The Investor's Manifesto. Preparing for Prosperity, Armageddon, and Everything in Between

  • ID: 1240827
  • Book
  • 224 Pages
  • John Wiley and Sons Ltd
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Praise for The Investor′s Manifesto

"Bill Bernstein′s impassioned new book is indeed a manifesto a call to action for Main Street investors to free themselves from exploitation by Wall Street money moguls; to understand the brute principles that ultimately determine stock market returns; and to establish the sound and simple strategies necessary for investment success. The Investor′s Manifesto is a grand–slam home run."
John C. Bogle, founder of the Vanguard Group, Inc.

"This is the investment book that my kids, step–kids, and sisters will read, remember, and thank me for. Bernstein′s way with ideas and words means that for all of them, practical investment is no longer too hard or too dull to master. The ahaaa moment for me was finding out what Bernstein is recommending to his readers now."
Ed Tower, Professor of Economics, Duke University

"The Investor′s Manifesto is packed with wisdom and charmingly written. It belongs on every investor′s bookshelf."
Burton G. Malkiel, author of A Random Walk Down Wall Street

"There is no better writer on investing than William Bernstein. If he has written it, it is a must–read. Whether you are just beginning your journey or already in retirement, this book is an invaluable guide filled with pearls of wisdom."
Larry Swedroe, Principal and Director of Research, The Buckingham Family of Financial Services, author of Wise Investing Made Simple and The Only Guide You′ll Ever Need series

"In The Investor′s Manifesto, author William Bernstein, PhD, MD, has condensed his long experience and intellectual wisdom into an easy–to–read and easy–to–understand book that deserves to be on the bookshelf of every serious investor."
Taylor Larimore, coauthor of The Bogleheads′ Guide to Investing and The Bogleheads′ Guide to Retirement Planning

"The Investor′s Manifesto brilliantly lays out timeless investment strategies in a clear, easy–to–understand manner. Whether an investing novice or an experienced investor, Bill Bernstein helps you recover from the market decline and build a solid financial future. Longtime Bernstein fans find the answer to the question ′What would Bill do?′"
Laura F. Dogu, coauthor of The Bogleheads′ Guide to Retirement Planning

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Foreword ix

Preface xiii

Chapter 1 A Brief History of Financial Time 1

In the Beginning 2

Near–Death in Venice 8

The Incredible Shrinking Risk Premium 11

Summary 12

Chapter 2 The Nature of the Beast 13

Of Ravens and Returns 13

History versus Math 18

Mr. Gordon s Curious Equation 25

Math Detail: The Discounted Dividend Model 29

Home Sweet Home? 35

Adventures in Equity 38

Math Detail: Risk 43

Throwing Dice with God 47

Gene Fama Looks for Angles and Finds None 49

Sandbagged by a Superstar 52

Jack Bogle Outfoxes the Suits 56

It Is Better to Be Lucky Than Smart 63

Bond Funds: A Flatter Playing Field 64

Summary 65

Chapter 3 The Nature of the Portfolio 69

Four Essential Preliminaries 71

The Asset Allocation Two–Step 74

Math Detail: Mean–Variance Analysis 83

With Luck, Zigs, and Zags 84

Chasing Rainbows 88

Summary 93

Chapter 4 The Enemy in the Mirror 95

Inner Demons 97

Behaving Badly 100

Bargain–Basement Psychotherapy 116

Summary 125

Chapter 5 Muggers and Worse 127

The World′s Largest Bad Neighborhood 128

The Fund Funhouse 135

Summary 142

Chapter 6 Building Your Portfolio 143

Financial Planning for a Lifetime: The Basics 143

Saving for Retirement: Nuts and Bolts 145

How to Save: Dollar Cost Averaging and Value Averaging 152

Four Investors, Four Plans 154

The Rebalancing Question 166

Math Detail: Rebalancing, Momentum, and Mean Reversion 169

Teach Your Children Well 172

Summary 174

Chapter 7 The Name of the Game 179

Investment Theory and History: The Short Course 180

The Portfolio Theory of Everything 181

We Have Met the Enemy, and He Is Us 181

Heads I Win, Tails You Lose 182

Fire When Ready 182

The Books You Need . . . Aged Like Fine Wine 185

Notes 188

Acknowledgments 193

About the Author 195

Index 196

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William J. Bernstein
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