I read this book quickly shortly after I got it, and I was blown away. Many reviewers pick this as a book for "beginners", but I don't agree with that.
My background: I have read (and own) dozens of investment books. I have subscribed to many newsletters (including Morningstar's, which is decent but unnecessary after you read this book). I have owned many individual stocks and for the last 2-3 years before I got the Boglehead religion I was lucky and beat the market averages buying individual stocks (although for most of my life I've lagged far below the market). I opened my first brokerage account in 1990, and I've been self-directed ever since. I've had 400%+ years as well as -70% years. I've even been in the top 100 virtual mutual funds on Marketocracy (out of 70,000), and I've written custom software to analyze the daily performance of the top 1500 stocks.
Having said all that, I wish that I had followed the investment principles laid out in this book from the very beginning. I would have a lot more money than I do now.
Before reading this book, I already had all my retirement money in Vanguard index funds. So you would think, end of story, you're already a believer. NOT SO! While I started out using the Target Retirement funds, which allocates your money properly for your age, I slowly deviated from those funds into the higher risk emerging markets index fund, because that fund was doing so well. It's easy to read this book and say, "oh that makes sense", stay the course for a year or so, then get seduced by the hot performance of a particular sector and lose your way. For these principles to work, you really have to apply them relentlessly, and I think that it takes either someone with an iron discipline or someone who's acquired "experience" in the market (i.e., losses that hurt) to recognize the wisdom of this book and follow it.
Years ago, I read John Bogle's book on index funds, and I agreed with the logic of what he was saying. Then I proceeded to ignore it for most of my investing career before I really "got" what he was saying.
Perhaps, if you're a beginner, you'll follow this book and avoid the pain and losses. The principles are easy enough to understand. In fact, if you want to save the price of the book, simply go to Vanguard, pick your retirement date, buy a "Target Retirement" fund for that date, and you're done. That's pretty much what the book tells you to do.
BUT, you'll need the book (and, in my opinion, the "experience" of following the 99% of the misleading advice out there) to really understand why this is the real way to go. You almost have to read this book every year as an antidote to the temptation that assaults you nonstop from Wall Street and CNBC and all the financial magazines.
If you're a beginning investor, this is it. This book is the mother lode. You can stop looking. Unfortunately, it may take you 10-15 years and many large losses to realize this (as I had to do), but take it from me (some random anonymous person on the Internet), this is the REAL DEAL.
Knowing what I do now, if at age 21 I'd had my choice of $2,000,000 or the wisdom to understand the concepts in this book, I'd choose wisdom. Here are two examples from this book to illustrate why. On page 13 of this book Jack Bogle relates a letter that he received in early 2005 about someone who's been investing with Vanguard for about 30 years, and whose portfolio had grown to over $1.25 million, but he'd never made more than $25,000 in any year in his life. Although they knew nothing about his specific investing history (maybe he just got lucky? we don't know), this figure is attainable investing $600 a month in a Vanguard stock index fund over 30 years.
On the other hand, according to an NBC News report related on page 180 of the book, more than 70 percent of lottery winners exhaust their fortunes within 3 years.
So, clearly, doing the right thing is going to have a huge impact on how much money you end up with.
Even the most experienced investors will benefit from this book (and in fact, may benefit more) by simplifying their portfolio. The chapters on asset allocation and taxes are extremely insightful, even to non-beginners.
After reading this book, I immediately re-balanced my Vanguard portfolio to better fit my age group, and to lower the risk that I was taking.
Even as an "experienced" investor already in Vanguard index funds, I learned something actionable that I was immediately able to apply. If you consider yourself an "experienced" investor, you will also benefit from reading this book. I highly recommend it. My ENTIRE retirement portfolio is in Vanguard index funds, allocated in the recommended amounts, so this is not an idle recommendation.
Read it and live it.
(Just so you know, I have never visited the Boglehead web site, and I have never corresponded with any of the authors. I'm just an uninterested third party who's a big fan of this book).
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The Bogleheads' Guide to Investing (Hardcover)
The methodology doesn't cover some industries (financial, insurance etc) but for the majority of companies this will come up with an intrisic value (not book value) of the future earnings discounted over time for inflation, risk etc. I made a spreadsheet that does the methodolgy the book teaches,but the author has one for sale. I wish I had the spreadsheet beforereading it, as I had to reread sections to gain a good understanding afterI had the spreadsheet. It allows you to follow along his examples and"see" the numbers and forecasts effect the valution. I will emailmy version to any interested parties. No instructions, bare bones, butworks. You wont understand it without the book.
