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William J. Bernstein (born 1948) is an American financial theorist and neurologist. His research is in the field of modern portfolio theory and he has published books for individual investors who wish to manage their own equity portfolios.[1] He lives in Portland, Oregon.
His bestselling books include The Birth of Plenty and A Splendid Exchange.
Biography[edit]
Bernstein is a proponent of the equity or index allocation school of thought, believing that all equity selection strategies should be focused on allocating between asset classes, rather than selecting individual stocks and bonds, or from the timing of their sales. Bernstein's first book, The Intelligent Asset Allocator, makes this case in detail; his second book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio (McGraw-Hill, 2002; ISBN0-07-138529-0), is aimed for those less comfortable with statistical thought. It also puts asset-class returns into long-term historical perspective.
Bernstein is a proponent of modern portfolio theory, which stands in stark contrast to the view that skilled managers can succeed in picking particular investments that will outperform the market, whether through market timing, momentum investing, or finding assets whose future value have been underestimated by the market. He argues that the financial research literature shows that most return is determined by the asset allocation of the portfolio rather than by asset selection.
In 1996, Bernstein introduced Coward's Portfolio, a popular form of lazy portfolio. He explained 'a rational coward might split their equity exposure equally between S&P, EAFE, US small, and foreign small stocks.'[2] A contemporary implementation of the Portfolio includes 40% short-term bonds, and 15% international equity evenly divided into Europe, Pacific, and emerging markets funds.[3]
Bernstein's third book, The Birth of Plenty, is a history of the world's standard of living; it proposes four conditions that have historically been necessary for it to rise. His fourth book, A Splendid Exchange: How Trade Shaped the World, published in 2008 by Grove Atlantic, is a history of trade. In 2009 his fifth book was published 'The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between' which continues the theme of asset allocation in a more accessible way.
In 2014 his sixth book, 'Rational Expectations: Asset Allocation for Investing Adults' was published. It updated his earlier books on investing to cover the position after the Great Financial Crisis (GFC) of 2008-09, and the most recent research on investing, including that by Elroy Dimson, Paul Marsh, and Mike Staunton, authors of 'Triumph of the Optimists'.
Bernstein holds a PhD in chemistry and an MD; he practiced neurology until retiring from the field.
Bibliography[edit]
- The Intelligent Asset Allocator. How to Build Your Portfolio to Maximize Returns and Minimize Risk. McGraw-Hill, New York, 2000, ISBN0-07-136236-3.
- The Four Pillars of Investing. Lessons for Building a Winning Portfolio. McGraw-Hill, New York, 2002, ISBN0-07-138529-0.
- The Birth of Plenty. How the Prosperity of the Modern World was Created. McGraw-Hill, New York, 2004, ISBN0-07-142192-0.
- A Splendid Exchange. How Trade Shaped the World from Prehistory to Today. Atlantic Books, London, 2008, ISBN978-1-84354-668-9.
- The Investor's Manifesto. Preparing for Prosperity, Armageddon, and Everything in Between. Wiley, New York, 2009, ISBN978-0-470-50514-4.
- Masters of the Word: How Media Shaped History. Grove, 2013, ISBN978-0-802-12138-7.
- Rational Expectations: Asset Allocation for Investing Adults. 2013, ISBN978-0-9887803-2-3.
References[edit]
- ^Burns, Scott (3 December 2000). 'The Couch Potato Portfolio, Plus'. Dallas Morning News. Retrieved 25 September 2011.
- ^'The Coward's Portfolio -- A Modest Proposal'.
- ^'Lazy Portfolio: Coward's Portfolio'. Bogleheads.
External links[edit]
| Wikiquote has quotations related to: William J. Bernstein |
- Roberts, Russ. 'William Bernstein Podcasts'. EconTalk. Library of Economics and Liberty.
- Coward's Portfolio Simulation on Hello Money
Retrieved from 'https://en.wikipedia.org/w/index.php?title=William_J._Bernstein&oldid=875514906'
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Explains how independent investors can construct a superior investment portfolio by learning the four essentials of investing.
