Don't Count on It!: Reflections on Investment Illusions, Capitalism, "Mutual" Funds, Indexing, Entrepreneurship, Idealism, and Heroes

This book covers a lot of ground, with 35 chapters addressing seven main themes over a total of 586 pages. If you are already very familiar with John Bogle (who has written many books and delivered countless speeches addressing investment topics over a very long career in investments), then there is precious little in this book that you don't already know. However, if you are an investor who isn't quite that familiar with Bogle, then you may find this anthology of his major essays and speeches over the last decade to be a very helpful introduction to important investment-related topics of today.Without divulging too much detail about the book, here's a relatively short guide to Bogle's topics. The seven parts of the book address:1. Investment illusions. For example, as Bogle makes clear mutual funds taken as a whole simply cannot earn the markets' returns--because mutual funds have their own expenses. Indeed, Bogle's simple formula--net returns to investors = gross returns on assets minus the costs of operating the financial system--is pretty obvious, but one that investors tend to forget. Another illusion cited by Bogle is that mutual fund investors actually earn the returns of their funds. That is, if the XYZ mutual fund earns an average annual return of 8% over a 10-year period, chances are that XYZ's shareholders didn't achieve that 8% annual return, due to the well-documented tendency of investors to add to their investments when they feel optimistic (and markets are high) and reduce their investments when they feel pessimistic (and markets are low). Simply put, buying high and selling low reduces one's return.2. The failure of capitalism. Bogle is actually a champion of capitalism, not some anti-capitalist critic. However, Bogle maintains that self interest and free markets alone won't necessarily guide an economy effectively. Rather, he says, there is a need for a broad fiduciary standard applicable to market participants, so that corporate managers, brokers, etc. put the interests of their shareholders and clients before themselves. (Some would argue that sufficient fiduciary standards already exist, but Bogle doesn't buy that argument.)3. What's wrong with "mutual" funds? For starters, Bogle observes that "mutual" typically refers to an entity that's owned by its participants. In that case, only the Vanguard Group of mutual funds, Bogle maintains, is truly "mutual." Surprise, surprise--Bogle helped found the Vanguard Group.4. What's right with indexing? Traditional indexing has taken a lot of flack in recent years, so Bogle (who helped start the indexing movement) fights back. He says the intellectual theory of indexing is not dependent on the notion of "efficient" markets, but rather on the concepts of low cost, diversification and tax efficiency. I admire Bogle as an honest and passionate advocate for investors, but I should note that not everyone will agree about the importance of the efficiency argument to the concept of indexing.5. Entrepreneurship and innovation. I am taking more of your time than I planned, so I'll become briefer. In this part of the book, expect yet more of Bogle's characteristic idealism concerning the determinants of innovation.6. Idealism and the new generation. Here we go again. More of Bogle's passionate arguments.7. Heroes and mentors. We all owe a lot to those who have inspired and guided us, and here Bogle describes four men who were influential to him: Walter Morgan, Paul Samuelson, Peter Bernstein and Bernard Lown.In conclusion, if you are an investor who is concerned about the economic and investing environment in which you participant, and if you are not already familiar with John Bogle's thoughtful commentaries on a host of relevant topics, then this book would be well worth your careful consideration.

I confess that I'm just in the middle of this book, but nevertheless here is my impression. First of all, it is a collection of essays or speeches, and it's quite repetitive. The themes are pretty much the same throughout the book, so it's repetitive, if not ad nauseum, at least to the point of boring. It is true that Vanguard represents what should be a revolutionary step forward in fund management, to the benefit of the individual investor. Mr. Bogle has made the valid point many times, as most readers of his works already know, that index investing with low costs is the best way for the individual investor to invest. Thanks to him, I already knew that and have incorporated it into my investment portfolio. But another 20 or more essays to this effect do not make scintillating reading. Also, Mr. Bogle, in each and every essay, calls for finance professionals to be more honest and ethical. I can only imagine that after each speech he receives enormous, resounding applause for his clarion call for the professionals to be better people. I am sure that this proselytizing has been completely ineffective. I can just imagine Mr. Bogle getting an appointment to meet Lloyd Blankfein and saying look, Lloyd, can you just turn over a new leaf and de-emphasize this profit-motive thing, I mean, can you just be a nicer person? Thank you Lloyd for your time. Structural reform, like re-introducing Glass Steagall and the separation of investment banking, that I can understand, but the preaching seems like mere posturing. This is not a great read, but I will tough it out. I'd rather read something by Michael Lewis though, or watch Bloomberg and see how the Spain debt-crisis turns out.I've finished this book now, and although I am glad to see that others found my previous comments helpful, I must say now that this book grows on you. By the time you finish it's downright inspirational!

Reading the works of John Bogle has changed my life. After spending a lifetime investing with various companies and working with at least three different financial advisors with only marginal success, I finally encountered my first Bogle book some dozen years ago. I began reading Bogle then and have continued through these past dozen years continuing with his latest title Don't Count On It. In each of his works he speaks to the layman in a clear, well documented style with occasional references to figures from history or literature. None of his writing is dry economics text. His major emphasis on "costs matter" are eye opening to investors trying the accumulate a nestegg for retirement. He shows in great detail the impact of various fees and transaction costs charged by actively managed mutual funds. Intermediation costs ultimately detract from whatever the market is able to deliver, and investors realize only the sum available after these various fees are imposed. Bogle discourages frequent trading because of the costs involved and counsels investors to diversify in low cost stock and bond funds and then "stand still" with an eye toward investing for the long term in order to accumulate the market's returns for retirement. Young and old alike with learn from the wisdom of John Bogle. He is the founder of index giant Vanguard, and yet he has no equity position in the company. Don't Count On It is a summation of this great man's philosophy and sage investment adivce.

This is a book that every investor in collective investment vehicles should read. It highlights the way that the US financial scene (and this is true of other markets around the world also) have become organised so that most of the profits generated by trading companies are diverted to financial intermediaries. Mr Bogle puts a strong emphasis on low cost funds and appropriate stewardship so that you obtain the profits instead.My only criticism is that it is somewhat repetitive, being based on a a number of past articles and speeches by the author. As a result it is rather long.

I am still reading this book, but thus far the book shines a bright light on how the global financial industry is working on make believe principles. Don't count on it is what it says on the cover, we could avoid a lot of financial pain if we did'nt count on the fairy tales we are told by our so called financial experts. Only an idoit would say at a point in life because life has been good so far it can only get better. So why do we fall for the pension growth predictions we need for our security in retirement?. Read Don't count on it.

One for Bogle fans, but a good read on a complex topic. Bought twice as original one was damaged before I'd finished it.