The Little Book of Common Sense Investing by John C. Bogle

John C. Bogle writes a straightforward book,  The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns arguing that low cost index fund typically outperform over 80% of other mutual funds when including the management costs of the actively managed funds.

He argues that attempting to beat the market is a loser's game.  You may win for a while but in the long term it is extremely difficult to beat the market.  Given that the knowledge of one person or a small group of managers is less than the sum of knowledge in the broader market it makes sense that a portfolio managed by one person may do well for a while simply by the laws of probability but will likely return to normal as it is unlikely to keep flipping up heads each financial quarter over 30 years.

His logic follows that of Nassim Talib in Fooled by Randomness and the wisdom of the common knowledge noted in Intellectuals and Society by Thomas Sowell.  It is not possible for one person to have at most 1% of the available knowledge.  It is also very probable that someone could through random chance look very wise after 5 years of investing but not so good 10 years out.

Excerpt from the book - 5 min.