Common Stocks and Common Sense: The Strategies, Analyses, Decisions, and Emotions of a Particularly Successful Value InvestorHardcover (2024)

FAQs

What is the Little Book of Common Sense Investing by John C Bogle about? ›

Brief summary

The Little Book of Common Sense Investing by John C. Bogle is a guide to passive investing. It promotes the idea of investing in low-cost index funds to achieve long-term financial success.

Investing in common stock allows you voting rights – one voting right per stock held – in the company's crucial matters. This way, you can participate in business decisions, policy formation, and leadership elections.

Common stocks, abbreviated as common shares, can generate returns at a high rate. The common shareholders possess all the rights to claim the company's assets in the event of the company's liquidation after they have paid to shareholders, bondholders, and other debt holders in full.

Brief summary

A Wealth of Common Sense by Ben Carlson is an insightful dive into investing strategies and financial lessons. It teaches the importance of simplicity, planning for the long-term, and avoiding common mistakes made in investment decisions.

Bogle's investment strategy is grounded in the concept of mean reversion. He eloquently noted, “Don't think the past is prologue; it rarely is. Sometimes it's anti-prologue.” This highlights a critical mistake many investors make: assuming that past performance guarantees future results.

Common stock, as its name implies, is one of the most ordinary types of stock. It gives shareholders a stake in the underlying business, as well as voting rights to elect a board of directors and a claim to a portion of the company's assets and future revenues.

Common Stocks. Represents ownership in a corporation. When buying common stocks, you are buying the corporation's factories, buildings, and products. Price Appreciation. Occurs when you sell your stock for more than you paid for the stock.

Other potential risks of owning common stocks include lack of diversification, foreign exchange, interest rates and country and company-specific issues. Many investors buy exchange-traded funds (ETFs) to diversify their common-stock portfolios more easily.

Is common stock good or bad? ›

Common stock tends to outperform bonds and preferred shares. It is also the type of stock that provides the biggest potential for long-term gains. If a company does well, the value of a common stock can go up. But keep in mind, if the company does poorly, the stock's value will also go down.

Compared to preferred stock, common stock prices may offer lower dividend payouts. And those dividends may be less consistent, in terms of timing, based on market conditions and company profits. On the other hand, investors who own common stock may benefit more over the long term if those shares increase in value.

Common stock is the type of stock issued most often by publicly-traded companies. Two reasons for investing in common stock are asset appreciation and dividends. Asset appreciation occurs when the value of a particular stock is greater than the amount an investor paid for the stock.

Common stock isn't just common in name only; this type of stock is the one investors buy most often. It grants shareholders ownership rights, allows them to vote on important decisions such as electing the board of directors and gives them a say in certain policy decisions and management issues.

Common Stock Risks.

These investor perceptions are based on various and unpredictable factors including: expectations regarding government, economic, monetary and fiscal policies; inflation and interest rates; economic expansion or contraction; and global or regional political, economic and banking crises.

The idea of The Little Book of Common Sense Investing is simple: You should only invest in low-cost, no-load, mutual funds that replicate the entire market (index funds) and you should buy-and-hold these funds for as long as you do not need the underlying money (no market timing).

Common Sense is a 47-page pamphlet written by Thomas Paine in 1775–1776 advocating independence from Great Britain to people in the Thirteen Colonies.

The Little Book of Value Investing also offers: Strategies for analyzing public company financial statements and disclosures Advice on when you truly require a specialist's opinion Tactics for sticking to your guns when you're tempted to abandon a sound calculation because of froth in the market Perfect for beginning ...

His approach to investing, as described in his book Common Sense on Mutual Funds, champions low-risk, long-term, low-cost funds. To achieve an acceptable level of risk in retirement portfolios, Bogle recommended that investors add bonds to their portfolios alongside stocks.