Book Description

Develop a Winning Investment Strategy -- with Expert Advice from "The Nation's #1 Money Manager"

Peter Lynch's "invest in what you know" strategy has made him a household name with investors both big and small.

An important key to investing, Lynch says, is to remember that stocks are not lottery tickets. There's a company behind every stock and a reason companies -- and their stocks -- perform the way they do. In this book, newly revised and updated for the paperback edition, Peter Lynch shows you how you can become an expert in a company and how you can build a profitable investment portfolio, based on your own experience and insights and on straightforward do-it-yourself research. There's no reason the individual investor can't match wits with the experts, and this book will show you how.

In Beating the Street, Lynch for the first time:

* Explains how to devise a mutual fund strategy
* Shows how he goes about picking stocks, step-by-step
* Describes how the individual investor can improve his or her investment performance to rival that of the experts of the investment clubs. ... Read more

Reviews (44)

Peter's Principles are great
They've has done it again, this book is very funny and filled with useful tips from seasoned investor Peter Lynch. This book has several of "Peter's Principles" (which are very humorous one-liners that make a lot of sense for investors.) My favorite parts of this book are: The story about the St. Agnes 7th grade portfolio managers (these kids beat out 99% of fund managers when they had a two year gain of 70%.) Another part of this book that I enjoy are the subtle tips for evaluating stocks. Mr. Lynch doesn't tell you to do this, that, and another thing to find the ten-baggers, but he does give clues throughout the text.

Reed Floren

Yet Another Mis-Leading Exhortation to Buy Stocks
This book, written in 1993, simultaneously comes at the end of Mr. Lynch's career in money management and the beginning of a long sprint in the broader stock market, largely fueled by tech/internet stocks. In any period, one can expect 1 of 100 money managers to far outperform both his or her peers and the broader market by chance. Mr. Lynch was that one money manager.

Mr. Lynch starts the book by turning investing into a game. Although his method was subtle (using an example of grammar school kids picking stocks), the implications are profound. Investing does share some resemblance to many games we play in life, and one of the Great Money Masters, the fictitious 'Adam Smith' readily admits this in his classic book on investment, The Money Game.

However, Mr. Lynch takes things one step beyond the game, and as the book's title hints, he turns all investment activities into a competition. In so doing, he pits the small investor against the institutional Players, and as a result, sets up the naive reader to walk a well-trodden path littered with sorrow and the bones of many foolish investors.

Granted, 'Adam Smith' once said, "The Players aren't smarter than you. They just have more information", and there also is a certain level of truth to Lynch's assertion that the Little Guy can outperform the Big Boys. However, Lynch fails to disclose one important and critical difference.

I believe it was Hemmingway who said, in response to Fitzgerald's observation that the rich were not like the ordinary schmuck, that "Yes, I know. They have more money." Something frightfully similar can be said of the key difference between the Little Guy and The Players, but with one critical insight: The Players do not merely have more money, they have a lot more of Other People's Money. That in essence is the fundamental difference between The Players and the Little Guy, who must wager his (or her) own hard-won funds in order to play the Grand Game- the stock market.

Needless to say (but will be said anyway), the consequences of one's actions weigh heavily on one's shoulders when one's own money is at stake, but really aren't felt when Other People's Money is on the line. The Players play with Other People's Money, but you, dear investor, play with your own hard-won earnings. That said, the intelligent investor must ask herself, 'Do I really want to play with my money?'.

Beating the Street rests heavily on this undisclosed truism and a host of faulty assumptions. The book really is a sales pitch to buy stocks and to participate as much as possible in stock mutual funds. To that end, Mr. Lynch places before the reader a number of questionable arguments. Here are just two:

First, perhaps the most flawed argument of the book is that the small investor, upon retirement, will spend more than she earns in investment income. This is stated as a bona-fide fact when in reality, it is a generous assumption. From this assumption, Mr. Lynch then argues that one should invest in stocks and use some portion of the capital appreciation in addition to the dividend income for the purpose of meeting one's spending needs. He then fortifies his argument by citing inflation and emphasizing its ability to erode fixed income.

