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

4.14 of 5 stars 4.14  ·  rating details  ·  1,200 ratings  ·  74 reviews
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 commonse...more
ebook, 336 pages
Published June 17th 2010 by McGraw-Hill (first published April 26th 2002)
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(showing 1-30 of 3,000)
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Chad Warner
Aug 03, 2013 Chad Warner rated it 4 of 5 stars  ·  review of another edition
Recommends it for: Investors
Recommended to Chad by: Kurt Kamminga
Shelves: finance, non-fiction
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
Paul
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
Krenzel
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
Wells Hamilton
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.
Mark
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
Taylor Foss
Amazing. A "must read" for any level of investor.
Jeff
Well written book describing the basics of investments in clear language. Highly recommended.
Jonathan
The Four Pillars of Investing was a poor name for this book because it cojures the image of a rock-solid investment strategy based on complementary principles that, properly balanced, support a lifetime of strong returns regardless of the vagaries of the market.

A better name would be "Four Things Everyone Should Know About Investing". This name is so much better that I will refer to this book as FTESKAI for the rest of the review.

FTESKAI is not a book for someone who just wants to be told where...more
Michelle
I was incredibly impressed by Bernstein's knowledge, analysis, and writing style. He gives enough of the math and research to make a very convincing case for passive investing without getting bogged down in formulas and technical jargon. As someone who feels comfortable with numbers and formulas but has little knowledge of economics and investing, I found this book a perfect balance of simplicity and detail. (He wrote an earlier book, The Intelligent Asset Allocator, that delved deeper into stat...more
Drrdave2711
A great financial literacy book that takes a more holistic view. Not a get rich quick scheme, clearly identifying the risks of investing in stocks & bonds. The author shows you how to look at the market more objectively and exposes the so called "financial advisor" and broker industry for what it is. Even if your not interested in this type of investing the history section and the behavioural psychology sections worth reading.

What I enjoyed most about the book was the authors ability to cut...more
Daniel Bratell
This is the first book about money management I've read and it is interesting because of its confirmation of things I thought I knew already. Such as "stock brokers" and investment advisors are crooks (or at least not very honest), and speculation/investment success is statistically proven just pure luck.

The main advise in the book is to go with lowest fee possible for biggest market spread possible (index funds). To expect some very bad years and be happy about them since that allows for higher...more
Omar Halabieh
As the title suggests, the author presents within this book four essential pillars of successful investing. Each section of the book is then dedicated to investigating and detailing each of these pillars and they are: 1) Theory 2) History 3) Psychology and 4) Business. The first section on theory, is one which the author calls "the most important part of the book". In his words it "surveys the awesome body of theory and data relevant to everyday investing". This section centers itself around the...more
Muhammad
William Bernstein is also the author of The Intelligent Asset Allocator. While his previous book did not do as well, The Four Pillars of Investing propelled him to imminent infamy.

Bernstein has done a magnificent job with his four theories. Whether you’re just starting out on your portfolio or have roughed it out as a seasoned investor, you will definitely take something from these four pillars.

The first pillar is the need to know certain inalienable investment theories. Like how great returns m...more
Melissa
I've read so many personal finance books that it's rare for me to pick up much new information in another book. Yet I learned something in this one! This is probably the best book on investing that I've read.

