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John Bogle on Investing: The First 50 Years / Edition 1

John Bogle on Investing: The First 50 Years / Edition 1

by John C. BogleJohn C. Bogle
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Get fifty years of industry-defining expertise in a single volume

John Bogle on Investing is a compilation of the best speeches ever delivered by one of the 20th century's towering financial giants. Individually, each of these speeches delivers a powerful lesson in investing; taken together, Bogle's lifelong themes ring loud and clear. His investing philosophy has remained more or less constant throughout his illustrious career, and this book lays it out so you can learn from the very best. You'll learn what makes a successful investment strategy, consider the productive economics of long-term investing, and how emotional investment in financial markets is often counterproductive enough to forfeit success. Bogle discusses the "fiscal drag" of investing, and shows you how to cut down on sales charges, management fees, turnover costs, and opportunity costs, as he unravels a lifetime's worth of expertise to give you deep insight into the mind of a master at work.

John C. Bogle founded Vanguard in 1974, then in the space of a few years, introduced the index mutual fund, pioneered the no-load mutual fund, and redefined bond fund management. This book wraps up the essence of his half-century of knowledge to deepen your understanding and enhance your investment success.

  • Learn why simple strategies are best
  • Discover how emotions can ruin the best investment plan
  • Examine the universality of indexing in the financial markets
  • Minimize the costs — financial and otherwise — associated with investing

John Bogle is still in there fighting, still pushing the industry onward and upward. Take this rare opportunity to have industry-shaping expertise at your fingertips with John Bogle on Investing.

Product Details

ISBN-13: 9781119088363
Publisher: Wiley
Publication date: 04/27/2015
Series: Wiley Investment Classics Series
Pages: 512
Product dimensions: 6.20(w) x 8.80(h) x 1.70(d)

About the Author

JOHN C. BOGLE is founder and former chairman of the Vanguard Group of mutual funds and President of its Bogle Financial Markets Research Center. After creating Vanguard in 1974, he served as chairman and chief executive officer until 1996 and senior chairman until 2000. Bogle is the author of ten books including Enough.: True Measures of Money, Business, and Life, The Little Book of Common Sense Investing, and The Clash of the Cultures: Investment vs.Speculation, all published by Wiley.

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Table of Contents






Part I Investment Strategies For The Intelligent Investor

1 Investing in the New Millennium: The Bagel and the Doughnut 5

2 The Clash of the Cultures in Investing: Complexity vs. Simplicity 17

3 Equity Fund Selection: The Needle or the Haystack? 33

4 Risk and Risk Control in an Era of Confidence (or Is It Greed?) 47

5 Buy Stocks? No Way! 66

6 The Death Rattle of Indexing 82

7 25 Years of Indexing: When Active Managers Win, Who Loses? 98

8 Selecting Equity Mutual Funds 108

9 The Third Mutual Fund Industry 122

Part II Taking On The Mutual Fund Industry

10 Mutual Funds: The Paradox of Light and Darkness 141

11 Economics 101: For Mutual Fund Investors . . . For Mutual Fund Managers 153

12 Honing the Competitive Edge in Mutual Funds 168

13 Creating Shareholder Value: BY Mutual Funds . . . or FOR Mutual Fund Shareholders? 180

14 The Silence of the Funds: Mutual Fund Investment Policies and Corporate Governance 196

15 Losing Our Way: Where Are the Independent Directors? 208

Part III Economics And Idealism: The Vanguard Experiment

16 Vanguard—Child of Fortune 221

17 The Winds of Change: The Vanguard Experiment in Internalized Management 231

18 Deliverance 246

19 The Lengthened Shadow, Economics, and Idealism 260

20 On the Right Side of History 270

Part IV Personal Perspectives

21 Changing the Mutual Fund Industry: The Hedgehog and the Fox 291

22 The Majesty of Simplicity 307

23 The Things by Which One Measures One’s Life 312

24 Telltale Hearts 316

25 Press On Regardless 327

Part V The Princeton Thesis

The Economic Role of the Investment Company 341


What People are Saying About This

Don Phillips

Don Phillips, CEO, Morningstar:

A long-time student of the mutual fund industry, Bogle is both its harshest critic and its greatest friend. He is, in effect, the conscience of the industry...

Peter L. Bernstein

Peter L. Bernstein, Economic Consultant, Author, Against the Gods:

This book sets the ultimate benchmark for all how-to-invest books.

Warren Buffett

Warren Buffett, Chairman, Berkshire Hathaway Inc.:

Any investor who owns or is thinking of owning shares in a fund should read this book cover to cover.


Exclusive Author Essay
Developing a Good Personal Finance Plan by John C. Bogle
Personal finance, it seems, is an area in which interest has grown by leaps and bounds over the past two decades -- an expansion that is due in large part to the incredible growth of the stock market during this period. The combination of the Internet, with its seemingly endless supply of information, and the bull market, which itself seems endless, has produced an environment in which more investors than ever before are ready, willing, and able to make their own investment decisions.

