The Bet That Proved Passive (Index) Investing is Superior to Active Management

Gambling Verses Investing

Warren Buffett the CEO of Berkshire Hathaway is one of the most successful investors of all time, he is also known as the “Oracle of Omaha.”

In a 2005 letter to the shareholders of his company wrote that active management professionals (hedge fund managers) not outperform individuals who used a passive (index) investing strategy over a ten-year period. To prove his sincerity in this belief he offered $500,000 (for charity) to anyone willing to accept his challenge.

Warren Buffett believed the large fees from active managers was not worth the cost. That in fact the exorbitant fees only enrichen the finance industry and hurt the consumer.

In 2007 hedge fund manager Ted Seides accepted the challenge. Buffet chose a low-cost Vanguard S&P fund and Seides picked five funds-of-funds with interests in more than 200 hedge funds to go up against Buffett. The official amount for the bet was 1 million dollars.

In December 2017, Buffett claimed victory, noting that the final tally has been an “eye-opener.” Buffett’s pick of a Vanguard S&P index fund delivered an average annual return of 8.5% compared to the fund-of-funds’ 2.4% average annual gain.

By the end of the bet on the $1 million invested in the funds chosen by Seides would have gained $220,000 in the same time period that Buffett’s low-fee investment would have earned $854,000.

Any individuals who invested in these hedge funds also lost out on making money. While at the same time the individuals running the hedge funds enjoyed “earning” their outrageous fees.

“Performance comes, performance goes, fees never falter.”-         Warren Buffett

Warren Buffett pointed out that:·        Making money on the stock market; "Does not require great intelligence, a degree in economics or a familiarity with Wall Street jargon."·        "What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals."·        "Stick with big, 'easy' decisions and eschew activity.”·        Buffett also sought to make it loud and clear that he doesn't think the exorbitant fees that hedge funds charge are worth it.

Buffett acknowledged a lesson learned from an interesting plot twist over the course of the bet.·        At the outset of the wager, Buffett and Seides bought about $300,000 worth U.S. Treasury bonds, widely considered a safe investment.·        The expectation was that the bonds would grow to about $1 million at the end of the decade, and the winner would claim the prize pool for charity.·        But, the bonds gave back "pathetic" returns, Buffett wrote.

Bonds

·        "Bonds had become a dumb -- a really dumb -- investment compared to American equities" or stock, he said.·        So, in 2012, Buffett and Seides dumped their Treasury bonds and used the money to buy B-class shares of Buffett's Berkshire Hathaway (BRKB).·        By the end of the bet, the Berkshire shares were worth $2,222,279 -- about $1.2 million more than they'd hope to earn with the bonds.·        In short, the "purportedly 'risk-free' long-term bonds" ended up being a "far riskier investment" than common stocks.

Bonds  Continued

Warren Buffett gave $2.2 million to the charity Girls Inc. of Omaha, Nebraska, after winning a 10-year bet that hedge fund managers couldn’t beat the stock market average, reports the Omaha World-Herald.

John Clifton "Jack" Bogle (May 8, 1929 – January 16, 2019) was an American investor, business magnate, and philanthropist. He was the founder and chief executive of The Vanguard Group, and is credited with creating the first index fund. An avid investor and money manager himself, he preached investment over speculation, long-term patience over short-term action, and reducing broker fees as much as possible. The ideal investment vehicle for Bogle was a low-cost index fund held over a lifetime with dividends reinvested and purchased with dollar cost averaging.

“If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle.”-         Warren Buffett

For more insight and information on passive (index) investing a good source is Jack Bogle’s book:<ul><li>Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor</li></ul>

“Net return is simply the gross return of your investment portfolio less the costs you incur. Keep your investment expenses low, for the tyranny of compounding costs can devastate the miracle of compounding returns.”-         John C. Bogle

“Wise investors won't try to outsmart the market.”-         John C. Bogle Attempting get rich schemes may very well lead to going broke quickly.Trying to get rich quick is gambling it is not investing.

Attempting get rich schemes may very well lead to going broke quickly. Trying to get rich quick is gambling it is not investing.

Understand yourself and those around you.

psychology

Psychology

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Career

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Money & Investments

Investing Verses Gambling

Many of the most highly successful people in the world I have spoken to attribute a singular focus -- a commitment to the pursuit of one main goal or arena -- to their success.In fact, it's how we often determine success. Historically, renaissance men who were well-rounded in a number of pursuits were well-regarded for the breadth of their knowledge and endeavors. Now, we often equate success with being the best or amongst the best in a peer groupsSo, how can you stay focused in a world with so many distractions?

Warren Buffett and Bill Gates's Top Secret to Success

When he was in college, accumulating $40,000 in college debt, he set a goal to have a $1 million net worth by age 30. Heknew exactly what his goal was. Then, he created a plan of milestones to achieve that goal, and it did not deviate from it until he had reached it. It's much easier for you to focus if you set a clear path for yourself up front and stay relentlessly committed to it.

