The Four Pillars of Investing: Lessons for Building a Winning Portfolio / Edition 1

by William Bernstein

Overview

The classic guide to constructing a solid portfolio—without a financial advisor!

“With relatively little effort, you can design and assemble an investment portfolio that, because of its wide diversification and minimal expenses, will prove superior to the most professionally managed accounts. Great intelligence and good luck are not required.”

William Bernstein’s commonsense approach to portfolio construction has served investors well during the past turbulent decade—and it’s what made The Four Pillars of Investing an instant classic when it was first published nearly a decade ago.

This down-to-earth book lays out in easy-to-understand prose the four essential topics that every investor must master: the relationship of risk and reward, the history of the market, the psychology of the investor and the market, and the folly of taking financial advice from investment salespeople.

Bernstein pulls back the curtain to reveal what really goes on in today’s financial industry as he outlines a simple program for building wealth while controlling risk. Straightforward in its presentation and generous in its real-life examples, The Four Pillars of Investing presents a no-nonsense discussion of:

• The art and science of mixing different asset classes into an effective blend
• The dangers of actively picking stocks, as opposed to investing in the whole market
• Behavioral finance and how state of mind can adversely affect decision making
• Reasons the mutual fund and brokerage industries, rather than your partners, are often your most direct competitors
• Strategies for managing all of your assets—savings, 401(k)s, home equity—as one portfolio

Investing is not a destination. It is a journey, and along the way are stockbrokers, journalists, and mutual fund companies whose interests are diametrically opposed to yours.

More relevant today than ever, The Four Pillars of Investing shows you how to determine your own financial direction and assemble an investment program with the sole goal of building long-term wealth for you and your family.

Product Details

ISBN-13:	9780071747059
Publisher:	McGraw Hill LLC
Publication date:	06/17/2010
Edition description:	List
Pages:	352
Sales rank:	696,614
Product dimensions:	6.20(w) x 9.10(h) x 1.30(d)

About the Author

William J. Bernstein, Ph.D., M.D., is a neurologist and the cofounder of the investment management firm Efficient Frontier Advisors. He is the author of three finance books—The Intelligent Asset Allocator, The Four Pillars of Investing, and The Investor’s Manifesto—and two volumes of economic history, The Birth of Plenty and A Splendid Exchange. Bernstein is currently working on a history book exploring the effects of access to technology on human relations and politics.

Table of Contents

Preface vii

Introduction xi

Pillar 1 The Theory of Investing 1

Chapter 1 No Guts, No Glory 3

Chapter 2 Measuring the Beast 43

Chapter 3 The Market Is Smarter Than You Are 75

Chapter 4 The Perfect Portfolio 107

Pillar 2 The History of Investing 127

Chapter 5 Tops: A History of Manias 129

Chapter 6 Bottoms: The Agony and the Opportunity 153

Pillar 3 The Psychology of Investing 163

Chapter 7 Misbehavior 165

Chapter 8 Behavioral Therapy 181

Pillar 4 The Business of Investing 189

Chapter 9 Your Broker Is Not Your Buddy 191

Chapter 10 Neither Is Your Mutual Fund 203

Chapter 11 Oliver Stone Meets Wall Street 219

Investment Strategy: Assembling the Four Pillars 227

Chapter 12 Will You Have Enough? 229

Chapter 13 Defining Your Mix 243

Chapter 14 Getting Started, Keeping It Going 281

Chapter 15 A Final Word 295

Bibliography 299

Index 305

2010 Postscript 317