The Little Book of Common Sense Investing
Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner's game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser's game. Common sense tells us--and history confirms--that the simplest and most efficient 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 portfolio is the only investment that guarantees you with your fair share of stock market returns. To learn how to make index investing work for you, there's no better mentor than legendary mutual fund industry veteran John C. Bogle. Over the course of his long career, Bogle--founder of the Vanguard Group and creator of the world's first index mutual fund--has relied primarily on index investing to help Vanguard's cl...
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What Hacker News says
- I am very lucky to be retiring in two months.
I should have more faithfully heeded the advice from "The Little Book of Common Sense Investing" by John Bogle, but I was close enough with index funds to do far more than I need.
I just today filed a request for permanent Mexican residency, uploaded the required documents, and scheduled my appointment next month. For $56us, why not?
I am very lucky to make this transition now. I know that.
- Just because people have been making money with stocks with crazy P/E historically doesn't mean that its meant to continue
Especially when you realize on aggregate, Companies long term have to reflect profit and less P/E otherwise if your stock index fund has larger P/E ratio, then you are absolutely taking on higher risk
There is no free lunch.
You are also forgetting that the reason the extrapolation of stock markets growth from historical data correlates to future data is that there is a benchmark of productivity underneath it all. Stock markets theoretically grows when productivity of all businesses in an economy improve which can improve due to scientific and economic reasons and the faith in the system that it does improve
Quite frankly, if you can't observe this, do not invest in index funds but rather something else which can reflect some amount of productivity (Short term bonds are needed by govt to improve life of the people so that they can pay more taxes in aggregate and improve conditions thus improving productivity as well)
I recommend the book Intelligent Investing and The little book of common sense investing by the legendary John Bogle (May he rest in peace)
- Problem is that no-one knows when that's going to happen and it can bounce back as fast as it went down, meaning in that situation you would be missing the opportunity too. The investor strategy as per Bogle is simple: buy regularly, regardless the market and hold it forever (until you retire). I don't want to speculate, because that is known to be a losers game. I read some time ago "The Little Book of Common Sense Investing" and to me that seems to be good enough advice to stick with. It's simple and as for what I read from other sources it works.
> Remember, the trick is to buy low and sell high, not buy high and hope it will somehow get higher.
If you take a look at the historical S&P500 (1926-2016) trend even taking into account market crashes the curve always goes up in the long term. That's why Bogle's strategy works.
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- Yes, read "The little book of common sense investing" by Bogle.
- Choose an online firm such as Charles Schwab or Fidelity. Find a mutual fund that tracks the S&P 500. Put money in there when you can. If you're young and want to take more risk for a chance at higher returns, you certainly can. But the idea behind the simple S&P 500 mutual fund is that the mutual fund will be comprised of the top 500 companies in the market and so your gains will pretty much match the gains of the market itself. It's a simple way to just put money into the market and get safe returns. You can read "The Little Book of Common Sense Investing" by John Bogle for more details on this. I actually have about an 80/20 split between two funds. The 80 would be towards the S&P 500 and the 20 would be towards the equivalent but for international markets.
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