Set a concrete goal or focus

Warren Buffett has had more success as an investor than any other individual in history. Daily, there are recommendations to act a certain way, but Warren says that he doesn't follow the path or the advice of other investors. He sticks to exactly the types of businesses he understands well and only acts on an investment if he feels there is a need to, which means he has made very few investments or "trades" over the course of his many decades-long investment career. If you know what works for you, you shouldn't be distracted by what others are doing.

Follow your own path

Albert Einstein famously said, "You have to learn the rules of the game. And then you have to play better than anyone else." These are incredibly powerful words in terms of focus. We are a society of taking action, but part of the focus should not just be doing, but really understanding the parameters of what you need to do, now and in the future. Buffett spends a significant portion of his time reading and very little time actually taking action. Learning and understanding the upfront and changing parameters of the market in which you are participating will aid your focus in the right place.

Know the rules of the game

There are so many distractions and opportunities in life, you have to constantly ask yourself if you are spending your time on your focus. If you find yourself pulled in different directions, get rid of some of your activities. When you are doing a task, ask yourself if it is in support of your focus. If it's not, let it go.You may not end up as wealthy as Warren Buffett or Bill Gates, but having a sincere focus on what you are trying to accomplish -- combined with a perseverance to stick with it day in and day out -- will make for an incredibly successful you.

Use a litmus test for your time

personaldevelopment

Personal Development

Successful people/ secrets 

We all have different preferences for when it's the right time to bring out the winter blankets. And the thermostat's setting often forms the basis of office arguments between women and men regarding the "correct" temperature for it to be set.Between the sexes, there are always more similarities than differences. But research does consistently show women prefer a higher indoor temperature to men. But is there any science backing up the widespread belief women "feel the cold" more than men?

Why Women Feel Cold More Than Men? 

#woman #sciencenews Yes, women might ‘feel the cold’ more than men. Here’s why We all have different preferences for when it's the right time to bring out the winter blankets. And the thermostat's setting often forms the basis of office arguments between women and men regarding the "correct" temperature for it to be set. Between the sexes, there are always more similarities than differences. But research does consistently show women prefer a higher indoor temperature to men. But is there any science backing up the widespread belief women "feel the cold" more than men? know answer here in this video... Know more about… Space : https://youtube.com/playlist?list=PLO6kTsDI4xfnAISJIMWKxkPoL9qoU9Hwv General knowledge : https://youtube.com/playlist?list=PLO6kTsDI4xfn6hHfyZBGiw-atw0its-7Q Science & Technology : https://youtube.com/playlist?list=PLO6kTsDI4xfmONVgfMhMbstBLpZuyJCP2 Health : https://youtube.com/playlist?list=PLO6kTsDI4xflrlYCGE0EIyWXoBoNG81-r 🙏Requests🙏 I requested to you (My viewers) please subscribe to my channel and if you like video then please press like button. All youtubers are doing hard work in video making and your like, Share, Subscribes are fruits for our hard works. You also follow me on: - Facebook: www.facebook.com/thetechers You can visit my Website : www.knowledgevaccination.blogspot.com This video is under Fair Use: Copyright Disclaimer Under Section 107 of the Copyright Act in 1976; Allowance is made for "Fair Use" for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. Fair use is a use permitted by copyright statute that might otherwise be infringing. Non - profit, educational or personal use tips the balance in favor of fair use. All rights and credit go directly to its rightful owners. No copyright infringement intended. Sound credit : YouTube Audio Library Footage Credit : Storyblocks/Pixabay/Pexels Narration by : Joy Mukherji References : Thank you all of you...🙏

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Marketing & Sales

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Technology & The Future

#woman #sciencenews 
Yes, women might ‘feel the cold’ more than men. Here’s why
We all have different preferences for when it's the right time to bring out the winter blankets. And the thermostat's setting often forms the basis of office arguments between women and men regarding the "correct" temperature for it to be set. Between the sexes, there are always more similarities than differences. But research does consistently show women prefer a higher indoor temperature to men.

But is there any science backing up the widespread belief women "feel the cold" more than men? know answer here in this video...

Know more about… 
Space : https://youtube.com/playlist?list=PLO6kTsDI4xfnAISJIMWKxkPoL9qoU9Hwv

General knowledge : https://youtube.com/playlist?list=PLO6kTsDI4xfn6hHfyZBGiw-atw0its-7Q

Science & Technology : https://youtube.com/playlist?list=PLO6kTsDI4xfmONVgfMhMbstBLpZuyJCP2

Health : https://youtube.com/playlist?list=PLO6kTsDI4xflrlYCGE0EIyWXoBoNG81-r

🙏Requests🙏 
I requested to you (My viewers) please subscribe to my channel and if you like video then please press like button. All youtubers are doing hard work in video making and your like, Share, Subscribes are fruits for our hard works.
 
