Jack Bogle's Common Sense Investing Principles

John Clifton Bogle popularly known as Jack Bogle wrote a book in 2007 that was titled “The Little Book of Common Sense Investing”. The book is built around a simple concept i.e. don’t waste your time and money by investing in single stocks or actively mutual funds and instead invest in index funds. Jack Bogle may not be amongst the most well-known money managers and investors; it will be difficult to present anyone who’s had a bigger impact on the investing public. Infact, here’s what Warren Buffett said in his 2016 annual report and I quote:

“If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds and in his crusade, Jack was frequently mocked by the investment management industry. Today, however, he has the satisfaction of knowing that he has helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me”

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📚The Little Book of Common Sense Investing by Jack Bogle :
Jack Bogle’s investing approach was entirely common-sensical. Think long term, buy and hold, manage your costs, save money and keep it simple.

00:00 Introduction
01:48 1. Common sense is underrated
03:00 2. Simple beats complex
05:03 3. Cost matters
06:07 4. Perfect is the enemy of good
07:32 5. Long term leads to extraordinary results
09:05 6. Don’t get emotional
09:50 7. Money isn’t everything

Jack Bogle wrote in one of his books “when you decide to avoid complexity and rely on simplicity your investments should flourish” But Bogle did not just use words and he would often prove his points using data and by backing it up with strong arguments. Infact, one simple approach that he advocated was to invest solely in a single, balanced market-index fund.

Jack Bogle often said that time is a friend when returns are concerned and your enemy when it comes to costs. Bogle is known to have said and I quote: “The way to wealth, I repeat one final time, is not only to capitalize on the magic of long-term compounding of returns but to avoid the tyranny of long-term compounding of costs”

“The greatest enemy of a good plan is the dream of a perfect plan. Always stick to the good plan” Well, now that I at it, this quote actually has two parts to it” The first part i.e. the greatest enemy of a good plan is the dream of a perfect plan was said by the Prussian general von Clausewitz while it was Jack Bogle who quite contextually applied the “always stick to the good plan” part to indicate the approach that everyday investors should take when investing.

Jack Bogle rolled out the world’s first index fund at perhaps the worst times with the United States coming out of an energy crisis and with the economy in recession and in the grips of high inflation and unemployment. As a consequence, the fund turned out to be a complete flop bringing in just 11 million dollars as against a target of 150 million. In Spite of these problems, Jack Bogle showed extreme patience to get his idea off the ground as it took a few more decades for indexing and Vanguard to become the investment giant it is today.

Time and again, Jack Bogle pressed investors to have a diverse selection of stocks and bonds to numerically assess performance and more importantly, to have the patience of sticking to a plan. In his words, impulse is the real enemy, and the best way to extract the most value from one’s investing is to have rational expectations for future returns and to avoid making changes based on the constant noise.

The more you read about Bogle through his articles, talks and books you’ll notice a common thought thread of 5 simple principles that has come to define his life: stay balanced, think long-term, keep costs low, be disciplined and put the investor first.


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