John Bogle's Principles of Value Investing
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Description
Book Introduction
“John Bogle’s invention of the index fund is as valuable as the invention of the wheel and the alphabet.”
If you know the wheel and the alphabet, you must know John Bogle!
John Bogle, the founder of index funds, is called the 'Saint of Wall Street' and is an influential figure to the extent that Warren Buffett selected him as 'the person who has made the greatest contribution to investment.'
However, it is a somewhat unfamiliar name to Korean investors.
That doesn't mean Korean investors are turning away from index funds.
If you see tickers like VOO, VTI, SPY, or (T)QQQ on your coworker's smartphone screen, you can easily strike up a conversation.
(It would be more natural than seeing a cryptocurrency name you've never heard of on your coworker's monitor and seeing a chart that fluctuates every second.)
Why? If you're looking for a reason, it's probably because John Bogle didn't advocate for a "quick, big" way to make money.
However, John Bogle presents investment principles that any investor should know, even if they don't follow them.
Nobel laureate in economics Paul Samuelson said:
“John Bogle’s invention of the index fund is as valuable as his invention of the wheel and the alphabet.” If you know the wheel and the alphabet, you should know John Bogle.
"John Bogle's Principles of Value Investing," introduced for the first time in Korea, is a book that contains John Bogle's core investment philosophy.
This book contains the 60 years of investment experience of John Bogle, who founded Vanguard, the largest shareholder of Apple, and grew it into the largest privately held asset management company in the United States, while pursuing a lifelong path of value investing.
This book covers the life and investment philosophy of John Bogle, who, during a time of unprecedented speculative fervor, transformed the industry and rewrote the history of finance by emphasizing a healthy investment culture.
If you know the wheel and the alphabet, you must know John Bogle!
John Bogle, the founder of index funds, is called the 'Saint of Wall Street' and is an influential figure to the extent that Warren Buffett selected him as 'the person who has made the greatest contribution to investment.'
However, it is a somewhat unfamiliar name to Korean investors.
That doesn't mean Korean investors are turning away from index funds.
If you see tickers like VOO, VTI, SPY, or (T)QQQ on your coworker's smartphone screen, you can easily strike up a conversation.
(It would be more natural than seeing a cryptocurrency name you've never heard of on your coworker's monitor and seeing a chart that fluctuates every second.)
Why? If you're looking for a reason, it's probably because John Bogle didn't advocate for a "quick, big" way to make money.
However, John Bogle presents investment principles that any investor should know, even if they don't follow them.
Nobel laureate in economics Paul Samuelson said:
“John Bogle’s invention of the index fund is as valuable as his invention of the wheel and the alphabet.” If you know the wheel and the alphabet, you should know John Bogle.
"John Bogle's Principles of Value Investing," introduced for the first time in Korea, is a book that contains John Bogle's core investment philosophy.
This book contains the 60 years of investment experience of John Bogle, who founded Vanguard, the largest shareholder of Apple, and grew it into the largest privately held asset management company in the United States, while pursuing a lifelong path of value investing.
This book covers the life and investment philosophy of John Bogle, who, during a time of unprecedented speculative fervor, transformed the industry and rewrote the history of finance by emphasizing a healthy investment culture.
- You can preview some of the book's contents.
Preview
index
Recommendation
Introduction
Chapter 1: The Clash of Investment and Speculation: The Gambling Called Short-Term Trading
Chapter 2: The Happy Collusion of Dual Agents: Those Who Steal Investors' Profits
Chapter 3: The Silence of Funds: Why Corporate Governance Needs a Voice
Chapter 4: Mutual Fund Culture: The Manager's Obsession with Salesmanship
Chapter 5: Is That Fund Manager Really on Our Side?: A 15-Point Checklist for Choosing a Good Financial Service
Chapter 6: The Birth of Index Funds: The Rise of Long-Term Investing and the Challenges of Short-Term Speculation
Chapter 7: A Safe Retirement, a Not-So-Safe Pension: Too Much Speculation, Too Little Investment
Chapter 8: The Rise, Fall, and Reconstruction of the Wellington Fund: A History-Proven Strategy for Winning Investments
Chapter 9: 10 Principles of Value Investing That Never Fail: Own Every Stock
Acknowledgements
Detailed image
Into the book
I wrote this book to sound the alarm about the shocking changes in financial culture that I have witnessed during my 60 years in the financial world.
