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John Bogle on Investing: The First 50 Years

Book Description

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.

    Table of Contents

    1. Cover Page
    2. Title Page
    3. Copyright
    4. Dedication
    5. CONTENTS
    6. 2015 INTRODUCTION TO THE CLASSIC EDITION OF JOHN BOGLE ON INVESTING: THE FIRST 50 YEARS
      1. Has The First 50 Years Become a Classic?
      2. A Retrospective on The First 50 Years
      3. Reviewing Five Key Chapters
      4. Reflections on What Makes a “Classic”
      5. Coming Full Circle
    7. FOREWORD
    8. INTRODUCTION
    9. PREFACE
      1. Three Surprising Turnarounds
      2. Great Ideas in Finance
      3. How the Book Is Organized
      4. Two Careers
    10. Part I: INVESTMENT STRATEGIES FOR THE INTELLIGENT INVESTOR
      1. SOME WORDS OF APPRECIATION
      2. Chapter 1: INVESTING IN THE NEW MILLENNIUM: THE BAGEL AND THE DOUGHNUT
        1. 1. The Bagel and the Doughnut in the Stock Market
        2. 2. The Bagel and the Doughnut in the Mutual Fund Industry
        3. 3. Vanguard in the New Millennium: The Bagel in a Doughnut-Dominated Industry
      3. Chapter 2: THE CLASH OF THE CULTURES IN INVESTING: COMPLEXITY VS. SIMPLICITY
        1. Successful Fund Managers Fail
        2. Newsletters Do Even Worse
        3. “All the News That's Fit to Print”
        4. “Manager of the Year”
        5. Bernie Cornfeld's Successors
        6. Life Is Short. Enjoy! But Only Up to 5%
        7. Now … to the Serious Money Account
        8. Simplicity Works
        9. The Reward Dimension
        10. The Risk Dimension
        11. The Cost Dimension
      4. Chapter 3: EQUITY FUND SELECTION: THE NEEDLE OR THE HAYSTACK?
        1. Economics and Emotions
        2. A Needle in a Haystack
        3. Can an Expert Find the Needle?
        4. Why So Many Losing Needles? Costs!
        5. Invest in the Haystack
        6. Follow the Money
        7. What's To Be Done?
        8. Owning the Haystack Today
        9. Bogle and Buffett Agree … But to What Avail?
      5. Chapter 4: RISK AND RISK CONTROL IN AN ERA OF CONFIDENCE (OR IS IT GREED?)
        1. Four Key Elements of Investing: Reward, Risk, Time, and Cost
        2. Reward: Out of Our Control
        3. Risk in Today's Market
        4. Old Economy, New Economy?
        5. The Ultimate Test: Future Cash Flows
        6. The Buffett Analysis
        7. Controlling Risk
        8. The “Efficient Frontier”
        9. Did He Say “Gold”? or “Alternative Investments”?
        10. A Final Thought
      6. Chapter 5: BUY STOCKS? NO WAY!
        1. The Great Crash and Its Aftermath
        2. Stock Values vs. Stock Prices
        3. The Hazards of Equity Investing
        4. Investing in Bonds
        5. The Appropriate Balance
        6. Return, Risk—and Cost
        7. The Soaring Costs of Mutual Funds
        8. Index Funds … and Others
        9. Beware of Some Funds
        10. Summing Up
      7. Chapter 6: THE DEATH RATTLE OF INDEXING
        1. Myth One: The S&P 500 as the Benchmark
        2. Myth Two: The Past Is Not Prologue
        3. Myth Three: Market Timing Will Carry the Day
        4. Myth Four: That Indexing Works Only in Efficient Markets
        5. Myth Five: That Reversion to the Mean Will Finally Triumph
        6. Conclusion
      8. Chapter 7: 25 YEARS OF INDEXING: WHEN ACTIVE MANAGERS WIN, WHO LOSES?
        1. A Better Standard?
        2. Too Many Index Funds?
        3. The Newest Fad
        4. Active Managers and Indexes
        5. A Retrospective
      9. Chapter 8: SELECTING EQUITY MUTUAL FUNDS
        1. Why Is It So Difficult to Pick “the” Winners?
        2. A More Sophisticated Real-World Test of Fund Selection
        3. A Simple Strategy for Picking “a” Winner
        4. Applying Analysis and Judgment to Identify Future Winners
        5. Implications for the Decade of the 1990s
        6. Conclusion
      10. Chapter 9: THE THIRD MUTUAL FUND INDUSTRY
        1. Why Own Bond Funds?
        2. Five General Rules for Bond Fund Selection
        3. Five Warnings about Bond Fund Selection
        4. Conclusion
    11. Part II: TAKING ON THE MUTUAL FUND INDUSTRY
      1. Chapter 10: MUTUAL FUNDS: THE PARADOX OF LIGHT AND DARKNESS
        1. The Biggest Star: The Bull Market
        2. Three More Stars: Taxes, Technology, and Innovation
        3. The Dark Side of the Bull Market
        4. The Dark Side of Taxes, Technology, and Innovation
        5. Where Do We Go from Here?
      2. Chapter 11: ECONOMICS 101: FOR MUTUAL FUND INVESTORS … FOR MUTUAL FUND MANAGERS
        1. The Leopard Changes Its Spots
        2. The Flaw of Past Performance
        3. The Flaw of High Fund Costs
        4. “Follow the Money”
        5. The Flaw of Future Returns
