VOL. XCIV, NO. 247
BOOK BREAKDOWN
NO ADVICE
Wednesday, January 14, 2026
Beginner · 2017
The Little Book of Common Sense Investing
by John C. Bogle · Evergreen
Own the whole market through low-cost index funds, minimize fees and taxes, and stay the course for decades.
Level
Beginner
Strategies
3 types
Frameworks
5 frameworks
Rating
Target Audience
Ideal Reader
- Anyone who wants a default, high-probability investing plan
- People who keep getting tempted by stock picking, hot funds, or market timing
- Investors who want a clear explanation of why costs and turnover are so destructive
- DIY investors building a simple long-term portfolio (401k/IRA/brokerage)
May Not Suit
- Active traders looking for tactics, setups, or short-term edges
- Readers who want deep security analysis (accounting/valuation) for stock picking
- People who already fully buy indexing and only need implementation details
Investor Fit
| Strategy | Portfolio Management · Quantitative · Behavioral Finance |
| Time Horizon | Long-term (5+ years) |
| Asset Focus | Equities · Fixed Income · Multi-Asset |
| Math Level | Basic Arithmetic |
| Prerequisites | Understands what stocks, bonds, and mutual funds/ETFs are · Comfortable with basic percentages and compounding |
Key Learnings
- 1Trying to beat the market is a low-odds game for most investors; costs make it worse
- 2Broad-market indexing captures market returns with minimal friction (fees, turnover, taxes)
- 3Investment costs compound against you over decades; small fee differences become huge wealth gaps
- 4Behavior matters: frequent trading and performance-chasing are self-inflicted damage
- 5Simplicity is a feature: fewer moving parts makes it easier to stick with the plan
- 6Set rational return expectations instead of assuming recent returns will continue
- 7Asset allocation (stocks vs bonds) and rebalancing drive outcomes more than fund-hopping
- 8Taxes are costs too; tax efficiency and turnover matter
- 9Not all "index-like" products are good: some are expensive, gimmicky, or encourage trading
- 10In the long run, business reality (dividends + earnings growth) dominates market noise
Frameworks (5)
Formulas (4)
Case Studies (3)
High-cost active fund vs low-cost index fund
Takeaway
Even if gross performance is similar, ongoing costs compound into a huge long-term performance gap.
Chasing last year's best fund
Takeaway
Switching to whatever just worked often locks in buying high and selling low.
Index funds that promise to beat the market
Takeaway
Many enhanced index products raise complexity and costs while weakening the original indexing advantage.
Notable Quotes
“Don't look for the needle in the haystack. Just buy the haystack!”
“Stay the course. No matter what happens stick to your program.”
“In investing, you get what you don't pay for.”
Mental Models
- —Buy the haystack (broad market ownership) instead of hunting needles (individual winners)
- —The tyranny of compounding costs
- —A 'winner's game' becomes a 'loser's game' once costs and bad behavior are added
- —Business reality vs market expectations
- —Reversion to the mean (especially in valuation and expected returns)
- —Stay the course (pre-commitment beats prediction)
- —Control what you can: costs, taxes, diversification, and behavior
Key Terms
- Index fund
- A fund designed to track a market index by holding a broad basket of securities.
- Expense ratio
- Annual fund operating cost charged as a percentage of assets; a direct drag on returns.
- Turnover
- How much a fund trades its holdings; often increases taxes and transaction costs.
- Tax drag
- Return lost to taxes from distributions and realized gains (often worsened by turnover).
- Tracking difference
- How much a fund lags its index in practice (fees + trading frictions + cash drag).
+1 more terms in book
Limitations & Caveats
Keep in mind
- •Does not teach security selection or valuation (it's intentionally anti-stock-picking)
- •Some discussions and data tables age as markets and products evolve
- •Less useful if you are evaluating niche active strategies with real constraints (capacity, illiquidity) and a proven edge
- •Does not fully solve complex real-life planning (liabilities, pensions, business ownership, concentrated stock)
Related Tools
Reading Guide
Priority Reading
- Why indexing works (and why most active strategies lose after costs)
- The compounding impact of costs and turnover
- Taxes as a cost
- Asset allocation (stocks vs bonds) and staying disciplined
- ETFs and 'index funds that promise to beat the market' (gimmick filter)
Optional Sections
- —Dense historical performance tables if you only want principles
- —Very edition-specific market commentary
Ratings
Concept Tags
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