In the introduction it is stated that: "Only stock market risk remains." (if you invest in index funds). The "Only" should have been been a big BUT. On page 69 Mr. Bogle writes: "Common sense tells us that we are facing an era of subdued returns in the stock market." This would have been a good place to add that index funds could in fact also guarantee you your fair share of devastating loses for a decade or two. It has happened before.
In 1990 the Japan Nikki 225 was about 40,0000. 13 years later in 2003 it was about 8,000. A decline of 80%. In 2008 it has increased by 62% to about 13,000 but still down a stunning 68%, 17 years after the peak in 1990. And here and now in America the stock market, index funds and all, is trading where it was nine year ago. The S&P 500 - stock index finished at 1352.99 on March 25, 2008, below the 1362.80 it was in April 1999. Since 1999 gold has had an annualized total return on investment of 14.51% and real estate (REITs) 14.11% (see March 26,2008 WSJ for more details). A recession and stagflation could could cause the decline to go on and on but no one knows. During the Great Depression stocks lost 90% of their value and then took 25 years to recover.
This is a fine book but the focus on just stocks and bonds, common sense should tell you is too narrow. It makes sense to be more broadly diversified. Hard assets like gold and sensibly priced (monthly rent 1% of price) income property that will protect you when index funds continue to let you down down down.
Today when I become a little sad from looking at how my index funds are doing I get cheered by reading my property manager's report about my investment in half a dozen condominiums (in fact they make me so happy I wrote a how-to book about them) and by looking up the price of gold.
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The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Book Big Profits) Books In Print, Audio Books.