You also follow me on: - 
Facebook: www.facebook.com/thetechers
You can visit my Website : www.knowledgevaccination.blogspot.com

This video is under Fair Use: Copyright Disclaimer Under Section 107 of the Copyright Act in 1976;  Allowance is made for "Fair Use" for purposes such as criticism, comment, news reporting, teaching, scholarship, and research.  Fair use is a use permitted by copyright statute that might otherwise be infringing.  Non - profit, educational or personal use tips the balance in favor of fair use.  All rights and credit go directly to its rightful owners.  No copyright infringement intended.

Sound credit : YouTube Audio Library
Footage Credit : Storyblocks/Pixabay/Pexels
Narration by : Joy Mukherji
References : 
Thank you all of you...🙏

Hi Friends,
In this channel, We provide you with Facts about Latest Space, Science & Technology research and information, Research based Health-related facts, General Knowledge facts, and many more. Your Information, Our Responsibility. 
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Why WOMEN feel COLD more than MEN?

2022 is a year of inflation. It resulted from the huge disruption that Covid caused. The high inflation and low economic growth are all over the media. <ul><li>Inflation is getting higher</li><li>Stocks are down</li><li>People are starting to get fired</li><li>Companies are barely hiring</li></ul> Investment ads claim they have investment strategies to generate significant returns during inflation, yet famous hedge funds like Tiger Global are down 60%. So don't be seduced by investment ads that try to profit from fear and greed.

The current economic situation

When we're faced with economic problems, we can view them in two ways:<ol><li>Up-close perspective: Looking at inflation, interest rates, debt, consumer spending, joblessness, etc.</li><li>Broad perspective: Looking at long-term trends and historical patterns.</li></ol> Taking a step back for a broader view can teach us about what's happening now.

Look at the big picture

Periods of high growth and low growth are not uncommon. For example, look at how the world went from the great 1920s to the Great Depression in the 1930s. Investor Howard Marks discusses the concept of cycles in his book, Mastering The Market Cycle. He states that the economy grows, on average, at a consistent pace. The economy will get stimulated and make people take more risks and consume more. In turn, this period often causes inflation and slows things down. Recessions and slowdowns are normal. However, when you invest long-term, these fluctuations won’t harm you.

Periods of high growth and low growth

Avoid taking too much risk when the economy is booming. Likewise, avoid buying into things you don't understand. Things only become troublesome when you make bad investment decisions during periods of high growth. For example:<ul><li>You bought houses without income in the 2000s.</li><li>Or you bought stocks and crypto with borrowed money over the last year.</li></ul>

Tips on investing

When you recognise economic patterns, you'll know that the current trends are expected and normal. <ul><li>Knowledge. Learn more about how the economy and stocks work. When you have better knowledge of the history of finance, you won't fall for too-good-to-be-true investments. Read good books on personal finance that have stood the test of time.</li><li>Mindfulness. Knowledge will not give you full peace of mind, so practising some form of Mindfulness or Stoicism can help detach from money stress.</li></ul>

The economy is affected by various factors out of your control

It’s difficult to have peace of mind during periods of uncertainty, like the ongoing inflation. Here are some practical tips and perspective.

Discover the world of business and economics.

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Economics

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Mindfulness

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Mental Health

How to Have Peace of Mind During High Inflation - Darius Foroux

"In the casino the house always wins. In horse racing, the track always wins. In the Powerball, the state always wins. 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."-John C. Bogle

Illusion That The Financial Industry Places YOUR Interests First

In order to not being a victim of the finance industry an individual must have a strategy. "The best way to implement this strategy is indeed simple. Buy a find that holds this all-market portfolio, and hold it forever. Such a fund is called an index fund. The index fund is simply a basket (portfolio) that holds many, many eggs (stocks) designed to mimic the overall performance of the U.S. stock market (or any financial market or market sector."-John C. Bogle

Investing Strategy

When a fund is actively managed, it employs a professional portfolio manager, or team of managers, to decide which underlying investments to choose for its portfolio. In fact, one reason you might choose a specific fund is to benefit from the expertise of its professional managers. (Firna Definition)It is very rare that an actively managed fund can beat average market returns in the long term. The reason for this is Fees. These fees include manager fees, brokerage commissions/transaction fees, and other hidden costs.

Actively Managed Funds

Where do actively managed fund fees come from? The answer is the consumer. The unfortunate truth is that active managers get paid no matter what results they provide (positive or negative). This has proven over time to not work in the consumers best interests.In order for the active manager to provide value they have to beat the market on top of their fees.

