to the novice investor. I would recommed reading a basic book on investment principles and strategies and then graduating to this book. But once you follow it, it will be your mutual fund/unit trust Bible.

Best of luck and don't let the financial industry fleece you!


A very sound textbook for believers in passive investing   July 4, 1999
 3 out of 4 found this review helpful

This is a text by the founder of the Vanguard Group of the USA and hence is aimed at the American reader. However, if you believe that the UK and US stockmarkets are "efficient" then most of the book is also relevant to the British investor.

The book deals mainly with index-tracking funds and asset allocation, e.g. shares versus bonds, although the author has a bias against foreign (i.e. non-US) shares.

I enjoyed the book but it is not exactly a piece of light-reading.