Wednesday, May 23, 2007

Tips on Investments

Quotes from "The Little Book of Common Sense Investing" by Jack Bogle.

Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees - Warren Buffett.

A low-cost index fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many years ago, and everything I have seen since convinces me of its truth - Warren Buffett.

Investing is all about common sense. Owning a diversified portfolio of stocks and holding them for the long term is a winner's game. Trying to beat the stockmarket is theoretically a zero sum game (for every winner, there must be a loser), and after the substantial cost of investing are deducted, it becomes a loser's game.

Common sense tells us, and history confirms, that the simplest and most effective investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost. The classic index fund that owns this market portolio is the only investment that guarantees you with your fair share of stock market returns - John Bogle.
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1 comment:

Anonymous said...

"Trying to beat the stockmarket is theoretically a zero sum game (for every winner, there must be a loser), and after the substantial cost of investing are deducted, it becomes a loser's game."

Interested readers might want to check out William Sharpe's intuitive explanation for the above statement here

It also says why not everyone should index. Crudely put, we need some people to keep the market efficient, so that indexers can benefit ;-)

-anonymous coward

PS: Harry Markowitz, Merton Miller, and William Sharpe were awarded the Nobel Prize in 1990 for their contributions to the theory financial economics.

May 23, 2007 11:18 PM

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