These changes include the gradual and persistent rise of a modern, frenzied speculative culture, complex and intricate "financial instruments," and the trading of various derivatives (rather than securities themselves).
This trait, along with self-interest and greed, dominates today's vast financial world and will undoubtedly have a profoundly detrimental impact on investors, society, and the nation, even if it has not yet.
--- p.16~17
The total value of initial public offerings (IPOs), which provide new capital to startups, averaged $45 billion annually over the past five years, while the total value of secondary offerings, which provide additional equity capital, averaged $205 billion annually, bringing the total value of equity issuance to approximately $250 billion.
During the same period, the average annual stock trading volume was $33 trillion.
This is nearly 130 times the equity capital provided to the company.
In other words, stock trading accounts for 99.2 percent of the financial system, while capital formation accounts for the remaining 0.8 percent.
--- p.
37
Whether it was stock gambling or casino gambling (where the odds were much lower), the relatively wealthy had the means to accumulate wealth quickly.
Low-income families finally have a chance to live a comfortable life, but their chances of success through gambling are extremely low.
To make matters worse, we love to buy things on credit, wanting to relieve our present needs rather than future ones.
Even the very wealthy seem to feel deprived.
We like to compare ourselves with our neighbors.
Since it is almost impossible to overcome the wall of reality, people turn to speculation (even if the odds of winning are low) to escape the routine of daily life.
--- p.48~49
Keynes' predictions have proven true many times.
Over the past 40 years, professional investors such as pension funds and mutual fund companies have come to dominate the financial markets, largely ousting the "ignorant individuals" who have long been a presence in the investment market.
However, such people are more interested in predicting how the public's assessment of value will change than in assigning an appropriate value to a company.
Of course, in the long run, very few experts can accurately predict that change.
Yet, not only financial agents but also corporate agents tend to believe that it is in their own interest to focus on the expectations of the stock market rather than the intrinsic value of the real market.
--- p.
88
In 2010, Morningstar, a well-known fund analysis service, acknowledged that fund costs were a more accurate predictor of fund performance than its sophisticated analysis system.
When combined with the average expense ratio and portfolio transaction costs, as well as the sales commissions that most funds incur, the total cost becomes a significant burden on the returns received by shareholders.
So, does this cost actually increase shareholder returns?
It's impossible.
How can asset management companies, which are essentially no different from the market, collectively outperform the market? --- p.
172
In short, long-term investment is the driving force of the TIF industry, while short-term speculation is the driving force of the ETF industry.
ETFs that track broad market indices can offer benefits to long-term investors (some even rival TIFs).
However, no one is sure to what extent these ETFs can be utilized.
--- p.
285
If so, the conflict in the index fund field can be said to be a clash of two very different philosophies.
The first philosophy is to buy and hold a broadly diversified portfolio of stocks and bonds.
A second philosophy is to buy such portfolios but sell them freely, and to buy and sell equally indiscriminately even peripheral portfolios, such as those heavily leveraged to increase stakes.
The line between investment and speculation has rarely been so clearly drawn.
--- p.
304
Therefore, there is no reason to pile on top of market risk without eliminating the other three risks.
If you can't be sure that your thinking is right (and who can?), you should diversify your investments.
Owning the entire stock market ultimately allows you to diversify your investments within your portfolio.
You have to admit that it's hard to find a needle and buy a haystack.
These changes include the gradual and persistent rise of a modern, frenzied speculative culture, complex and intricate "financial instruments," and the trading of various derivatives (rather than securities themselves).
This trait, along with self-interest and greed, dominates today's vast financial world and will undoubtedly have a profoundly detrimental impact on investors, society, and the nation, even if it has not yet.
