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

4.22  ·  Rating details ·  4,731 ratings  ·  222 reviews

  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 common

Kindle Edition, 336 pages
Published June 17th 2010 by McGraw-Hill (first published April 26th 2002)
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Hrishikesh Kumar The book is relevant to everyone. It has references and history of US market but it is equally relevant to other markets too.

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Chad Warner
Feb 20, 2010 rated it really liked it  ·  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
Mar 24, 2020 rated it really liked it  ·  review of another edition
It's an interesting read about introduction to investing. I may agree on some parts of the book and disagree with some, but overall, your time investment in reading this one may or may not bear fruits in the near future.

Investment as they is like a water in the river. It will continue to flow as long as there will be no blockage on its way. It can become big or become smaller but it always depend on what canal or tunnel it passes through. Or maybe it might goes to the sea or ocean perhaps. 😀😄😂

Jan 19, 2016 rated it it was amazing  ·  review of another edition
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
May 22, 2008 rated it it was amazing  ·  review of another edition
Shelves: finance
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
Apr 29, 2017 rated it really liked it  ·  review of another edition
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
Jul 05, 2012 rated it really liked it  ·  review of another edition
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
Jordi Casadevall franco
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
Jul 31, 2007 rated it it was amazing  ·  review of another edition
Shelves: money
Re-reading this in light of the money meltdown.

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
Nov 29, 2020 rated it it was amazing  ·  review of another edition
Shelves: investing, 2020
Widely considered as the bible of investing principles, this book provides the reader with a nice foundation of investment theory. It outlines the main pitfalls to avoid when dealing with different investment market players.
Aug 17, 2015 rated it liked it  ·  review of another edition
Shelves: non-fiction, markets
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
Wells Hamilton
Apr 08, 2009 rated it really liked it  ·  review of another edition
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. ...more
Jun 02, 2015 rated it it was amazing  ·  review of another edition
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. ...more
Jun 16, 2020 rated it it was amazing  ·  review of another edition
One does not simply encounter a book with condenses so much information while having the ability to lay it out in such a readable and understandable way. I had heard a lot about Bernstein prior to reading this book, but it is upon delightfully devouring its pages that I understood the greatness from his teaching.

The book is presented in two main parts. First, the four pillars from which the book title comes from, where the authors in a clear and friendly way introduces a basic theoretical approa
Carlos Luso
May 02, 2019 rated it it was amazing  ·  review of another edition
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.
Ryan Goodyear
Jan 29, 2021 rated it it was amazing  ·  review of another edition
Shelves: personal-finance
The current GME stuff is fascinating in a sociological way, but there are going to be some big surprises for some.

My gems:

P45 speculation vs. investment vs. purchase
P102 “most of the investment industry is engaged in non-productive work
P159 “The burnt customer certainly prefers to believe that he has been robbed rather than that he has been a fool on the advice of fools.”
P171 “one of the most deadly investment traits is the need for excitement”
P179 shopping list of maladaptive behaviors-- herd m
Jul 09, 2019 rated it liked it  ·  review of another edition
i don't really understand much as it has so many numbers, tables and graphs. I'm pretty sure it is beneficial to those who are interested in investing in stock market! ...more
Kieran Donnelly
Jul 13, 2020 rated it it was amazing  ·  review of another edition
Absolutely excellent. High emphasis on knowing financial history and relying on data. How to spot a bubble. Fairly mathematical and full of actionable insights.

Particularly enjoyed being taken to school on bonds and the value in one's portfolio.

If you intend to have any say in your future wealth, this is highly recommended.
Sep 15, 2020 rated it really liked it  ·  review of another edition
Very recommendable book. It includes great pieces of advice about general financial knowledge and more advanced things that, in my opinion, are very useful for life. These are the kind of things that are not taught at school and definitely should.
As the disadvantages of this book I would say that it is a little bit dense and out of date (in some aspects).

Everyone (from economy/finance "connoisseurs" to completely new to the matter) should read this book for having a good knowledge basis about e
Jul 22, 2018 rated it it was amazing  ·  review of another edition
Excellent summary of the basics of successful investing.
Catlin Bettridge
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
Feb 14, 2019 rated it really liked it  ·  review of another edition
Definitely was not a beach read.

The four pillars are investing are: the theory, the history, the psychology, and the business of investing. Each "pillar" took about 2-4 chapters that were usually peppered with financial terms, mathematical formulae, bar charts, which required some active thinking. It felt like reading a very instructive textbook -- being both dry in tone, but concise in its explanations. The really valuable stuff is unfortunately at the end of these four pillars, which is where
Aug 14, 2019 rated it really liked it  ·  review of another edition
Recommends it for: All adults
People tend to be intimidated by investing, in much the same way that they are intimidated by math, and most of the investment companies out there like it that way. It makes you a naive customer, which maximizes their profits.

Here’s the thing, though: the basic principles are pretty easy, and mastering those basics will make you a competent investor. Start with John Bogle’s “Common Sense on Mutual Funds”. If you never read another book on investing, you will still be well-prepared to do such thi
Apr 17, 2015 rated it it was amazing  ·  review of another edition
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
Apr 25, 2019 rated it it was amazing  ·  review of another edition
Shelves: favorites
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
Todd N
Feb 25, 2008 rated it it was amazing  ·  review of another edition
Shelves: finance
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
Jun 04, 2014 rated it it was amazing  ·  review of another edition
Shelves: non-fiction
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
Christopher Durand
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, 2014 rated it liked it  ·  review of another edition
Shelves: finance-money
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
Scott Diamond
Aug 05, 2014 rated it really liked it  ·  review of another edition
Shelves: nf-econ-invest
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. ...more
Feb 25, 2015 rated it really liked it  ·  review of another edition
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!
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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.

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