Actively Managed Fund Fees

Passive funds seek to replicate the performance of their benchmarks instead of outperforming them. For instance, the manager of an index fund that tracks the performance of the S&P 500 typically buys a portfolio that includes all of the stocks in that index in the same proportions as they are represented in the index. If the S&P 500 were to drop a company from the list, the fund would sell it, and if the S&P 500 were to add acompany, the fund would buy it. (Firna)

Passively Managed Funds

Because index funds don't need to retain active professional managers, and because their holdings aren't as frequently traded, they normally have lower operating costs than actively managed funds. However, the fees vary from index fund to index fund, which means the return on these funds varies as well. (Firna)

Index Funds

Some index funds, which go by names such as enhanced index funds, are hybrids. Their managers pick and choose among the investments tracked by the benchmark index in order to provide a superior return. In bad years, this hybrid approach may produce positive returns, or returns that are slightly better than the overall index. Of course, it's always possible that this type of hybrid fund will not do as well as the overall index. In addition, the fees for these enhanced funds may be higher than the average for index funds. (Firna)

Index Funds Continued

There are significant downsides to the high costs in investing. An actively managed fund will probably result in significantly less profit/income for the investor as compared to a low cost index fund that passively mimics the performance of an index. Examples of indexes are S&P 500 index, the Russell 2000 Index, or the Wilshire 5000 total market index.

Downside of High Costs In Investing

An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets. (investopedia.com)

Index Funds Further Explained

Searching out the lowest cost index fund directly translates into more money for the investor. Therefore not all index funds are equal. Due diligence and research is necessary to maximize returns.

Lower Costs Translate into More Money for You

Ideally investing should be about long term results. Get rich schemes are more like gambling. The payoffs in gambling might be great but the more likely results are loses. Remember the casino always wins. Slow and steady wins the race.

Be Skeptical of New Investing Trends

“On balance, the financial system subtracts value from society”― John C. Bogle

The Financial System

“Buying funds based purely on their past performance is one of the stupidest things an investor can do.”― John C. Bogle

Past Performance Guarantees Nothing

“Some estimates suggest that the failure rate is around 20 percent, meaning that each year, one of every five hedge funds goes up in smoke.”― John C. Bogle

Hedge Funds

“The best way to implement this strategy is indeed simple: Buy a fund that holds this all-market portfolio, and hold it forever. Such a fund is called an index fund. The index fund is simply a basket (portfolio) that holds many, many eggs (stocks) designed to mimic the overall performance of the U.S. stock market (or any financial market or market sector).”― John C. Bogle

Costs Savings Strategy

“When you have identified your long-term objectives, defined your tolerance for risk, and carefully selected an index fund or a small number of actively managed funds that meet your goals, stay the course. Hold tight. Complicating the investment process merely clutters the mind, too often bringing emotion into a financial plan that cries out for rationality. I am absolutely persuaded that investors’ emotions, such as greed and fear, exuberance and hope—if translated into rash actions—can be every bit as destructive to investment performance as inferior market returns.”― John C. Bogle

Stay the Course - Hold Tight

“Mutual fund investors, too, have inflated ideas of their own omniscience. They pick funds based on the recent performance superiority of fund managers, or even their long-term superiority, and hire advisers to help them do the same thing. But, the advisers do it with even less success. Oblivious of the toll taken by costs, fund investors willingly pay heavy sales loads and incur excessive fund fees and expenses, and are unknowingly subjected to the substantial but hidden transaction costs incurred by funds as a result of their hyperactive portfolio turnover."― John C. Bogle

Investors Choosing Mutual Funds

"Fund investors are confident that they can easily select superior fund managers. They are wrong.”― John C. Bogle

Investors Choosing Fund Managers

“When navigating the financial markets, the long-term investor must keep in mind the four basic dimensions of long-term return — reward, risk, cost and time — and must apply them to every asset class. Never forget that these four dimensions are remarkably interdependent.”― John C. Bogle

Navigating Financial Markets

“I’m speaking here about the classic index fund, one that is broadly diversified, holding all (or almost all) of its share of the $15 trillion capitalization of the U.S. stock market, operating with minimal expenses and without advisory fees, with tiny portfolio turnover, and with high tax efficiency. The index fund simply owns corporate America, buying an interest in each stock in the stock market in proportion to its market capitalization and then holding it forever.”― John C. Bogle

Owning Corporate America

“The grim irony of investing, then, is that we investors as a group not only don't get what we pay for, we get precisely what we don't pay for. So if we pay for nothing, we get everything.”― John C. Bogle “When there are multiple solutions to a problem, choose the simplest one.”― John C. Bogle

Keep It Simple

“On balance, the financial system subtracts value from society”― John C. Bogle “The two greatest enemies of the equity fund investor are expenses and emotions.”― John C. Bogle “Owning the stock market over the long term is a winner's game, but attempting to beat the market is a loser's game.”― John C. Bogle

Expenses and Emotions Work Against You

“Financial markets are far too complex to isolate any single variable with ease, as if conducting a scientific experiment. The record is utterly bereft of evidence that definitive predictions of short-term fluctuations in stock prices can be made with consistent accuracy. The prices of common stocks are evanescent and illusory.”― John C. Bogle

Complexity Works Against You

“The winning formula for success in investing is owning the entire stock market through an index fund, and then doing nothing. Just stay the course.”― John C. Bogle