--- p.16~17
The total value of initial public offerings (IPOs), which provide new capital to startups, averaged $45 billion annually over the past five years, while the total value of secondary offerings, which provide additional equity capital, averaged $205 billion annually, bringing the total value of equity issuance to approximately $250 billion.
During the same period, the average annual stock trading volume was $33 trillion.
This is nearly 130 times the equity capital provided to the company.
In other words, stock trading accounts for 99.2 percent of the financial system, while capital formation accounts for the remaining 0.8 percent.
--- p.
37
Whether it was stock gambling or casino gambling (where the odds were much lower), the relatively wealthy had the means to accumulate wealth quickly.
Low-income families finally have a chance to live a comfortable life, but their chances of success through gambling are extremely low.
To make matters worse, we love to buy things on credit, wanting to relieve our present needs rather than future ones.
Even the very wealthy seem to feel deprived.
We like to compare ourselves with our neighbors.
Since it is almost impossible to overcome the wall of reality, people turn to speculation (even if the odds of winning are low) to escape the routine of daily life.
--- p.48~49
Keynes' predictions have proven true many times.
Over the past 40 years, professional investors such as pension funds and mutual fund companies have come to dominate the financial markets, largely ousting the "ignorant individuals" who have long been a presence in the investment market.
However, such people are more interested in predicting how the public's assessment of value will change than in assigning an appropriate value to a company.
Of course, in the long run, very few experts can accurately predict that change.
Yet, not only financial agents but also corporate agents tend to believe that it is in their own interest to focus on the expectations of the stock market rather than the intrinsic value of the real market.
--- p.
88
In 2010, Morningstar, a well-known fund analysis service, acknowledged that fund costs were a more accurate predictor of fund performance than its sophisticated analysis system.
When combined with the average expense ratio and portfolio transaction costs, as well as the sales commissions that most funds incur, the total cost becomes a significant burden on the returns received by shareholders.
So, does this cost actually increase shareholder returns?
It's impossible.
How can asset management companies, which are essentially no different from the market, collectively outperform the market? --- p.
172
In short, long-term investment is the driving force of the TIF industry, while short-term speculation is the driving force of the ETF industry.
ETFs that track broad market indices can offer benefits to long-term investors (some even rival TIFs).
However, no one is sure to what extent these ETFs can be utilized.
--- p.
285
If so, the conflict in the index fund field can be said to be a clash of two very different philosophies.
The first philosophy is to buy and hold a broadly diversified portfolio of stocks and bonds.
A second philosophy is to buy such portfolios but sell them freely, and to buy and sell equally indiscriminately even peripheral portfolios, such as those heavily leveraged to increase stakes.
The line between investment and speculation has rarely been so clearly drawn.
--- p.
304
Therefore, there is no reason to pile on top of market risk without eliminating the other three risks.
If you can't be sure that your thinking is right (and who can?), you should diversify your investments.
Owning the entire stock market ultimately allows you to diversify your investments within your portfolio.
You have to admit that it's hard to find a needle and buy a haystack.
--- p.446~447
Publisher's Review
Why John Bogle?
Why Active Funds Can't Beat Index Funds
Why John Bogle? At a time when active funds, which sought high returns through frequent trading, were mainstream, Bogle's emphasis on index funds, which track indices, drew widespread criticism.
But history has proven Bogle right.
There were countless challenges, failures, and moments of recovery along the way.
This book captures Bogle's vivid experiences that completely changed the global financial culture, from the idea of index funds to his meeting with Nathan Most, the "creator of ETFs."
Why index funds? The biggest advantage of index investing, as highlighted in this book, is that it eliminates the need for extensive investment research.
The 'stocks' and 'sectors' recommended in many books change constantly, so you need to study new content and dedicate time to it every time.
But if you follow the index, as John Bogle says, all you have to do is “buy right and hold on tight.”
This book explains how to "live properly" through decades of data, helping investors maintain a strong mentality even during corrections and declines.
The fundamental principles of value investing, as told by John Bogle, the "Saint of Wall Street"!
A proven investment strategy with over 60 years of investment experience!