Published April 26th 2002 by McGraw-Hill Companies
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Feb 20, 2010Chad Warner rated it really liked itRecommended to Chad by: Kurt Kamminga
An investment adviser and I were talking about the financial books we had read, and he highly recommended this book as the next on my list. I can see why! Instead of immediately offering advice on how to invest, Bernstein takes a step back and makes sure you understand market theory, the history of the markets, the role of psychology in choosing investments, and the very real impact of expenses and the media's influence.
The book contains statistics, tables, graphs, analogies, examples, and theo...more
The book contains statistics, tables, graphs, analogies, examples, and theo...more
May 22, 2008Krenzel rated it it was amazing
In the introduction to his book, 'The Four Pillars of Investing: Lessons for Building a Winning Portfolio,' Dr. William Bernstein states that the 'competent investor never stops learning.' Yet, because the world of investing can be such a confusing place, it sometimes seems that the more you learn, the more confused you get. As a participant on the Bogleheads message board, I feel I am an educated investor but still I often get lost after reading all the different debates: Should I invest in tot...more
In short, Bernstein advocates wide diversification through a portfolio of passively managed index funds in different asset classes, and buy-and-hold for the long term
Pillar 1: Investment Theory
• High returns requires high risk.
• The market is efficient. Own it all by indexing.
• You can't time the market or pick winning stocks, so asset allocation is the only factor you can control, hence index the whole market.
Pillar 2: Investment History
The more history you know, the better prepared you'll be...more
Pillar 1: Investment Theory
• High returns requires high risk.
• The market is efficient. Own it all by indexing.
• You can't time the market or pick winning stocks, so asset allocation is the only factor you can control, hence index the whole market.
Pillar 2: Investment History
The more history you know, the better prepared you'll be...more
Very interesting book, well written but it isn't for people who want a quick buck. I liked how informative this book was. I just didn't really learn anything new. But then there are no new things under the sun. If you are serious about investing your money, remember diversification, patience, spend less, forget about deceiving the market and remember no one can predict the future, no matter how their 'track records' may indicate otherwise. Finance 101: Past performance isn't indicative of future...more
Bernstein argues that the successful investor must understand four essential content areas: the theory, history, psychology, and business of investing. Practically speaking, he argues that the best portfolios build on that understanding will be based on indexed mutual funds in several key asset classes.
Bernstein’s theoretical understanding of the market is complex, and any short review will not do it justice. It is fair to say, however, that he argues that the market is much smarter and more eff...more
Bernstein’s theoretical understanding of the market is complex, and any short review will not do it justice. It is fair to say, however, that he argues that the market is much smarter and more eff...more
Jul 31, 2007Mark rated it it was amazing
Re-reading this in light of the money meltdown.
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One of the best books about investing I've read. By no means the first one you should read, but once you've got some of the basics under control, this helps takes it to a very sensible level. Asset allocation and the history of booms and busts are key here.
Though I just finished it a couple of weeks ago, I'd like to start re-reading it again soon. Very readable and interesting, though I can do without ever hearing about the tulip bulb bubble y...more
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One of the best books about investing I've read. By no means the first one you should read, but once you've got some of the basics under control, this helps takes it to a very sensible level. Asset allocation and the history of booms and busts are key here.
Though I just finished it a couple of weeks ago, I'd like to start re-reading it again soon. Very readable and interesting, though I can do without ever hearing about the tulip bulb bubble y...more
This book exceeded my expectations. If Nassim Taleb were to write a book on investment advice early in his career that's probably what it would look like. The book covered some financial theory and history as well as offered very practical advice.
Oct 23, 2018Jordi Casadevall franco rated it it was amazing
Awesome. Contains a LOT of theory, maths and can be hard to read. But it really defines a framework to work on your own portfolio.
I always love the books that starts from the beginning of theory, from basics principles, deriving step by step the correct conclusions, and not by making you accept a lot of assumptions and “jumps of faith”. The author talks freely about his opinion of active managed funds.
This one and A Random Walk Down Wall Street are my favorites to introduce somebody to investin...more
I always love the books that starts from the beginning of theory, from basics principles, deriving step by step the correct conclusions, and not by making you accept a lot of assumptions and “jumps of faith”. The author talks freely about his opinion of active managed funds.
