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The Power of Passive Investing by Richard Ferri

The Power of Passive Investing by Richard Ferri [3] explains why investing is so much easier when you do it passively through index investing. If this sounds like John C. Bogle, founder of Vanguard, then you won’t be surprised to learn that he wrote the foreword to this book! (or that Ferri was a co-author of The Bogleheads’ Guide to Retirement Planning [4])

There’s one quote in the book that I think sums up why passive investing is a good idea: “Investment greats such as Warren Buffett, Peter Lynch, and David Swensen are all outspoken advocates for passive investing. In addition, the U.S. government’s Thrift Savings Plan (TSP) for federal employees has only passive investment options available for participants.” When you couple that with the statistics and research that Ferri has put into the book, it’s a combination of facts that become very difficult to refute if you want to advocate active investing.

It’s hard for me to have an opinion on the book because I’m already a big proponent of index investing. I’m a customer of Vanguard, I’m bought into the system of low cost index funds, and so this book isn’t designed for me. It’s preaching to the choir.

This book is for the scores of Americans who invest by way of active mutual funds with 1%+ expense ratios, sales loads, and scores of other fees that I never see. The books charts and technical analysis, while impressive, only cement the idea I already have in my mind.

So my charge to you is that if you don’t believe in passive investing, give this book a look. If you believe market experts can beat the market because of skill and not luck, despite the overwhelming evidence that they don’t; read this book and tell me if you still believe the same. If you do, I’d love to discuss it!

If you were interested in learning more about Rick Ferri, you can check out his website [5].