Invoking the words and spirit of Thomas Paine, investor-turned-historian John Bogle concedes that ideas for revamping the mutual-fund industry are perhaps "not yet sufficiently fashionable to them general favor." But despite likening the "ills and injustices suffered by mutual fund investors" to those "our forebears suffered under English tyranny," Bogle--founder of the Vanguard Group-- makes a strong case for index funds with this exhaustive study of investing.

Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. Common sense tells us—and history confirms—that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost. The classic index fund that owns …