Book Review
The title of this little book will probably provoke varying reactions from readers. Some will insist that they are already using common sense, while others will say investing is more about clever tactics than common sense.
The idea of getting "your fair share of stock market returns" is also rather challenging. Many ruefully wish they could do that while others definitely want more than their fair share.
In The Little Book of Common Sense Investing, Vanguard Group founder and ex-CEO John Bogle tackles the thinking behind these attitudes. He says "successful investing is all about common sense" and laments that common sense is actually not so common. He rejects a lot of conventional investing wisdom, asserting that most investors are playing a losing game.
Bogle explains that there is no sense behind many commonly held beliefs, such as: investing in the stock market is a zero-sum game, so there is an even chance of beating the market; if you invest with diligence and knowledge you can stay one step ahead of the game; trading more often improves your chances of staying ahead; and past returns enable us to foretell an investment's future performance.
Bogle believes that if investors really used common sense, they would adopt a totally different approach. He recommends that we invest in index funds with low expenses.
Author: John C. Bogle
Publisher: John Wiley & Sons, Inc, 2007
ISBN: 978-0-470-10210-7
Hardcover, 240 pages
Wiley list price: $19.95
(China Daily 08/10/2007 page15)