The Little Book of Common Sense Investing – Review

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books, Big Profits)John C. Bogle 

This is another financial book that seems to be talked about often when researching general and simple investing strategies. This book is a little more technical than the last one I read (I Will Teach You to Be Rich), but still not “advanced” by any means. I really enjoyed this book and it really opened by eyes to the topic of index fund investing and how it will probably become the core of my investment strategy in the very near future.

Overview

The technical words in the investing world are sometimes enough to intimidate people into not participating in that world. Watching experts and analysts explain topics and events on such a technical level can easily steer someone away from investing, since they don’t “understand” or “have time” to do it. I’m like this (but I’m getting better) and it has caused me to stall on being more aggressive in my investment strategy.

Having said that, this book really shows why it doesn’t have to be hard or complicated to start investing in something that can be understood fairly easily, like an S&P Index fund. Bogle was one of the creators of the index fund through Vanguard and his knowledge of the topic and case studies showcase his mastery of the subject.

Pulling information from historical events, other investors and authors, and his own personal experience, the goal here is to get readers to stop getting lost in all the buzz words and stock picking and focus on a tried and true method of simple investing. It’s not “fun” nor is it “sexy” when discussing it with friends, but, according to him and his examples, it works.

Who Should Read It?

If you want to understand a simpler vehicle of investment and be able to start to feel comfortable with it, this book is for you. Don’t have time throughout the day to pick stocks based on current events, trends, analysis, and research? This book assures you that you can still participate in the gains of the stock market without having to do any of those things.

I think this book presents good core ideas around investing and why non-index fund vehicles fall short. He also ensures that it doesn’t need to be your only strategy, feel free to try other things and have some “play” money on the side for risky investments, but don’t lose site of core ideas.

Even if you have money invested or have a strategy in place that may or may not be working out, I think there are still some valuable lessons here that could be used in your favor, strengthening your ideas and strategy for the future.

Reflection

Reading this book after I Will Teach You to Be Rich was a good combonation for me. IWTYTBR taught me about discipline, management of money and decisions, and setting goals with that money. Common sense investing gave me just that, a common sense view on what I should be investing in and why I should stop stressing out about not being able to pick stocks.

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