        6. The Flaw of Great Success
        7. The Industry Responds … Sort of … on Fund Performance
        8. The Industry Response on Costs
        9. The Industry Response on Price Competition
        10. Is There “Vigorous Price Competition”?
        11. Solutions: Unclear
        12. “Show Me the Money”
      3. Chapter 12: HONING THE COMPETITIVE EDGE IN MUTUAL FUNDS
        1. Index Funds and Managed Funds
        2. The Powerful Relationship between Costs and Returns
        3. Vanguard vs. the Competition
        4. It's More Than the Expense Ratio
        5. Revolutionary Words
        6. Four Generations—Two Authors—One Idea
        7. Common Sense on Mutual Funds
        8. The Competitive Edge
      4. Chapter 13: CREATING SHAREHOLDER VALUE: BY MUTUAL FUNDS … OR FOR MUTUAL FUND SHAREHOLDERS?
        1. Enhancing Corporate Value
        2. Time Horizons and the Sources of Investment Return
        3. The Consequences of Using Market Returns as the Standard
        4. The Rise of the Institutional Investor
        5. The Changing Focus of Institutional Voting Activism
        6. The Silence of the Mutual Funds
        7. Mutual Funds: The Artillery or the Target?
        8. The Inevitable Failure to Earn the Cost of Capital
        9. How Effective Are Fund Directors?
      5. Chapter 14: THE SILENCE OF THE FUNDS: MUTUAL FUND INVESTMENT POLICIES AND CORPORATE GOVERNANCE
        1. Why Are Mutual Funds Passive Participants in Corporate Governance?
        2. The Effects of Passivity
        3. Managed Earnings
        4. Short-Term or Long-Term?
        5. Reversing Course I. Index Funds
        6. Reversing Course II. The Ticking Time Bomb of Executive Compensation
        7. Reversing Course III. Taking Action
      6. Chapter 15: LOSING OUR WAY: WHERE ARE THE INDEPENDENT DIRECTORS?
    12. Part III: ECONOMICS AND I DEALISM : THE VANGUARD EXPERIMENT
      1. Chapter 16: VANGUARD—CHILD OF FORTUNE
        1. Fortune and Princeton
        2. In the Business and Out
        3. The Character of Vanguard
        4. The First Index Fund
        5. The First Multi-Series Bond Fund
        6. Education and Economics
      2. Chapter 17: THE WINDS OF CHANGE: THE VANGUARD EXPERIMENT IN INTERNALIZED MANAGEMENT
        1. 1. The Mandate
        2. 2. The Concept
        3. 3. The Timetable
        4. 4. The Challenges
        5. 5. The Opportunities
        6. 6. Implications for the Industry
        7. The Winds of Change
      3. Chapter 18: DELIVERANCE
        1. Looking Back and Then Ahead
        2. The Challenge of Professional Responsibility
        3. The Challenge of Fiduciary Duty
        4. Fund Industry Structure
        5. “A Man Cannot Serve Two Masters”
        6. Mutualization?
        7. The Challenges Ahead
      4. Chapter 19: THE LENGTHENED SHADOW, ECONOMICS, AND IDEALISM
        1. Wilson and Economics
        2. Liberal or Conservative?
        3. The Economics and Idealism Behind Vanguard's Founding
        4. Down with Costs, and Carthage Too
        5. A Lengthened Shadow?
      5. Chapter 20: ON THE RIGHT SIDE OF HISTORY
        1. The Fund Industry and Vanguard
        2. Turning Back the Clock
        3. Remarkable Relevance
        4. Building a Model Institution
        5. Linking Foresight and Caring
        6. The Superior Company and the Liberating Vision
        7. Powerful Parallel Phrases
        8. Memo on Growing from Small to Large
        9. Where History Comes In
    13. Part IV: PERSONAL PERSPECTIVES
      1. Chapter 21: CHANGING THE MUTUAL FUND INDUSTRY: THE HEDGEHOG AND THE FOX
        1. Princeton's Vital Role
        2. A Remarkable Accident
        3. Walter L. Morgan, Fellow Princetonian
        4. The Foxes—Truly a Skulk
        5. When Mr. Market Speaks, Funds Listen
        6. Enter the Hedgehog
        7. Status Quo versus Reality
        8. Investment versus Speculation
        9. The Hedgehog as Businessman
        10. Reinforcement … from a Surprising Source
        11. Liberal Education, Moral Education
        12. Returning Full Circle
        13. Woodrow Wilson on the Moral Impulse
      2. Chapter 22: THE MAJESTY OF SIMPLICITY
      3. Chapter 23: THE THINGS BY WHICH ONE MEASURES ONE'S LIFE
      4. Chapter 24: TELLTALE HEARTS
        1. Telltale Heart #1
        2. The Nicholas Effect
        3. Telltale Heart #2
        4. Still on Watch
        5. “You Have a New Heart”
        6. Continuing My Mutual Fund Mission
        7. Gratitude to the Donors
        8. A Sense of Hope for the World
      5. Chapter 25: PRESS ON REGARDLESS
        1. Corporate America
        2. The Vanguard Saga
        3. A “Hot Tip” on Stocks
        4. Advice to the MBA Graduate
    14. Part V: THE PRINCETON THESIS
      1. PRINCETON THESIS
    15. INDEX
    16. About the Author