“Rather than listen to the siren songs from investment managers, investors – large and small – should instead read Jack Bogle’s The Little Book of Common Sense Investing.” – WARREN BUFFETT
Source: The little book of common sense investing – JOHN C. BOGLE
– DON’T ALLOW A WINNER’S GAME TO BECOME A LOSER’S GAME –
What is the winning strategy for investing in stocks?
Simple arithmetic suggests, and history confirms, that the winning strategy for investing in stocks is to own all of the nation’s publicly held businesses at very low cost. By doing so you are guaranteed to capture almost the entire return that these businesses generate in the form of dividends and earnings growth.
How to implement the winning strategy for investing in stock?
Buy a low-cost index fund that mimics the overall performance of the stock market, and hold it forever.
Why investing in equities for the long term has been a winner’s game?
Thanks to the growth, productivity, resourcefulness, and innovation of our corporations, capitalism creates wealth, a positive-sum game for its owners. The returns earned by business are ultimately translated into the returns earned by the stock market. The magic of compounding investment returns is little short of a miracle.
Why beating the stock market is a zero-sum game?
As investors, all of us as a group earn the stock market’s return. As a group, we investors are average. For every winner, there is a loser. Before the deduction of the costs of investing, beating the stock market is a zero-sum game.
Why beating the stock market (after costs) is a loser’s game?
As investors seek to outpace their peers, winners’ gains inevitably equal losers’ losses. With all that feverish trading activity, the only sure winner in the costly competition for outperformance is the person who sits in the middle of our financial system.
In the game of investing, the financial croupiers always win, and investors as a group lose. After the deduction of the costs of investing, beating the stock market is a loser’s game.
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