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Common Sense on Mutual Funds. New Imperatives for the Intelligent Investor Forward by Peter L.Bernstein.

“Other investment executives used to roll their eyes about Vanguard’s Bogle, but his rules work.”—Newsweek

When Jack Bogle speaks, people listen—whether they are fans or not. As the senior chairman and founder of the Vanguard Group, one of the two largest mutual fund organizations in the world, he has single-handedly transformed the industry by championing better funds at lower costs to the investor. A leading thinker and visionary whose ideas and principles have been adopted by countless investors, his name is as synonymous with excellence in mutual fund investing as Warren Buffett’s is with excellence in stock investing. Now, in Common Sense on Mutual Funds, Bogle takes a critical look at the mutual fund industry and how we invest, and charts a compelling course for change.

Written in Bogle’s inimitable style, this eye-opening book examines the fundamentals of mutual fund investing alongside industry practices that are often in conflict with a sound long-term investment program. Common Sense on Mutual Funds shows investors how to revolutionize their portfolios by embracing simplicity and then avoiding industry pitfalls. Just as Thomas Paine argued for a new way of thinking about independence in “Common Sense,” so Bogle sets forth a new way of looking at mutual funds. He presents a platform for intelligent investing and then uncovers the ills that beset the mutual fund industry, serious ills that thwart our efforts to accumulate adequate financial resources. He analyzes costs, scrutinizes asset size, exposes tax inefficiencies, warns of “empty suit” directors, and reveals the severe conflict between fund principles and fund pro-motion. Emphasizing long-term investing and asset allocation, Bogle finds in simplicity the solution to the riddle of fund selection by investors. From stock and bond funds to global investing and index funds, Common Sense on Mutual Funds provides insight, illumination, and enlightenment.

For more than 30 years, Bogle has championed the rights of the fund shareholder, for he believes that investing is first and last about people’s hopes and fears and individual goals. In Common Sense on Mutual Funds, he speaks eloquently about individual investors and how their interests are not being well-served: “The ills and injustices suffered by mutual fund investors are not so dissimilar to those our forebears suffered under English tyranny. . . . I have no quarrel with management companies focusing on profits. But 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 independent watchdog, despite the fact that it is the shareholders who actually own the mutual funds.”

Organized as a series of essays on the investment issues of the day, this insider’s view of the industry makes vital information on mutual funds accessible to experienced investors as well as those just beginning. A veritable treasure chest filled with insight and guidance from a true leader, Common Sense on Mutual Funds is an invaluable addition to every investor’s library. Bogle’s message, amid the cacophony of investment advice, is clear and simple: common sense will rule the day.

JOHN C. BOGLE is the founder and Senior Chairman of The Vanguard Group, Inc., the world’s largest no-load mutual fund group, with more than ten million shareholders and 0 billion in assets. He has studied mutual funds in depth since 1949, when he began the research for his senior thesis at Princeton University before joining the industry in 1951. In 1997, he was identified as one of seven of the world’s twentieth century “Creator-Leaders,” in Leadership in Financial Services by Steven I. Davis. In 1998, he received the Distinguished Service Award of the Association for Investment Management and Research. And early in 1999, his alma mater, Princeton University, presented him with its coveted Woodrow Wilson Award, exemplifying “Princeton in the Nation’s Service.” Bogle is the author of the bestselling book, Bogle on Mutual Funds: New Perspectives for the Intelligent Investor, as well as numerous articles on investing. Back Copy: Critical Praise for Common Sense on Mutual Funds.

“Common Sense on Mutual Funds marks the culmination of one of Wall Street’s most inspired careers. Invoking both Thomas Paine and Benjamin Graham, Jack Bogle outlines a supremely logical plan not only to better investors’ returns, but to improve the whole fund industry. This isn’t just the best book yet by Bogle, it may well be the best book ever on mutual funds.”—Don Phillips, President & CEO, Morningstar, Inc.

“Buffett cannot teach you or me how to become a Warren Buffett. Bogle’s reasoned precepts can enable a few million of us savers to become in twenty years the envy of our suburban neighbors—while at the same time we have slept well in these eventful times.”—Paul A. Samuelson, Massachusetts Institute of Technology, Department of Economics.

“After a lifetime of picking stocks, I have to admit that Bogle’s arguments in favor of the index fund have me thinking of joining him rather than trying to beat him. Bogle’s wisdom and his commonsense way of explaining things make this book indispensable reading for anyone trying to figure out how to invest in this crazy stock market.”—James J. Cramer, Money manager and senior columnist for TheStreet.com

“Written in his characteristic forthright and visionary style, Bogle penetrates the myths and jargon to shed a powerful light on the central issues that confront every investor, no matter what their level of experience or sophistication.”—Martin L. Leibowitz, Vice Chairman and Chief Investment Officer, TIAA-CREF

“Jack Bogle is one of the great pioneer/visionaries of the investment business. In this book he shares his knowledge, experience, and judgement to enable us to become better investors. The final philosophical chapters provide insights that may help some of us become better people.”—Byron R. Wien, Chief U.S. Investment Strategist, Morgan Stanley Dean Witter

“Superior in intellect, character, and performance, the investment genius who defied conventional wisdom and proved his critics wrong gives readers a wealth of practical advice.”—Hon. William E. Simon, Former Secretary of the TreasuryInvoking the words and spirit of Thomas Paine, investor-turned-historian John Bogle concedes that his ideas for revamping the mutual-fund industry are perhaps “not yet sufficiently fashionable to procure them general favor.” But despite likening the “ills and injustices suffered by mutual fund investors” to those “our forebears suffered under English tyranny,” Bogle–founder of the Vanguard Group–makes a strong case for index funds with this exhaustive study of investing.

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.

It’s an interesting concept: smart, reasoned investors can all but secure their financial future, but the system itself, run unchecked by fund managers, needs a major overhaul. And considering the amount of reasoned, historically based support he includes, readers will have a hard time finding fault with the sometimes controversial Bogle. Equal parts instructional and crusade, Common Sense on Mutual Funds deserves the attention it’s likely to receive. Recommended. –Rob McDonald

Rating: (out of 73 reviews)

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