Winning Formula

“The simple fact is that selecting a mutual fund that will outpace the stock market over the long term is, using Cervantes’ wonderful observation, like ‘looking for a needle in the haystack.’ So I offer you Bogle’s corollary: ‘Don’t look for the needle in the haystack. Just buy the haystack!”― John C. Bogle

Buy The Haystack

“Investors need to understand not only the magic of compounding long-term returns, but the tyranny of compounding costs; costs that ultimately overwhelm that magic.”― John C. Bogle

Magic or Compounding

“It will also tell you how easy it is to do just that: simply buy the entire stock market. Then, once you have bought your stocks, get out of the casino and stay out. Just hold the market portfolio forever. And that’s what the index fund does. This investment philosophy is not only simple and elegant. The arithmetic on which it is based is irrefutable. But it is not easy to follow its discipline.”― John C. Bogle

Easy Does It

“Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial portfolio turnover tend to reduce investment yields. Many people will find the guarantee of playing the stock-market game at par every round a very attractive one. The index fund is a sensible, serviceable method for obtaining the market’s rate of return with absolutely no effort and minimal expense.”― John C. Bogle

Sensible Investing

“Another huge toll has been taken by taxes. Passively managed index funds are tax-efficient, given the low turnover implicit in the structure of the Standard & Poor’s 500 Index (and, to an even greater extent, the all-market Wilshire 5000 Index).”― John C. Bogle

Tax Efficiency

“Gold is largely a rank speculation, for its price is based solely on market expectations. Gold provides no internal rate of return. Unlike stocks and bonds, gold provides none of the intrinsic value that is created for stocks by earnings growth and dividend yields, and for bonds by interest payments. So in the two centuries plus shown in the chart, the initial $10,000 investment in gold grew to barely $26,000 in real terms. In fact, since the peak reached during its earlier boom in 1980, the price of gold has lost nearly 40 percent of its real value.”― John C. Bogle

Investing In Gold

“The message is clear: in the long run, stock returns depend almost entirely on the reality of the investment returns earned by our corporations. The perception of investors, reflected by the speculative returns, counts for little. It is economics that controls long-term equity returns; emotions, so dominant in the short-term, dissolve.”― John C. Bogle

Reality Verses Perception

“While illusion (the momentary prices we pay for stocks) often loses touch with reality (the intrinsic values of our corporations), it is reality that rules in the long run.”― John C. Bogle

Enemies of Equity

“The greatest enemy of a good plan is the dream of a perfect plan. Stick to the good plan.”― John C. Bogle “Simplicity beats complexity”― John C Bogle, The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns “The relentless rules of humble arithmetic.”― John C Bogle

A Good Plan Triumphs

“Your index fund should not be your manager’s cash cow. It should be your own cash cow.”― John C Bogle “It takes wisdom to know what we don’t know”― John C. Bogle

Investing Wisdom

“It is fair to say that, by Graham’s demanding standards, the overwhelming majority of today’s mutual funds, largely because of their high costs and speculative behavior, have failed to live up to their promise. As a result, a new type of fund—the index fund—is now gradually moving toward ascendancy. Why? Both because of what it does—providing the broadest possible diversification—and because of what it doesn’t do—neither assessing high costs nor engaging in high turnover.”― John C. Bogle

Benjamin Graham's Standards

“We cannot expect management companies to operate in the public interest. We must recognize the reality that they are in the business of investing other people’s money in order to maximize their own profits, even though those profits come at the expense of their fund shareholders.”― John C. Bogle,

Profit Making Reality

“In the short run, the stock market is a voting machine; in the long run it is a weighing machine. —Benjamin Graham, Security Analysis (1934)”― John C. Bogle “The Index Fund is designed to be held for a lifetime.”― John C. Bogle

Investing For a Lifetime

“Hear David Swensen, widely respected chief investment officer of the Yale University Endowment Fund. “A minuscule 4 percent of funds produce market-beating after-tax results with a scant 0.6 percent (annual) margin of gain. The 96 percent of funds that fail to meet or beat the Vanguard 500 Index Fund lose by a wealth-destroying margin of 4.8 percent per annum.”― John C. Bogle

Passive Investing Statistical Advantage

Index investing and protecting yourself. Passive Investing verses Actively Managed Investing.

