Name: The four pillars of investing
ISBN: 9780071747059

The four pillars of investing

The classic guide to constructing a solid portfolio— with out 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.

What Hacker News says

whoooboyyOct 2025

Read "The Four Pillars of Investing". Basically index funds, diverse whole markets, leave it alone and watch it grow.

I did this at 22, and that seed money has grown a ton.

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imakwanaOct 2022

One of the best introduction to investing for an individual investor is William Bernstein's Four Pillars of Investing

https://www.amazon.com/Four-Pillars-Investing-Building-Portf...

For learning how financial world really works, Burton Malkiel's A Random Walk Down Wall Street is absolutely phenomenal.

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mooredsOct 2021

I'd start with a couple of great books you should be able to get from the library:

   * The Four Pillars of Investing: https://www.amazon.com/Four-Pillars-Investing-Building-Portfolio-ebook/dp/B0041842TW
   * Are You a Stock or a Bond: https://www.amazon.com/Are-You-Stock-Bond-Financial/dp/0133115291
   * A Random Walk Down Wall Street: https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393358380

All of these point to fundamentals about investing:

   * The first step is to identify your risk tolerance and goals. That's way more important that the specific vehicles of investing.
   * Unless you are a professional investor, it is highly unlikely you'll beat the professionals (and not likely even then) so broad diversification is a good idea.

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throw0101aAug 2020

> And only 20 years even less.

I'm guessing you're in the US. I'm sure you can find papers and articles doing back-testing to the 1920s, which would include the Great Depression. If you can wait long enough, things have always recovered and earned a return.

> Did you adjust your calculations for inflation? For the S&P 500, the absolute worst-case is 58 years of not being up, I believe. 1929 - 1987.

Not my calculations. That's also assuming that one has zero bonds: for most people, who are saving for retirement, the component of the portfolio that goes into fixed income rises as age approaches 65. What were bonds during that time?

Most average people don't have the stomach for 'raw' 100% equity holdings, and so bonds are often present; bonds also allow for having 'dry powder' available for rebalancing. Scenarios like these are why portfolio theory can be complicated:

* https://www.investopedia.com/managing-wealth/modern-portfoli...

* https://en.wikipedia.org/wiki/Modern_portfolio_theory

For good layman treatments on the subject I recommend the works of William J. Bernstein, The Intelligent Asset Allocator, The Four Pillars of Investing, and Rational Expectations:

* https://en.wikipedia.org/wiki/William_J._Bernstein

Recent interviews:

* https://rationalreminder.ca/podcast/108 (podcast)

* https://www.youtube.com/watch?v=haLGx8KlFvk (same, but video)

* https://www.youtube.com/watch?v=3GzkxkOEcWc

> Historically low bond yields: The room for rates to go lower is low.

One does not necessarily buy bonds for returns, but also (perhaps) to manage volatility (which is often used as a proxy to measure risk). And low bonds are not anything new:

* https://awealthofcommonsense.com/2020/05/low-bond-returns-ar...

And one has to look at the real return of bonds over the decades: yes nominal numbers are low now and were high in the past, but inflation was high in the past as well (e.g., 1980s).

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DapperZoomMay 2020

I was going to recommend the Four Pillars of Investing by Mr. Bernstein.

https://www.amazon.com/Four-Pillars-Investing-Building-Portf...

I'd also recommend The Richest Man in Babylon, but not as the only book on personal investing you read. I tried reading it when I first did the deep dive into personal finance and it didn't quite seem worth it since there were very few specifics about actual investment vehicles. But I revisited it after reading several other books and thought it was really good at driving home and solidifying the big picture and major principles of personal finance.

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pembrookMar 2020

First, arm yourself with the tools to figure out whether what you're reading is bullshit or not (unfortunately a huge issue in the finance space). Read about The Organon by Aristotle, particularly his work around logical fallacies.

Then, for a brief overview of the history of money, currency, and markets read the first part of William Bernstein's The Four Pillars of Investing (provides some good historical context).

To understand financial market movements in the short term (like what is happening now), read about crowd psychology, behavioral biases (Kahneman), and black swans (Taleb).

To understand financial markets over the long term, read anything written by Buffet (his annual reports) or Munger, or their intellectual precursor, Graham and Dodd.

To understand the theories and thinking underpinning money and central banking, read about Adam Smith, Milton Friedman, Keynes, and Hayek.

Start with a bias toward history and older works, and move towards newer works to understand how the current zeitgeist got here and be able to think more critically about the ideas that are currently en vogue.

Also, I agree with the comment that recommends avoiding books by journalists. These are typically compelling narratives in search of supporting facts and theories (the wrong way to approach thinking). You should start your learning from the opposite position. Learn the theories and facts first, then think critically about any good-sounding narratives you see repeated in the wild.

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