In the 'Donghak Ant Movement' that began with COVID-19, the rate of return for men in their 20s was the lowest by a landslide.
Because I bought and sold stocks 'too hard'.
Whether it's a profit-taking or loss-cutting transaction, the accumulated fees incurred for each transaction can result in losses beyond imagination.
In investing, fees are as important as stock indices, and minimizing trading turnover to lower costs is a principle investors must keep in mind.
'Index funds' were developed from this most basic calculation method.
"John Bogle's Principles of Value Investing" is a book written by John Bogle, the founder of index funds and one of the world's top three asset management companies, Vanguard Group, and is a book that Warren Buffett personally recommended in his shareholder letter.
The author distinguishes between the concepts of investment and speculation, emphasizes the importance of costs through real-world examples, and states that active funds, which frequently trade stocks over the long term, cannot compete with index funds (passive funds) that hold stocks for a long time.
It also resonates deeply with current professionals by pointing out structural contradictions in the financial industry and suggesting the right mindset.
Today, with the value of cash declining, investing has become a necessity rather than a choice, and with the emergence of 24-hour exchanges, the culture of short-term speculation has become more intense than ever.
But in the short term, it is impossible for everyone to make money in the stock market, which is a zero-sum game.
Only by viewing the market from the perspective of long-term investment, not speculation, can we create a "winner's game."
The 10 investment principles contained in this book, which encapsulate John Bogle's 60-year career, will be invaluable lessons for investors who are swayed by frequent corrections and the sweet temptation of short-term trading.
“Costs eat into the winners’ profits and incur the losers’ losses.”
Insights from an investment guru, recommended by Warren Buffett in his shareholder letter!
Be aware of the tyranny of 'welfare costs' that eat away at 'welfare benefits'!
The stock market tends to rise in the long term, but from an investor's perspective, it is a zero-sum game in the short term, and after deducting various fees, it becomes a "loser's game."
To prevent these investor losses, John Bogle created 'index funds' that held a wide range of low-cost stocks and discouraged 'short-term speculation', which involved frequent stock trading.
As a result, John Bogle's Vanguard Group achieved great success, becoming the world's largest asset management firm.
This book reveals John Bogle's investment philosophy, which reflects his years of experience and conviction.
Chapter 1 of this book, which consists of nine chapters, explains the background of the clash between the two cultures by distinguishing between investment and speculation.
Chapter 2 examines the structural problems of asset management companies and corporate managers who create a "loser's game" through excessive costs, and Chapter 3 addresses these problems from the perspective of corporate governance, developing awareness of the fund's expense ratio.
Chapter 4 discusses the changing culture of the mutual fund industry and explains why fund shareholders have suffered losses.
Chapter 5, building on the aforementioned issues, presents 15 criteria for selecting "good financial products" to help investors make wise choices.
Chapter 6 examines the formation of the Vanguard Index Fund, analyzes TIF (traditional index fund) and ETF investments, and presents the theoretical basis for why long-term investment trumps short-term speculation.
Chapter 7 points out the problems of the retirement pension system related to this investment and speculation frenzy, and Chapter 8 looks back at the history of the Wellington Fund as a real-life example of investment triumphing over speculation.
In the final chapter, he introduces 10 principles of value investing, which are based on his extensive investment experience as the founder of Vanguard Group.
This book, which covers everything from the theory of smart value investing to real-world examples and key insights, will serve as a practical and in-depth guidebook for investors.
Why Active Funds Can't Beat Index Funds
Why John Bogle? At a time when active funds, which sought high returns through frequent trading, were mainstream, Bogle's emphasis on index funds, which track indices, drew widespread criticism.
But history has proven Bogle right.
There were countless challenges, failures, and moments of recovery along the way.
This book captures Bogle's vivid experiences that completely changed the global financial culture, from the idea of index funds to his meeting with Nathan Most, the "creator of ETFs."
Why index funds? The biggest advantage of index investing, as highlighted in this book, is that it eliminates the need for extensive investment research.