The best-selling investing "bible" offers new information, new insights, and new perspectives The Little Book of Common Sense Investing is the classic guide to getting smart about the market. Legendary mutual fund pioneer John C. Bogle reveals his key to getting more out of investing: low-cost index funds. Bogle describes the simplest and most effective investment strategy for building wealth over the long term: buy and hold, at very low cost, a mutual fund that tracks a broad stock market Index such as the S&P 500. While the stock market has tumbled and then soared since the first edition of Little Book of Common Sense was published in April 2007, Bogle’s investment principles have endured and served investors well. This tenth anniversary edition includes updated data and new information but maintains the same long-term perspective as in its predecessor. Bogle has also added two new chapters designed to provide further guidance to investors: one on asset allocation, the other on retirement investing. A portfolio focused on index funds is the only investment that effectively guarantees your fair share of stock market returns. This strategy is favored by Warren Buffett, who said this about Bogle: “If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. . . . Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.” Bogle shows you how to make index investing work for you and help you achieve your financial goals, and finds support from some of the world's best financial minds: not only Warren Buffett, but Benjamin Graham, Paul Samuelson, Burton Malkiel, Yale’s David Swensen, Cliff Asness of AQR, and many others. This new edition of The Little Book of Common Sense Investing offers you the same solid strategy as its predecessor for building your financial future. Build a broadly diversified, low-cost portfolio without the risks of individual stocks, manager selection, or sector rotation. Forget the fads and marketing hype, and focus on what works in the real world. Understand that stock returns are generated by three sources (dividend yield, earnings growth, and change in market valuation) in order to establish rational expectations for stock returns over the coming decade. Recognize that in the long run, business reality trumps market expectations. Learn how to harness the magic of compounding returns while avoiding the tyranny of compounding costs. While index investing allows you to sit back and let the market do the work for you, too many investors trade frantically, turning a winner’s game into a loser’s game. The Little Book of Common Sense Investing is a solid guidebook to your financial future.

books

Books

The best-selling investing "bible" offers new information, new insights, and new perspectives The Little Book of Common Sense Investing is the classic guide to getting smart about the market. Legendary mutual fund pioneer John C. Bogle reveals his key to getting more out of investing: low-cost index funds. Bogle describes the simplest and most effective investment strategy for building wealth over the long term: buy and hold, at very low cost, a mutual fund that tracks a broad stock market Index such as the S&P 500. While the stock market has tumbled and then soared since the first edition of Little Book of Common Sense was published in April 2007, Bogle’s investment principles have endured and served investors well. This tenth anniversary edition includes updated data and new information but maintains the same long-term perspective as in its predecessor. Bogle has also added two new chapters designed to provide further guidance to investors: one on asset allocation, the other on retirement investing. A portfolio focused on index funds is the only investment that effectively guarantees your fair share of stock market returns. This strategy is favored by Warren Buffett, who said this about Bogle: “If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. . . . Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.” Bogle shows you how to make index investing work for you and help you achieve your financial goals, and finds support from some of the world's best financial minds: not only Warren Buffett, but Benjamin Graham, Paul Samuelson, Burton Malkiel, Yale’s David Swensen, Cliff Asness of AQR, and many others. This new edition of The Little Book of Common Sense Investing offers you the same solid strategy as its predecessor for building your financial future. <ul> <li>Build a broadly diversified, low-cost portfolio without the risks of individual stocks, manager selection, or sector rotation.</li> <li>Forget the fads and marketing hype, and focus on what works in the real world.</li> <li>Understand that stock returns are generated by three sources (dividend yield, earnings growth, and change in market valuation) in order to establish rational expectations for stock returns over the coming decade.</li> <li>Recognize that in the long run, business reality trumps market expectations.</li> <li>Learn how to harness the magic of compounding returns while avoiding the tyranny of compounding costs.</li> </ul> While index investing allows you to sit back and let the market do the work for you, too many investors trade frantically, turning a winner’s game into a loser’s game. The Little Book of Common Sense Investing is a solid guidebook to your financial future.

John C. Bogle

The Little Book of Common Sense Investing

After World War II, New York City assumed a new global prominence in the international financial markets. It became home to the world’s largest and most prestigious stock market on Wall Street. Today, New York City is the most populous city in the United States, with over 8 million people.

New York is the global capital of investing

Ellis Island was the historical gateway through which many immigrants arrived in the country during the 19th and 20th centuries. New York remains a popular immigrant destination. Ambitious Americans traditionally go to New York to make a name for themselves in industries such as writing, theatre, commerce, fashion, mass media, investment banking, and more. The city is a popular tourist spot and home to the Statue of Liberty, the towering Empire State Building, the famous Broadway theatre district, and Times Square.

New York represents opportunity

<ul><li>The area was inhabited by the Lenape people and other Native American tribes. They used natural waterways for fishing, trade, and war with nearby tribes.</li><li>In 1524, Italian Giovanni da Verrazzano explored the region in service to the French and named it New Angoulême, after the French King Francis I.</li><li>Then in 1609, the English explorer Henry Hudson arrived. He took note of the large local beaver population, whose pelts were a valuable commodity.</li><li>Inspired by Hudson's discovery, the Dutch found several fur trading outposts in the area, including a 1624 settlement in what is now Manhattan.</li></ul>

New York history

<ul><li>By 1626, the Dutch had constructed Fort Amsterdam, which served as the town's nucleus. The town was named New Amsterdam and served as the capital of the local Dutch colonies.</li><li>The Second Anglo-Dutch War (1665–1667) resulted in the British gaining control of the city as part of a treaty.</li><li>After the exchange, New Amsterdam was promptly renamed New York after the English King Charles' brother James, the Duke of York.</li></ul>

How New York got its name

By the late 1940s, New York had become the world's biggest manufacturing centre. It had 40,000 factories, a million factory workers and a port which handled 150 million tons of freight goods a year. The city inherited Paris's role as the centre of the art and fashion world. New York was a refuge for foreign artists fleeing war-battered Europe. New York was a great international city and took on the role of the world's financial capital and the site of the world's two largest stock exchanges: the New York Stock Exchange and NASDAQ.

