Jack Bogle, founder of Vanguard Index, inventor of index mutual fund 2007 - There's no need to beat the market. Just own businesses. - Trying to beat the market is a loser's game. - Buying the market index and holding, with low fees, is already good enough. - Price/Earnings ratio (simplified) is the number of dollars investors are willing to pay for each dollar of earnings. - Two games at play: - real market: real companies spending real money to produce real products, with real innovation and real strategy, etc. — the accumulation and investing game - expectations market: expectations of speculators, expectations of investors, etc. — the behavior and mind game of the crowd "In the short run, the stock market is a voting machine, but in the long run, it is a weighing machine." — Benjamin Graham, mentor of Warren Buffett #quote - Minimize expenses and emotions. - "Don't look for the needle. Buy the haystack." The haystack being the index fund of all stocks. - Index funds outperform active management and are low cost. Index funds are best for buy and hold. - Indexing does not work as well outside of S&P500, that is, efficient markets. - ETFs are not true indexes. They are meant to be traded, so they suffer more volatility. They are held and used by speculators and traders, not so much by investors. ETFs are more specific and complex. Sector ETFs that are hyperspecific actually are more volatile because they are more narrow. - "Wall Street is in business to make commissions" and to give customers what they want. - This incentive is not aligned with the investor's objective. --- [[investing]] #book