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

Foreword xi

Introduction xv

A Note to the Reader xxxi

Part One. Investment Illusions 1

Chapter 1 Don’t Count on It! The Perils of Numeracy 5

Chapter 2 The Relentless Rules of Humble Arithmetic 25

Chapter 3 The Telltale Chart 49

Chapter 4 A Question So Important That It Should Be Hard to Think about Anything Else 71

Chapter 5 The Uncanny Ability to Recognize the Obvious 87

Part Two. The Failure of Capitalism 97

Chapter 6 What Went Wrong in Corporate America? 101

Chapter 7 Fixing a Broken Financial System 123

Chapter 8 Vanishing Treasures: Business Values and Investment Values 137

Chapter 9 A Crisis of Ethic Proportions 157

Chapter 10 Black Monday and Black Swans 161

Chapter 11 The Go-Go Years 187

Part Three. What’s Wrong with “Mutual” Funds 203

Chapter 12 Re-Mutualizing the Mutual Fund Industry: The Alpha and the Omega 207

Chapter 13 A New Order of Things: Bringing Mutuality to the “Mutual” Fund 237

Chapter 14 The Fiduciary Principle: No Man Can Serve Two Masters 273

Chapter 15 Mutual Funds at the Millennium: Fund Directors and Fund Myths 297

Chapter 16 “High Standards of Commercial Honor . . . Just and Equitable Principles of Trade . . . Fair Dealing with Investors” 317

Part Four. What’s Right with Indexing 347

Chapter 17 Success in Investment Management: What Can We Learn from Indexing? 351

Chapter 18 As the Index Fund Moves from Heresy to Dogma, What More Do We Need to Know? 369

Chapter 19 “The Chief Cornerstone” 393

Chapter 20 Convergence! The Great Paradox: Just as Active Fund Management Becomes More and More Like Passive Indexing, So Passive Indexing Becomes More and More Like Active Fund Management 409

Part Five. Entrepreneurship and Innovation 435

Chapter 21 Capitalism, Entrepreneurship, and Investing: The 18th Century versus the 21st Century 439

Chapter 22 Seventeen Rules of Entrepreneurship 455

Chapter 23 “Vanguard: Saga of Heroes” 469

Chapter 24 When Does Innovation Go Too Far? 493

Part Six. Idealism and the New Generation 507

Chapter 25 Business as a Calling 511

Chapter 26 The Right Kind of Success 517

Chapter 27 “This Above All: To Thine Own Self Be True” 521

Chapter 28 “Enough” 529

Chapter 29 If You Can Trust Yourself . . . 535

Chapter 30 The Fifth “Never” 543

Chapter 31 “When a Man Comes to Himself ” 549

Part Seven. Heroes and Mentors 557

Chapter 32 Walter L. Morgan 563

Chapter 33 Paul A. Samuelson 569

Chapter 34 Peter L. Bernstein 575

Chapter 35 Bernard Lown, MD 581

Index 587