The author very carefully explains the history, theory, psychology and business of investing. He really nails home that low-cost index funds are the way to go and why. He explains why "buying low and selling high" is much harder than it sounds (and how most investors don't follow this advice...more
Mark
a very good book with lots of good advice about investing with enough technical data to have relevance but written well enough that a novice can understand. He breaks up the fundamentals of investing into four main parts with the last part giving an overall view about how to set up your portfolio. The first part acknowledges that riskier investments will have higher returns over the long haul and safer investments will have lower returns. He scans history for examples and notes that the US is a...more
Trevor
Oct 26, 2008 Trevor rated it 5 of 5 stars  ·  review of another edition
Recommends it for: people planning to invest
Recommended to Trevor by: Chris Colburn
I strongly recommend this book! It's great for anyone who wants to really understand how markets works and how to best approach the world of investing. However, to really get the most out of this book I would recommend having at least some knowledge of basic investment options before reading. It would probably be a good idea to read a book like "The Bogleheads' Guide to Investing" first because it introduces investment concepts such as what are stocks, mutual funds, bonds, CD's, index investing,...more
Christian
Best book I've read on taking the long view on investing. Most personal finance books are sell-side anecdotes about investing $100 at the market bottom in 1932 or getting a 15% annualized return over 30 years. Bernstein gives your more conservative instincts plenty of ammunition on how to invest. The mantra is in hindsight there will always have been a perfect investment strategy. In the present you have no idea what that will be. He breaks up success into four pillers: theory, psychology, histo...more
Will Szal
After reading this book, I assigned it to my middle school math class that I was teaching. Once they were done reading it, they had to manage a Google Stocks portfolio and we monitored their success.
Todd Nemet
Cheesy title, great book. I'm in the middle of his Intelligent Asset Allocator, which has a lot more math.

Here are the four pillars to save you some time:
1. Theory (how to price, why you should index)
2. History (Did you know the interest rate in ancient rome was 4%? You should.)
3. Psychology (ignore your instincts and what people say at dinner parties)
4. Business (stock brokers and business press -- not your friends)

Mr. Bernstein trained as a physician, so he brings a scientific mindset that I c...more
Mark
This is an extremely practical book on saving and investing. It gives a brief history of investing, going back around 400 years to give a good feel for how risk and return work. It covers the basics of calculating returns, and how to think about money over time. It teaches the simple mechanics of creating an investment plan with several good real life scenarios. Most importantly, it gives insight to how the financial industry and financial media work. The motivations and methods of both are laid...more
Adrian Baudy
One of the best written investment books I've read to date. One of the few books I think everyone should read at least once.
Cindy
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
Julian Bu
Solid book adding to the literature making the case of rational passive investing.
Devin Partlow
Pretty decent pillars that investors should familiarize themselves with. There's even a section dedicated to the building your portfolio that's pretty practical for the novice investor.
Mark
For anyone who follows the advice on the "Sound Investing" podcast, or Clark Howard's investment guides, the main points of this book re-affirm those beliefs (value over growth, small-cap over large-cap, keeping a well diversified portfolio, etc). The details however, can be overwhelming at first. I can see myself with this book, after having read it for the first time, wanting to research more on my own, and then re-reading it in the future to appreciate the finer details.
Gary Mesick
An excellent one-book summary of how to invest for the long term. But Bernstein's great insight was how to use portfolio theory. Unfortunately, nobody understood his book on that. They didn't have enough background. Here, he provides the background, but little portfolio theory. And I already had the background by the time I got to his book. But if you don't, you can learn much here: risk is rewarded, history has patterns, you and your broker are your own worst enemies, etc.
Belle
finally, after 10 years, I have read this book. it's still absolutely relevant and provides a great all-around treatise on investing. I didn't find the equations or graphs to be off putting - in fact, I thought they made a lot of sense and were quite helpful. that being said, it still takes some time to sink in and be blue to translate the theory into practice. I'm going to have to borrow the 10th anniversary updated revision to read his 2010 postscript.
Miles M
Probably one of the best books on investing ever written. Easy to comprehend, follow and apply. I’m in the investment industry and this is a must read for anyone that actively participates in the equities market with any regularity. I particularly like the chapter on “bubbles” and you’ll recognize why after having gone through the recent financial meltdowns. This book is also one that a person can revisit over and over due to its timelessness.
Nathaniel
Another excellent addition to the library of the long-term index investor, this work present a fascinating history of financial markets, both worldwide and in the U.S. in particular. Bernstein then moves on to provide practical but general investing advice, making insightful suggestions and encouraging the reader to adopt an indexing approach. A bit academic in places, this is not a good starter work for someone interested in investing.
Mark
tl;dr invest in Vanguard index funds
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