This wealth of information and guidance can be wonderful in helping you invest your nest egg, but I warn you that there are also a great many ideas that don't comport with at least my idea of common sense. I urge you to disregard each one of them in direct proportion to its complexity, its decibel level, and the conviction of its advocates that a favorable outcome is assured. Avoid complex strategies that seem to provide temptingly easy solutions to eternally complex problems. Complexity -- which I call "witchcraft" -- may seem to offer a perfect plan, but it rarely delivers on the dream it promises. What is more, complexity is expensive. The simplicity of a good plan, on the other hand, can work not only effectively, but economically as well. The good plan works, not despite being inexpensive, but because it is inexpensive.

Too often people mistake a simple plan for a naive plan, when the reality is just the opposite. The informed investor realizes the economy of simplicity and the importance of costs. The informed investor knows the importance of investing for the long term and avoiding the short-term diversions of the stock market casino that serve only to enrich the croupiers. And the informed investor knows that very few investors beat the market over the long term. The best investment plan, then, is to capture nearly all of the market's return and thereby, in the words of Paul Samuelson, Nobel Laureate in Economics, "become the envy of your neighbors -- while sleeping well in these eventful times."

How to get there? For now, I'll leave that to you to discover. I encourage you to seek out information, question the proponents, their strategies, and their underlying motives. Ultimately, I am confident that you will discover, as I did, the majesty, and effectiveness, of simplicity. And don't forget this: "The greatest enemy of a good plan is the dream of a perfect plan."


Fiduciary Responsibility, Objectivity of Analysis, and Willingness to Take a Stand

If a modern day Rip van Winkle were to wake up after a sleep of 50 years, he'd have a lot of trouble understanding today's financial markets or recognizing the names of the major participants. But if Rip happened to be, say, a Princeton professor who had monitored or read John Bogle's senior thesis, he wouldn't be at all surprised about one of the most significant developments in the world of the stock market and money management.

John Bogle didn't invent the business of mutual investment funds. They had started before he went to college, but were barely visible. His curiosity about the business was piqued by an article in a magazine as he was ruminating about a thesis topic. That bit of serendipity led not only to an honors thesis but to a lifelong vocation.

Today, mutual funds are the dominant investment medium for American families. They directly own a large fraction of all traded stock and a sizable share of bonds and liquid assets as well.

The success of the industry is built on a solid base¾the demonstrable value of diversifying risk and spreading costs by collective investment. Those were concepts intuitively recognized and emphasized by the Princeton senior.

John Bogle has not, of course, been alone in seeing the basic merit of mutual funds, now counted in the thousands. His great contribution¾his single-minded mission¾has been to insist that those funds should be managed, first and foremost, in a way truly to serve the interests of the investing public.

That has meant strong emphasis on minimizing conflicts of interest and operating at the lowest possible cost. To those ends, the family of funds which John Bogle established a quarter of a century ago¾The Vanguard Group¾has remained independent of ties to other businesses. It has long led the industry in operating without sales charges and with minimal operating costs.

Early in its life, Vanguard established the industry's first index fund. Over time, the stress on the value of index funds responded to the clear logic¾a logic fully supported by the plain evidence¾that most "active" money managers most of the time will not be able to "beat" the market. These days, after all, mutual funds largely are the market. On the average, they couldn't do better, even if they had no costs, operated with perfect efficiency, and incurred no taxes. With those hurdles to jump, very few funds can consistently outperform the averages. That's not an easy conclusion for money managers to accept. John Bogle has not won many popularity contests among his professional colleagues. Moreover, he himself would readily confess that the unique form of governance and style of management that he instilled in Vanguard is not easy to replicate.

But from a distance, I along with many others have enormously admired the force and eloquence with which he has set forth his thinking. It is thinking that I find fully persuasive as an analytic matter and entirely consistent with the public interest. John Bogle's basic conviction that the mutual fund investor is entitled, in his words, to a "fair shake" should serve as the motto of every mutual fund. This new volume happily makes that thinking easily available to a wider audience. John Bogle writes with unusual clarity and simplicity, clarity of the vision and simplicity of the written word. He has a rare ability to set out concisely and effectively the evidence to support his argument. A wry sense of humor can't quite disguise, and shouldn't disguise, his sense of frustration¾even outrage¾about some practices that permeate the industry that has been his life's work and personal passion.

All of us dependent on mutual funds or other collective investment institutions to manage our savings, and that is most of us, owe thanks to John Bogle for insisting that our interests be placed front and center.

Even more broadly, the strong sense of fiduciary responsibility, the objectivity of analysis, and the willingness to take a stand¾qualities that permeate all his writings¾set high standards for all those concerned with the growth and integrity of our open and competitive financial system.

Paul A. Volcker
May 1, 2000

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