From the shelf · 102 money books
Does The Little Book of Common Sense Investing hold up?
The Little Book of Common Sense Investing by John C. Bogle is one of the 102 money books on The Money Shelf. The shelf links it to 3 of the 22 claims that the book tests against official records from the United States, the United Kingdom and Australia. Each verdict below comes from that test.
Claim 4 · The book makes this claimIndex funds: own the index
HoldsOver every period of five years or longer, at least 83 per cent of US large-cap funds, at least 92 per cent of UK large- and mid-cap funds and at least 81.6 per cent of Australian equity general funds lagged their index, and the one figure below 80 per cent over those periods, UK small-cap funds over 10 years at 76.62 per cent, is still a majority.
Read the full test →Claim 12 · The book argues against this claimStock picking: you can pick winning stocks
Not establishedThe stock-level studies show that a few firms account for all the net wealth, so a small random portfolio is likely to miss them, and the SPIVA scorecards show most professional managers lagging their index.
Read the full test →Claim 13 · The book argues against this claimMarket timing: time the market and cut losses early
Not establishedThe Schwab arithmetic shows that perfect timing finished $15,522 ahead of investing immediately (9.1 per cent more) and that bad timing still beat cash, but the study assumes foresight.
Read the full test →The Little Book of Common Sense Investing raised the question. The records take it further: every figure dated, every source named, and the arithmetic worked through for three countries.
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