Invoking 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.
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