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