The facts are 1) how much investment income you will need is determined by how much you plan to spend, 2) many people choose to work either part-time or full-time after retirement (either out of necessity or desire), and thus have some supplemental income, 3) though the general historical trend for stock prices has been 'up', there is nothing that says that stocks have to go up, and finally 4) inflation can adversely affect stock prices (and have actually done so in the past). Lynch invokes the inflation argument when trashing bonds, and abandons it when touting stocks, even though inflation acts on both. Nor does his idealized comparison of stocks vs. bonds on pages 52-56 take into account taxes and transaction costs incidentally.

Second, on page 69, Mr. Lynch boldly says that, "If you plan to to stick with a fund for several years, the 2-5 percent you paid to get in will prove insignificant". This last statement may actually be worse than his first (of many) flawed arguments, for the following reason: the money lost to the load fails to compound at whatever investment rate of return, and over long periods of time, the difference between what you committed and what gets actually invested grows- and this is before we even consider the effect of annual expenses.

These and other flawed but superficial arguments for stock investing make for very difficult reading. Apart from the gross argumentative errors, the book presents many of Mr. Lynch's reminiscences of a stock market long gone. However, there are some useful hints in the book, most likely put there by Mr. Rothchild, but they are far outnumbered and over-shadowed by Mr. Lynch's deceptive pitch to buy stocks.

Excellent
It's hard to find a better written book on investing that Beating the Street. Despite working in the industy for many years, Peter Lynch urges people to do it for themselves. He writes clearly giving examples of how one could do better than the Wall Street pros. This book is one of the best on investing that I have read.

Not Half Bad.
In my opinion, this book was a lot more readable than I would have expected a book about the stock market to be. The light humor (very light) kept the book interesting and there were plenty of good tips. The "20 Golden Rules" were great. Lynch obviously knows what he's doing and he proves it by giving real life examples from his own successful experience. The only setback I found was that the tips were made out to be really easy, but they sounded tough. Overall, though, I would recommend it to both beginners and pros involved in the stock market.

Learn from the Master
Lynch's success comes not from his complex algorithms and estoric financial modeling, but from opening his eyes to the world and noticing good businesses.

His success at Magellan is attributed to his ability to find good companies, at reasonable valuations, and be patient enough to watch them climb.

This book is much more specific than his other release. Here, he provides detailed accounts of stock picking strategy, including how to choose from different stocks, when to buy, when to buy more and when to sell.

This is a quick read, but there is a huge amount of information that the average investor can use to their benefit. ... Read more

Book Description

Common Sense on Mutual Funds. New Imperatives for the Intelligent Investor Forward by Peter L.Bernstein.

"Other investment executives used to roll their eyes about Vanguard's Bogle, but his rules work."—Newsweek

When Jack Bogle speaks, people listen—whether they are fans or not. As the senior chairman and founder of the Vanguard Group, one of the two largest mutual fund organizations in the world, he has single-handedly transformed the industry by championing better funds at lower costs to the investor. A leading thinker and visionary whose ideas and principles have been adopted by countless investors, his name is as synonymous with excellence in mutual fund investing as Warren Buffett's is with excellence in stock investing. Now, in Common Sense on Mutual Funds, Bogle takes a critical look at the mutual fund industry and how we invest, and charts a compelling course for change.