Postwar New York

history

History

Centers of Progress, Pt. 28: New York (Finance) - HumanProgress

There are more than 30.000 different banks worldwide, and they hold unbelievable amounts of assets. The top 10 banks alone account for roughly 25 trillion US-Dollars. Banks are, in essence, in the risk management business. People keep their money in banks and receive a small amount of interest. In turn, the bank takes this money and lends it at much higher interest rates. So banks take funds that savers don't use and turn them into funds society can use to do things like buying houses or growing businesses.

Traditional banks 

The main problem with banks nowadays is that many have abandoned their traditional role as providers of long-time financial products in favour of short-time gains that carry much higher risks. For example, back in 2008, banks like Leeman Brothers gave credit to nearly anyone who wanted to buy a house, putting the bank in a risky position. It led to the collapse of the housing market in the US and parts of Europe, causing stock prices to plummet, eventually leading to a global banking crisis.

The problem with traditional banks

Today, other models of providing finance are gaining ground fast. For example, new investment banks charge a yearly fee and do not get commissions on sales. This motivates them to act in the best interests of their clients or credit unions. They provide the same financial services as banks but focus on shared value instead of maximising their profits. Their goal is to help members create opportunities, such as starting small businesses, expanding homes and investing back into communities. They are controlled by their members, who democratically elect the board of directors.

Investment banks are gaining in popularity

<ul><li>Credit union systems range from a few members to organisations with hundreds of thousands of members. They focus on benefits for their members, which influences the risk that credit unions are willing to take. </li><li>Crowdfunding platforms enable people to get loans from large groups of small investors, circumventing the bank as a middle man.</li><li>Micro lending. These platforms offer microloans to businesses and personal people who previously could not access the money they needed.</li></ul>

Other finance models

Banks are a riddle wrapped up in an enigma. We all kind of know that they do stuff with money we don’t understand, while the last crisis left a feeling of deep mistrust and confusion. We try to shed a bit of light onto the banking system. Why were banks invented, why did they cause the last crisis and are there alternatives? OUR CHANNELS ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ German Channel: https://kgs.link/youtubeDE Spanish Channel: https://kgs.link/youtubeES HOW CAN YOU SUPPORT US? ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ This is how we make our living and it would be a pleasure if you support us! Get Merch designed with ❤ from https://kgs.link/shop Join the Patreon Bird Army 🐧 https://kgs.link/patreon DISCUSSIONS & SOCIAL MEDIA ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ Reddit: https://kgs.link/reddit Instagram: https://kgs.link/instagram Twitter: https://kgs.link/twitter Facebook: https://kgs.link/facebook Discord: https://kgs.link/discord Newsletter: https://kgs.link/newsletter OUR VOICE ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ The Kurzgesagt voice is from Steve Taylor: https://kgs.link/youtube-voice OUR MUSIC ♬♪ ▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀ 700+ minutes of Kurzgesagt Soundtracks by Epic Mountain: Spotify: https://kgs.link/music-spotify Soundcloud: https://kgs.link/music-soundcloud Bandcamp: https://kgs.link/music-bandcamp Youtube: https://kgs.link/music-youtube Facebook: https://kgs.link/music-facebook The Soundtrack of this video: http://epicmountainmusic.bandcamp.com/track/banking http://soundcloud.com/epicmountain/banking http://www.epic-mountain.com Help us caption & translate this video! http://www.youtube.com/timedtext_cs_panel?c=UCsXVk37bltHxD1rDPwtNM8Q&tab=2

videos

Videos

Banks are a riddle wrapped up in an enigma. We all kind of know that they do stuff with money we don’t understand, while the last crisis left a feeling of deep mistrust and confusion. We try to shed a bit of light onto the banking system. Why were banks invented, why did they cause the last crisis and are there alternatives?


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This is how we make our living and it would be a pleasure if you support us!