The 'stocks' and 'sectors' recommended in many books change constantly, so you need to study new content and dedicate time to it every time.
But if you follow the index, as John Bogle says, all you have to do is “buy right and hold on tight.”
This book explains how to "live properly" through decades of data, helping investors maintain a strong mentality even during corrections and declines.
The fundamental principles of value investing, as told by John Bogle, the "Saint of Wall Street"!
A proven investment strategy with over 60 years of investment experience!
In the 'Donghak Ant Movement' that began with COVID-19, the rate of return for men in their 20s was the lowest by a landslide.
Because I bought and sold stocks 'too hard'.
Whether it's a profit-taking or loss-cutting transaction, the accumulated fees incurred for each transaction can result in losses beyond imagination.
In investing, fees are as important as stock indices, and minimizing trading turnover to lower costs is a principle investors must keep in mind.
'Index funds' were developed from this most basic calculation method.
"John Bogle's Principles of Value Investing" is a book written by John Bogle, the founder of index funds and one of the world's top three asset management companies, Vanguard Group, and is a book that Warren Buffett personally recommended in his shareholder letter.
The author distinguishes between the concepts of investment and speculation, emphasizes the importance of costs through real-world examples, and states that active funds, which frequently trade stocks over the long term, cannot compete with index funds (passive funds) that hold stocks for a long time.
It also resonates deeply with current professionals by pointing out structural contradictions in the financial industry and suggesting the right mindset.
Today, with the value of cash declining, investing has become a necessity rather than a choice, and with the emergence of 24-hour exchanges, the culture of short-term speculation has become more intense than ever.
But in the short term, it is impossible for everyone to make money in the stock market, which is a zero-sum game.
Only by viewing the market from the perspective of long-term investment, not speculation, can we create a "winner's game."
The 10 investment principles contained in this book, which encapsulate John Bogle's 60-year career, will be invaluable lessons for investors who are swayed by frequent corrections and the sweet temptation of short-term trading.
“Costs eat into the winners’ profits and incur the losers’ losses.”
Insights from an investment guru, recommended by Warren Buffett in his shareholder letter!
Be aware of the tyranny of 'welfare costs' that eat away at 'welfare benefits'!
The stock market tends to rise in the long term, but from an investor's perspective, it is a zero-sum game in the short term, and after deducting various fees, it becomes a "loser's game."
To prevent these investor losses, John Bogle created 'index funds' that held a wide range of low-cost stocks and discouraged 'short-term speculation', which involved frequent stock trading.
As a result, John Bogle's Vanguard Group achieved great success, becoming the world's largest asset management firm.
This book reveals John Bogle's investment philosophy, which reflects his years of experience and conviction.
Chapter 1 of this book, which consists of nine chapters, explains the background of the clash between the two cultures by distinguishing between investment and speculation.
Chapter 2 examines the structural problems of asset management companies and corporate managers who create a "loser's game" through excessive costs, and Chapter 3 addresses these problems from the perspective of corporate governance, developing awareness of the fund's expense ratio.
Chapter 4 discusses the changing culture of the mutual fund industry and explains why fund shareholders have suffered losses.
Chapter 5, building on the aforementioned issues, presents 15 criteria for selecting "good financial products" to help investors make wise choices.
Chapter 6 examines the formation of the Vanguard Index Fund, analyzes TIF (traditional index fund) and ETF investments, and presents the theoretical basis for why long-term investment trumps short-term speculation.
Chapter 7 points out the problems of the retirement pension system related to this investment and speculation frenzy, and Chapter 8 looks back at the history of the Wellington Fund as a real-life example of investment triumphing over speculation.
In the final chapter, he introduces 10 principles of value investing, which are based on his extensive investment experience as the founder of Vanguard Group.
This book, which covers everything from the theory of smart value investing to real-world examples and key insights, will serve as a practical and in-depth guidebook for investors.
GOODS SPECIFICS
- Publication date: December 13, 2021
- Page count, weight, size: 456 pages | 148*225*30mm
- ISBN13: 9791159318078
- ISBN10: 1159318077
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