Written in Bogle's inimitable style, this eye-opening book examines the fundamentals of mutual fund investing alongside industry practices that are often in conflict with a sound long-term investment program. Common Sense on Mutual Funds shows investors how to revolutionize their portfolios by embracing simplicity and then avoiding industry pitfalls. Just as Thomas Paine argued for a new way of thinking about independence in "Common Sense," so Bogle sets forth a new way of looking at mutual funds. He presents a platform for intelligent investing and then uncovers the ills that beset the mutual fund industry, serious ills that thwart our efforts to accumulate adequate financial resources. He analyzes costs, scrutinizes asset size, exposes tax inefficiencies, warns of "empty suit" directors, and reveals the severe conflict between fund principles and fund pro-motion. Emphasizing long-term investing and asset allocation, Bogle finds in simplicity the solution to the riddle of fund selection by investors. From stock and bond funds to global investing and index funds, Common Sense on Mutual Funds provides insight, illumination, and enlightenment.

For more than 30 years, Bogle has championed the rights of the fund shareholder, for he believes that investing is first and last about people's hopes and fears and individual goals. In Common Sense on Mutual Funds, he speaks eloquently about individual investors and how their interests are not being well-served: "The ills and injustices suffered by mutual fund investors are not so dissimilar to those our forebears suffered under English tyranny. . . . I have no quarrel with management companies focusing on profits. But the trade-off between the profits that accrue to fund shareholders and the profits that accrue to the fund management companies seems subject to no independent watchdog, despite the fact that it is the shareholders who actually own the mutual funds."

Organized as a series of essays on the investment issues of the day, this insider's view of the industry makes vital information on mutual funds accessible to experienced investors as well as those just beginning. A veritable treasure chest filled with insight and guidance from a true leader, Common Sense on Mutual Funds is an invaluable addition to every investor's library. Bogle's message, amid the cacophony of investment advice, is clear and simple: common sense will rule the day.

JOHN C. BOGLE is the founder and Senior Chairman of The Vanguard Group, Inc., the world's largest no-load mutual fund group, with more than ten million shareholders and $400 billion in assets. He has studied mutual funds in depth since 1949, when he began the research for his senior thesis at Princeton University before joining the industry in 1951. In 1997, he was identified as one of seven of the world's twentieth century "Creator-Leaders," in Leadership in Financial Services by Steven I. Davis. In 1998, he received the Distinguished Service Award of the Association for Investment Management and Research. And early in 1999, his alma mater, Princeton University, presented him with its coveted Woodrow Wilson Award, exemplifying "Princeton in the Nation's Service." Bogle is the author of the bestselling book, Bogle on Mutual Funds: New Perspectives for the Intelligent Investor, as well as numerous articles on investing. Back Copy: Critical Praise for Common Sense on Mutual Funds.

"Common Sense on Mutual Funds marks the culmination of one of Wall Street's most inspired careers. Invoking both Thomas Paine and Benjamin Graham, Jack Bogle outlines a supremely logical plan not only to better investors' returns, but to improve the whole fund industry. This isn't just the best book yet by Bogle, it may well be the best book ever on mutual funds."—Don Phillips, President & CEO, Morningstar, Inc.

"Buffett cannot teach you or me how to become a Warren Buffett. Bogle's reasoned precepts can enable a few million of us savers to become in twenty years the envy of our suburban neighbors—while at the same time we have slept well in these eventful times."—Paul A. Samuelson, Massachusetts Institute of Technology, Department of Economics.

"After a lifetime of picking stocks, I have to admit that Bogle's arguments in favor of the index fund have me thinking of joining him rather than trying to beat him. Bogle's wisdom and his commonsense way of explaining things make this book indispensable reading for anyone trying to figure out how to invest in this crazy stock market."—James J. Cramer, Money manager and senior columnist for TheStreet.com

"Written in his characteristic forthright and visionary style, Bogle penetrates the myths and jargon to shed a powerful light on the central issues that confront every investor, no matter what their level of experience or sophistication."—Martin L. Leibowitz, Vice Chairman and Chief Investment Officer, TIAA-CREF

"Jack Bogle is one of the great pioneer/visionaries of the investment business. In this book he shares his knowledge, experience, and judgement to enable us to become better investors. The final philosophical chapters provide insights that may help some of us become better people."—Byron R. Wien, Chief U.S. Investment Strategist, Morgan Stanley Dean Witter