This one and A Random Walk Down Wall Street are my favorites to introduce somebody to investin...more
Apr 08, 2009Wells Hamilton rated it really liked it
After years of studying technical and fundamental analysis, I can finally rest. Dr. Bernstein William J. Bernstein, a buy-and-hold, dollar cost averaging, index investing, portfolio rebalancer has made me a believer. I would have created a synopsis of the book for quick reviews down the road, but Bernstein conveniently included one at the end of each chapter, and one in the last chapter covering the whole book. The book is well-written, intelligent, and extraordinarily practical.
Jun 02, 2015Kurt rated it it was amazing
A very good book I'd recommend to anyone interested in investing. It covers all the fundamentals one should know to try to avoid making big mistakes. Though I do disagree with his assumption that the market is rational in that risk and return will always be proportionally related.
Apr 25, 2019Kirill Bredikhin rated it it was amazing
One of the best books on personal finance and investing that I've read in years.
It really feels more like four books in one:
- a great theoretical intro into investing theory (which is what usually most other books are focusing on);
- a captivating historical research of financial bubbles starting in early 1700's;
- an analysis of market's and individual human psychology and biases when it comes down to investing;
- a comprehensive and truthful review of modern business practices of brokerage fir...more
It really feels more like four books in one:
- a great theoretical intro into investing theory (which is what usually most other books are focusing on);
- a captivating historical research of financial bubbles starting in early 1700's;
- an analysis of market's and individual human psychology and biases when it comes down to investing;
- a comprehensive and truthful review of modern business practices of brokerage fir...more
In one word: amazing!
It trashes the financial news that we, as traders or just regular joe's, receive on a daily basis. It details how our banks and brokers are not our friends and it teaches us how to invest properly. We will not find the next Microsoft, that's for sure, but we won't ruin our financial life by trying to do it. Also, we will not be hostages of the hefty fees charged by banks and financial brokers.
It trashes the financial news that we, as traders or just regular joe's, receive on a daily basis. It details how our banks and brokers are not our friends and it teaches us how to invest properly. We will not find the next Microsoft, that's for sure, but we won't ruin our financial life by trying to do it. Also, we will not be hostages of the hefty fees charged by banks and financial brokers.
Excellent summary of the basics of successful investing.
Aug 17, 2015Milan rated it liked it
This book started out well with the introduction and the history of the financial markets. One chapter of the book describe how the various financial intermediaries - brokers, fund houses and investment banks - all work to profit from the investors. It also shows that the basic role of financial press is marketing financial products and not providing information. William Bernstein correctly shows that the small investor always comes last in the hierarchy of the financial world.
As the book moves...more
As the book moves...more
Aug 10, 2014Catlin Bettridge rated it it was amazing
Through the numerous anecdotes provided by financial market history such as the Dutch Tulip Bubble of the 1600s and the Great Depression of the 1930s, this book provides a broad overview and introductory education in finance and investing. This book is somewhat technical and will be especially appealing to the reader who enjoys mathematical and scientific explanations of financial concepts. More importantly, this book imparts some extremely important lessons onto the reader, such as; markets are...more
I've read a few books about investing, but this is 'hands down' the best I've encountered. There's a lot of books out there which slam fund managers, stock brokers and their ilk, and recommend a passive approach with index funds. Unlike that 'old news', this book goes further by explaining how to value an asset, how to construct a portfolio, and how to think about your retirement 'nest egg'.
Bernstein is a great writer and I will definitely be checking out his other books. He says early on that...more
Bernstein is a great writer and I will definitely be checking out his other books. He says early on that...more
Jun 04, 2014Cindy rated it it was amazing
The four pillars: Theory of Investing (returns are directly linked to risk), the History of Investing (understand past performance to build a portfolio, not to chase returns), the Psychology of Investing (stay the course!), and the Business of Investing (long-term, low-cost index funds will statistically beat any actively managed plan).