Get Merch designed with ❤ from https://kgs.link/shop  
Join the Patreon Bird Army 🐧 https://kgs.link/patreon  


DISCUSSIONS & SOCIAL MEDIA
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The Kurzgesagt voice is from 
Steve Taylor:  https://kgs.link/youtube-voice


OUR MUSIC ♬♪
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700+ minutes of Kurzgesagt Soundtracks by Epic Mountain:

Spotify:            https://kgs.link/music-spotify
Soundcloud:   https://kgs.link/music-soundcloud
Bandcamp:     https://kgs.link/music-bandcamp
Youtube:          https://kgs.link/music-youtube
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The Soundtrack of this video:

http://epicmountainmusic.bandcamp.com/track/banking
http://soundcloud.com/epicmountain/banking
http://www.epic-mountain.com

Help us caption & translate this video!

http://www.youtube.com/timedtext_cs_panel?c=UCsXVk37bltHxD1rDPwtNM8Q&tab=2

Animation videos explaining things with optimistic nihilism since 12,013.

We’re a team of illustrators, animators, number crunchers and one dog who aim to spark curiosity about science and the world we live in. To us nothing is boring if you tell a good story.

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Kurzgesagt – In a Nutshell

Banking Explained – Money and Credit

Kakeibo is an old Japanese form of budgeting that has become en vogue thanks to an increased focus on incorporating mindfulness into all aspects of our lives. It offers a simple, no-nonsense way to get your spending under control.The system was developed in 1904 by a female journalist named Hani Motoko.Kakeibo helps to bring mindful awareness to the process of spending (and budgeting) in a similar way that food journaling brings awareness to eating behaviours.

Kakeibo: Managing Your Money Like The Japanese

At the heart of kakeibo is journaling or documenting your income and spending. Since the process predates smartphones and computers, it relies on old-fashioned pen and paper technology.Life goals and financial goals are related, and once we start to connect financial life with overall life, things start to make sense.

How to Use Kakeibo

The first step in kakeibo, much like any mindfulness work, is to become aware of what's actually happening to your finances. This means keeping detailed track of your spending for a set period. Most financial experts, like Liu, recommend tracking expenses and income for at least a month before setting a budget.Tracking your spending and income gets at the heart of the kakeibo practice, which centers on four key questions. They are:<ul><li>How much money do I have or earn?</li><li>How much do I want to save?</li><li>How much am I spending?</li><li>Where can I improve?</li></ul>

Track Your Spending for A Month

Once you have tracked your expenditures for a month, you can break spending into categories. The key to kakeibo is tracking it all with a basic pen and paper, rather than using any kind of app. Why?<a href="https://www.forbes.com/sites/annabelacton/2017/11/03/how-to-set-goals-and-why-you-should-do-it/#43fa9f54162d"> Research has repeatedly shown</a> that physically writing things down changes the way we behave. It also creates a little more friction to our spending.Once you have an idea of your spending, you can divide your kakeibo, or budget, into different categories of spending: Essential and non-essential.

Break Your Spending Into Categories and Getting Financially Naked

<ul><li>General: These are your regular household expenditures like housing, food, transportation, medical care, internet, and phone connections, animal care, and childcare.</li><li>Leisure: These are things like Netflix, shopping, online shopping, parties, gifts, etc. Think of these as the things you enjoy, but don't necessarily need.</li><li>Culture: Capture those things that enrich your life here. Maybe it's a subscription to a newspaper or magazine, perhaps it's your regular haircut or nail appointment.</li><li>Unexpected Costs: This is the stuff that comes up unexpectedly that we all need to pay for.</li></ul>

The Four Categories

Once you have an idea of where your money goes over a month, you can set your goals. What do you want to achieve with your money? What's your timeline for achieving your goals? Whatever your goals are, set a number and a timeline for them and write it down. You can then divide that number into smaller chunks so you know how much you might need to save per month or week.Do this for each of the four categories. This will serve as your “budget” or spending limit for each category.

Set Your Goals

At the end of each week, you check your balances against your goals. At the end of the month, you look back at where you ended up in relation to your goals in each category and ask yourself where you can do better.We've become so accustomed to immediate gratification these days. Kakeibo asks us to slow down and consider so that we don't overspend.The real magic of kakeibo is that it uses some basic questions and tricks to get you to become more mindful of your spending and to get you thinking about what you really want and need.

Track Your Spending and Assess

The following questions are designed to invite self-reflection and help you decide if an expense is “worth it.”<ul><li>Do I actually need this? Will it be useful, and does it make me excited?</li><li>Do I have the space for this? Will it have a place in my life or home?</li><li>Based on my current financial situation, can I actually afford this?</li><li>How do I feel about buying this?</li><li>What is my general emotional state today? How do I feel?</li></ul>

Kakeibo: Ask Yourself

Budgeting poses a distinct challenge for almost everyone. It's uncomfortable, forces us to face a lot of our preconceived notions, and tests our learned behaviour as consumers. There are many different kinds of budgeting styles and tools out there, but you don't need new-fangled tools, apps, or expensive memberships to get your spending under control.By using a simple pen and paper and incorporating mindfulness into your budgeting work, you just might be able to break the debt cycle and gain financial freedom through the practice of kakeibo.

The Bottom Line

Get your spending in line with this innovative way to save money. 

The Art of Kakeibo: This Japanese Budgeting System Could Change Your Financial Life

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