"Superior in intellect, character, and performance, the investment genius who defied conventional wisdom and proved his critics wrong gives readers a wealth of practical advice."—Hon. William E. Simon, Former Secretary of the Treasury ... Read more

Reviews (47)

Superb, even if a bit Repetitive
Despite the prosaic title of the book, and the conservative investment philosophy of its author, "Common Sense on Mutual Funds" has a revolutionary aim. Vanguard founder John Bogle believes the mutual fund industry must make major changes in order to faithfully serve its customers and, by explaining his investment philosophy, he shows both why radical change is necessary for the industry and helps to precipitate it by encouraging individual investors to follow his investment advice.

Bogle thinks too many mutual fund investors are being scammed by professional managers of funds who reward their companies instead of their investors' portfolios. High fees, outrageous expenses, rapid turnover, unneeded "products", marketing costs -- all are used by countless mutual fund companies to inflate their bottom lines to the detriment of their investors' needs.

Several reviewers here have noted that Bogle repeats several key points throughout the book, especially the importance of keeping costs as low as possible. This is true. But important lessons need to be stressed, especially with so much evidence that the average investor still doesn't understand them. Perhaps Bogle feels it's a lesson that can't be said enough. After all, why would you pay more for less, unless you simply don't understand what is being done to you?

This book was somewhat prescient. Published near the end of the long bull market of the 1980 and 90s, "Common Sense on Mutual Funds" called out -- in its own quiet and understated way -- for reform of the mutual fund industry before it became fashionable to do so. While Bogle's book doesn't have an angry tone, its recommendations are essentially more radical than anything now being considered by New York's attorney general in his drive to reform the industry.

Bogle Is Dead Wrong!
John Bogle is a nice guy, but he is dead wrong about the stock market and about active management of mutual funds. His thesis: All performance regresses to the mean, therefore you cannot beat the market over time. Better to buy the market via index funds, do so at lowest cost, and hold for the long term. That approach guarantees slightly better than average performance. Much better approach: rank order all no-load mutual funds by alpha, and select a diversified portfolio of those at the top according to your asset allocation profile. Monitor alphas over time. Periodically rebalance, but especially replace any mutual fund when its alpha falls below 0 with one that has a positive alpha. You will end up with a dollar balance far above that following Bogel's advice. I am surprised that Don Phillips, head of Morningstar,Inc. does not know this.

Index funds are still managed! C'mon Bogle.
In waging his crusade against actively managed funds, Bogle loses sight of the fact that even index funds are managed nonetheless. Take the popular Vanguard 500 Index Fund, which is indexed to S&P 500. He still cannot dodge the question: Who decides which stock gets listed or delisted? It's S&P itself, which manages the index. But why does he suppose that S&P is always a better managing institution than the best mutual fund companies that actively manage their funds?

Arguably, most fund managers can't outperform the indexes, but that does NOT mean that no managers actively managing their funds ever outperform the indexes. If you have to put money in the market, why not go for the best? And sure, managers can blow up too, but you can still diversify amongst the best managed funds.

As to costs, sure, index funds have small expenses compared to actively managed funds, but index funds have a serious drawback--usually a lot more volatility that makes owning them riskier. Investing is not just about keeping expenses to a minimum--important as it is. Neither is it merely about performance. It's also about controlling risks and preserving capital. I for one wouldn't want to own a fund--even for the long term and however cheap--if it's up 40% one year, down 30% the next, and then up %25% still the next and so on. I'm willing to pay more knowing that my capital would be preserved even in a down market. No index funds can be compared to the safety and nonvolatile nature of such funds as SGENX, OAKBX, MERFX and MVALX, which have very low betas.

Bogle's indexing approach is for me a sure path to mediocrity. If you have to put money in the market, why not go for the best funds with a long-term market-beating track record and consistent returns? To reduce management-related risks, why not also diversify amongst the best managed funds?