Take this book in small doses so you can ruminate on the concepts. I'm a huge fan of statistics, data, and the wisdom that comes from thoughtfully analyzing these...more
Take this book in small doses so you can ruminate on the concepts. I'm a huge fan of statistics, data, and the wisdom that comes from thoughtfully analyzing these...more
Apr 30, 2015Christopher Durand rated it really liked it
William Bernstein does an excellent job of not only putting together a solid investing strategy. He doesn't hesitate to throw in numerous graphs and the occasional formula, but it is nothing the average person can't understand with careful reading. My favorite part about this book is that he takes the time to discuss implementing the strategy. He acknowledges that a person's financial situation may be less than ideal and works to provide numerous scenarios to overcome the challenges most investo...more
Oct 29, 2014KennyO rated it liked it
A really well written treatise on the basics of investing for those who didn't major in finance in college and don't want to wallow in stock analysis. The Four Pillars are: The Theory of Investing, which isn't rigorously theoretical; The History of Investing, knowing the lessons of history helps you avoid its errors; The Psychology of Investing, again not terribly psychological but it exposes the most invidious investing traps; The Business of Investing, the first chapter here is titled 'Your Br...more
Bernstein provides excellent insight into the history of the financial markets and the psychology of investing. The guidance on setting up a portfolio is backed up by thorough explanations. He explains how to diversify and how to get started from nothing. He also teaches his to use value averaging as a mechanism to add to your investment portfolio and rebalance at the same time. Excellent financial advice. Must read!
The Four Pillars Of Investing Pdf Free Download For Windows 10
Aug 05, 2014Scott Diamond rated it it was amazing
I listened to the audio book and I was expecting a serious financial tome but this book was delightful. The author covers some common topics in investing but does it in a humorous manner. He also offers some unique advice regarding performance of the stock market relative to bonds and REITs. I haven't studied REITs in depth but it appears that the author's advice provided in 2002 has held up very well up to 2016 and beyond.
What a fantastic book about investments and investment strategy. This is not a book for beginners but if you are looking for substance regarding investment strategy, this is an excellent book to read. Bernstein goes way back (Centuries!) to look at investments throughout time, not only the last 50 years. This gives you a good perspective regarding markets.
Highly recommended.
Highly recommended.
This book is a must read for anyone that will ever do investing. If you learn some of the basics about how and why you should invest then you can save quite a bit of money in the process. This book is practical and detailed and specific without being too much in the weeds of details. I loved this book. Wish there was a higher star rating I could've given it.
One of the best investment books I've ever read. It did more to bring me peace of mind and security in the fact that index fund investing is the only way to go. It has been a spring board to other investment reading. I'll not pay someone to manage my assets which means I need to learn how to manage them myself. With tools like this, I'm move forward quite competently.
Feb 16, 2015Angel **Book Junkie** rated it liked it
I suck at investments. (and I work for a bank)
I honestly don't feel like I know any more coming out of this book then I did going in. I think I am going to pick up Investing for Dummies I might learn a little more.
I honestly don't feel like I know any more coming out of this book then I did going in. I think I am going to pick up Investing for Dummies I might learn a little more.
Dec 30, 2014Alexis rated it it was amazing
I was particularly drawn to the history and psychology sections. And although the theory part was really boring for me, it was necessary with which to understand the rest of the book. I definitely think I'll refer back to this book from time to time.
This is one of THE best books I have ever read on Investing. Following the more general introduction to Tony Robbins: Money Master the Game, I find this book goes even deeper and re-emphasizes how one should approach investing. Great book.
Dec 01, 2014Linden rated it it was amazing
Excellent introduction to investing. I will be recommending this to many people in the future.
Apr 01, 2009Jeff rated it it was amazing · review of another edition
Well written book describing the basics of investments in clear language. Highly recommended.
Jul 31, 2016Aamna rated it it was amazing
Great read for novices. Made investing less intimidating for me.
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William J. Bernstein is an American financial theorist and neurologist. His research is in the field of modern portfolio theory and he has published books for individual investors who wish to manage their own equity portfolios. He lives in Portland, Oregon.
“The easiest way to get rich is to spend as little as possible.” — 1 likes
Four Pillars Of Investing Bernstein
“el valor de una acción o bono es simplemente el valor presente de su flujo de ingresos futuro–,” — 0 likes
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