# William J. Bernstein

William J. Bernstein (born 1948) is an American financial theorist. He is known for his research in the field of modern portfolio theory and for his finance books for individual investors who wish to manage their own equity portfolios. He lives in Portland, Oregon.

## Quotes
### The Four Pillars of Investing (2002)

* The real reason that physicians are rotten investors is that it never occurs to them that finance is a science, just like medicine.
** Introduction, p. ix.
* The brokerage and mutual fund business form a financial colossus that bestrides modern financial, and increasingly, social and political life.
** Introduction, p. xii.
* We tend to think of the stock and bond markets as relatively recent historical phenomena, but, in fact, there have been credit markets since human civilization first took root in the Fertile Crescent.
** Chapter 1, No Guts, No Glory, p. 6.
* At a very early stage in history we are encountering "survivorship bias" - the fact that only the best results tend to show up in the history books.
** Chapter 1, No Guts, No Glory, p. 8.
* The rub here is that buying when prices are low is always a very scary proposition. The low prices that produce high future returns are not possible without catastrophe and risk.
** Chapter 1, No Guts, No Glory, p. 12.
* When the barbarians are at the gates, interest rates rise and bond prices fall precipitously.
** Chapter 1, No Guts, No Glory, p. 13.
* Owning a portfolio of value stocks is the equivalent of wearing a Nehru jacket over a pair of bell bottom trousers.
** Chapter 1, No Guts, No Glory, p. 37.
* And lest I offend art lovers, it should be pointed out that even an old master, bought from the the artist for $100 and sold 350 years later for $10,000,000, has returned only 3.34% per year.
** Chapter 2, Measuring The Beast, p. 45
* In fact, using entirely reasonable assumptions, you can make the Dow's discounted market value almost anything you want it to be.
** Chapter 2, Measuring The Beast, p. 53.
* The Gordon Equation is as close as being a physical law, like gravitation or planetary motion, as we will ever encounter in finance.
** Chapter 2, Measuring The Beast, p. 54.
* The worst possible time to invest is when the skies are the clearest.
** Chapter 2, Measuring The Beast, p. 66.
* Value stock returns are impossible to estimate using the traditional methods, because most of the excessive return arises from the slow improvement in valuations that occurs as doggy stocks become less doggy over time.
** Chapter 2, Measuring The Beast, p. 68.
* In finance as in life, there is often a huge chasm between what is expected and what actually transpires.
** Chapter 2, Measuring The Beast, p. 71.
* Most great financial innovators come from humble circumstances - nothing arouses fascination with financial assets quite like their absence.
** Chapter 3, The Market Is Smarter Than You Are, p. 76.
* In fact, the nation's biggest investment pools are the retirement funds of the large corporations and governmental bodies, such as the California Public Employees Retirement System (CALPERS), which manages an astounding $170 billion. These plans receive a level of professional management that even the nations wealthiest investors can only dream of.
** Chapter 3, The Market Is Smarter Than You Are, p. 85.
* " when a famous investor publishes a newsletter, it's a sure tip-off that his techniques have stopped working."
** Chapter 3, The Market Is Smarter Than You Are, p. 88.
* In other words, since you cannot successfully time the market or select individual stocks, asset allocation should be the major focus of your investment strategy, because it is the only factor affecting your investment risk that you can control.
** Chapter 4, The Perfect Portfolio, p. 108.
* It is one thing to coolly design a portfolio strategy on a sheet of paper or computer monitor, and quite another to actually deploy it.
** Chapter 4, The Perfect Portfolio, p. 115.
* We tend to think of technological progress as an ever accelerating affair, but it just isn't so.
** Chapter 5, Tops: A History Of Manias, p. 130.
* The advent of modern communication technology has simply facilitated the rapid dissemination of increasingly trivial information.
** Chapter 5, Tops: A History Of Manias, p. 131
* Human beings are not very good at taking losses or admitting failure.
** Chapter 7, Misbehavior, p. 177.
* The wealthy are different than you and I: they have many more ways of having their wealth stripped away.
** Chapter 7, Misbehavior, p. 179.
* Wealthy investors should realize that they are the cash cows of the investment industry, and that most of the exclusive investment vehicles available to them - separate accounts, hedge funds, limited partnerships, and the like - are designed to bleed them with commissions, transactional costs, and other fees.
** Chapter 8, Behavioral Therapy, p. 187.
* Journalism attracts people with exceptional linguistic talent, but I have found that very few have the mathematical sophistication to appreciate the difference between skill and luck.
** Chapter 11, Oliver Stone Meets Wall Street, p. 220.
* It is often said that a monkey could run an index fund. Nothing could be further fro the truth. Precisely tracking an index requires a very high degree of market savvy, discipline and nerve.
** Chapter 13, Defining Your Mix, p. 246.
* If markets were truly efficient, then you shouldn't be able to make any money rebalancing.
** Chapter 14, Getting Started, Keeping It Going, p. 290.
* Investment planning and execution are two completely different animals.
** Chapter 14, Getting Started, Keeping It Going, p. 293.
* Ninety-nine percent of what you read about investing in magazines and newspapers, and 100% of what you hear on television is worse than useless.
** Chapter 15, A Final Word, p. 297.
* Investing is not a destination. It is an ongoing journey through its four continents - theory, history, psychology and business.
** Chapter 15, A Final Word, p. 297.