That said, I don't mean to say that you should not own index funds at all.

Brokers Hate This Guy - He Deserves 6 Stars
If we were not a democracy someone would lock this guy up. He has spilled all the beans on the fake financial advisors and financial and insurance sales people that want to sell you the grotesque front end loaded mutual funds and those annuities that make piles of money for everyone except for the investor. Bogle founded one of the biggest mutual fund groups in America - the Vanguard Group - and he is a burr under the saddle of many financial people. His advice saves you money at the expense of the broker.

The bitter truth is that over the long haul only 10% of mutual funds outperform the conservative S&P 500 index. So why pay some company a front end load fund of 5-7% to under-perform the S&P 500 plus an annual fee of 1.5% when you can buy S&P index shares or Vanguard mutual funds that have no load fees, and have very low annual expenses - often less than 0.5% per annum. You end up giving away a chuck of your money if you do not follow his sound advice.

Bogle of course does not want to stop there. He wants to reign in all those CEO perks and huge bonuses and use the leverage of the mutual fund shareholders. All great stuff,

This is a case where Amazon.com should have a special 6 star category.

Jack in Toronto

Other books to consider
Bogle's book is a classic. It eloquently discusses mutual fund fundamentals and makes a strong argument for indexing. If this topic is important to you, try also "The Great Mutual Fund Trap", "The Intelligent Asset Allocator" (emphasis on asset allocation and indexing), and the free material at ABetterWayToInvest and ETFResources. ... Read more

Book Description

The best book on mutual funds just got better-and bigger-in this up-to-the-minute new paperback edition. This is the expanded edition of the acclaimed hardcover guide that earned raves from consumers, reviewers, and booksellers. The Wall Street Journal called Rowland's 1996 guide "outstanding." And The Boston Globe praised it as "a lifetime reference for mutual fund investors," applauding Rowland's clear, concise, jargon-free approach to building a mutual fund portfolio. As one of America's preeminent finance journalists, Rowland has offered top-drawer advice on investing for over 20 years. The New Commonsense Guide to Mutual Funds now includes 75 of her signature DOs and DON'Ts-practical, savvy solutions for the problems, frustrations, and missed opportunities encountered by anyone who owns shares in mutual funds. Inside this new guide, investors will find smart questions to ask before investing. A risk assessment quiz. Powerful techniques and strategies professional money managers use for asset allocation and rebalancing. And guidance about when and how to get into (and out of) a mutual fund. Includes: Roth IRAs; Education IRAs; Over a dozen new DOs and DON'Ts; More resources, including top-ranked fund managers, research tools for investors, key web sites; Greatly expanded guidance on risk-taking and strategies; Over 12 sample portfolios; Answers to most frequently asked questions from baby boomers, retirees, and Gen-Xers who follow Rowland's online column at www.moneyinsider.com. Mary Rowland is a contributing editor to Bloomberg Personal Finance and is one of the most respected authors in the field of personal finance. She has written extensively for The New York Times, Fortune, Worth, Business Week, Money, Modern Maturity, Woman's Day, USA Today, and many other major consumer and financial publications. Her books include A Commonsense Guide to Your 401(k) and Best Practices for Financial Advisors. ... Read more

Reviews (6)

The best beginner book on mutual funds I've found.
I checked out many books on mutual funds and investing from the library. This is the one I kept going back to, because its easy-to-read "dos" and "donts" format got right to the point. That might sound too pat, but the advice given within that simple format is right on and consistant with other reliable sources I've checked. There are also more sections beyond the dos & donts for those who want to go further in depth. The advice is basic and sensible - such as what factors to look for in a fund, how to evaluate performance and costs of funds, and recommended further reading. I plan to buy a copy so I don't have to keep going to the library!

