The Investor's Manifesto Quotes

“The reason that 'guru' is such a popular word is because 'charlatan' is so hard to spell.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Do not trust historical data—especially recent data—to estimate the future returns of stocks and bonds. Instead, rely on interest and dividend payouts and their growth/failure rates.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Among his many accomplishments was inventing the “efficient market hypothesis” (EMH) which states, more or less, that all known information about a security has already been factored into its price.f This has two implications for investors: First, stock picking is futile, to say nothing of expensive, and second, stock prices move only in response to new information—that is, surprises. Since surprises are by definition unexpected, stocks, and the stock market overall, move in a purely random pattern.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“For example, assume that you are getting $30,000 per year from Social Security. As we saw with In-Between Ida, the present value of all those future checks is $30,000 divided by 7 percent, or about $400,000.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Never forget that the portfolio’s the thing: Inevitably, it will contain poorly performing asset classes—there will always be at least one—but its identity will change from year to year.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“I see the supposed convenience of being able to trade ETFs throughout the day as a psychological disadvantage. Unless you are able to predict intraday market moves—a fool’s errand if ever there was one—you are faced with the oftentimes paralyzing choice of exactly when to buy or sell.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“The most important investment ability of all is emotional discipline.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“When stocks perform poorly, in order to raise living expenses you will be selling bonds, since their allocation will rise. Just do not forget to replenish the bond bucket with the proceeds of stock sales and to also take your living expenses from the stock bucket as well when times are flush.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Eighty years ago, John Maynard Keynes put it best: I do not feel that selling at very low prices is a remedy for having failed to sell at high ones. . . . I would say that it is from time to time the duty of the serious investor to accept the depreciation of his holdings with equanimity and without reproaching himself.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“If done properly, successful investing entertains as much as watching clothes tumble in the dryer window. Always remember that the more exciting a given stock or asset class is, the more likely it is to be over-owned, overpriced, and destined for low future returns.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“It costs more to transact abroad, and many foreign governments tax stock dividends; although you can recover this cost in a taxable account through the foreign tax credit on your U.S. tax return, you cannot do so in a retirement account.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“If you decide to buy bonds or a bond fund, make sure the average maturity is less than the time horizon of the savings.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Because we cannot predict the future, we diversify. —Paul Samuelson”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“A good rule of thumb is to never, ever pay more than 15 years fair rental value for any residence.c This computes out to a 6.7 percent (1/15th) gross rental dividend, or 3.7 percent after taxes, insurance, and maintenance, which is about what you might expect from a mixed portfolio of stocks and bonds.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Always favor expected returns calculated from the Gordon Equation over past returns, no matter how long of a period they cover.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Investors cannot earn high returns without occasionally bearing great loss.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Treasury securities issued with a maturity of one year or less are called “bills”; from one to 10 years, “notes”; and over 10 years, “bonds.” Notes and bonds yield an interest coupon every six months. Bills do not—rather, they are issued at a discount and redeemed at par; the difference is their “yield.”)”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“Investment wisdom, however, begins with the realization that long-term returns are the only ones that matter. Investors who can earn an 8 percent annualized return will multiply their wealth tenfold over the course of 30 years, and if they have half a brain, they will care little that many days, or even years, along the way their portfolios will suffer significant losses. If they are, in fact, anguished by the bad days and years, they can at least comfort themselves that the rewards of equity ownership are paid for in the universal currencies of financial risk: stomach acid and sleepless nights.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“In every field of human endeavor, whether it is flying, medicine, or armed combat, this reflexive/reflective split cleaves the world into amateurs and professionals, the former driven by their emotions, the latter by calculation and logic.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between

“My rule of thumb is that if you spend 2 percent of your nest egg per year, adjusted upward for the cost of living, you are as secure as possible; at 3 percent, you are probably safe; at 4 percent, you are taking real risks; and at 5 percent, you had better like cat food and vacations very close to home. For example, if, in addition to Social Security and pensions, you spend $50,000 per year in living expenses, that means you will need $2.5 million to be perfectly safe, and $1.67 million to be fairly secure. If you have “only” $1.25 million, you are taking chances; if you are starting with $1 million, there is a good chance you will eventually run out of money.”
― William J. Bernstein, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between