Great fundamentals and starting point
This is a great starting point for people who want to know more about investing, and particulary those who want to do it themselves. Rowland packs a lot of useful investing do's and don't, with easy to follow explanations. She stresses the key concepts such as asset and risk allocation, dollar-cost-averaging, and "buy low, sell high" (which, although a cliché, is often ignored). She examines all kind of mutual funds, from stocks, to bonds, to gold, to blend. One drawback is the book is about 3 years old, which hurts the information a little. However, this book can provide investing knowledge that applies any time, whether you believe in the "New Economy" or not.

Nothing to compare with
This is the only book on mutual funds that I have read. It had provided me with basics and with the places to look up mutual fund info. While not necessarily breathtaking read it is informative. The small format is also a plus (I do a lot of my reading in subway cars).

Bad Advice
This book is not for a novice, the best place for a novice is with a professional. She makes very poor and vague advice in her do's and dont's. Specifically in regard to Bond Funds, Asset Allocation, and Share Classes. You get what you pay for. If you are a novice, dont "Play" with your money, seek professional advice. You tip a waiter 15% but wont pay a broker 5% or less ? Think about it.

Information for novice investors and seasoned shareholders.
More than 63 million Americans own mutual funds, but most folks don't really know what they're all about, aside from being the "must" investment of the 90's. This guide will change that. Much of the book is devoted to a series of specific dos and don'ts. There's also a range of asset allocation portfolios for every type of investment "personality," and a primer on how to work with a financial advisor. ... Read more

Book Description

CBS Marketwatch's dean of funds, Paul Farrell, shows you his simple strategy that will help you diversify and customize your mutual fund portfolio while shielding your investments. ... Read more

Reviews (4)

An excellent guide to mutual find investing
The Winning Portfolio: Choosing Your 10 Best Mutual Funds is an excellent guide to mutual find investing and ideally suited to the informational and strategic planning needs of the novice investor. Written by CBS MarketWatch's dean of funds Paul Farrell, The Winning Portfolio aptly presents how best to choose between the top 100 mutual funds and create a diversified, solid portfolio that will effectively put your money to work for you. Written in clear, easily understandable language for new investors and long-time market veterans alike, The Winning Portfolio is a must-read for everyone putting a sizeable chunk of their financial well-being into the mutual fund market.

It just makes sense
There are so many books on investing right now, that it is difficult to know where to turn. "The Winning Portfolio" is a gem that stands out from the rest of the crowd. This book is easy to understand, even for a novice, yet is not beneath those who have already been investing.

He explains how to build a winning portfolio using mutual funds with emphasis on asset allocations. This is not a one-size-fits-all approach. He helps the reader determine how to build a portfolio based on their needs, then offers examples of how to meet financial goals. Yes, it takes a bit of work, but it doesn't require the diligence (and the stomach) of a day-trader to maintain. This system will work for the average person.

After reading this book, I have a solid plan in place and an idea of where I'm headed and why I'm going there. I agree with the previous reviewer... Dr. Paul's column at cbs.marketwatch.com is also required reading.

The Winning Protfolio - a winning book
If you have not yet read Paul Farrell's internet column on the CBS Marketwatch page, you are missing out on a lot! This book, and his daily column on SuperStar Funds, are a must for anyone planning their future.

A Great Place to Start
This book is an ideal starting point for those who are trying to figure out how to start saving. Dr. Farrell is a comforting voice to anyone who might be overwhelmed at the thousands of mutual funds on the market today and the other countless investment options avaialable these days. Dr. Farrell's message is simple - make a plan, then stick to it. Then, and this is where other columnists, writers fall down, he tells you HOW to do it. He outlines what a model portfolio would look like and gives a long list of funds that might be good choices. Dr. Farrell's other message is, it's not hard to invest - most of the gains in your portfolio come from the allocations you pick - not the individual funds. The book is simple, well-written, and interesting. This shouldn't be the last investment book you read, but if you haven't read one yet, it should be the first! ... Read more