Financial Wisdom From William J. Bernstein


William J. Bernstein is a financial theorist and authors of several books on investment and portfolio management. He is the proponent of Modern Portfolio Theory and argues that investors/fund managers achieve superior returns through luck rather than skills.

Here are some of the wisdom (quotes)  from William J. Bernstein regarding investment and finance.

Financial Wisdom (Quotes) From William J. Bernstein

If you want excitement in your life, it’s far safer and cheaper to take up sky-diving than to seek it in your investment portfolio.

If you are such an individual and become upset when one of your asset classes does poorly, even when the rest of your portfolio is doing well, then you should not be managing your own money.

The definition of investment is the deferring of present consumption for future consumption. So, you do have to be willing to defer. And there are a couple of tricks that you can use to save money. One of them is simply to pay yourself first.

The easiest way to get rich is to spend as little as possible.

Never, ever, extrapolate past returns into the future.

You have to understand what market history looks like. What market history tells you is that the very, very best investments are made when things look the worst.

Very high returns are almost always made by those brave enough to invest when the sky is blackest.

It’s human nature to find patterns where there are none and to find skill where luck is a more likely explanation.

Always remember that investing is not a destination, but rather a journey of discovery and learning. With luck, you’ve just gotten a good start.

Only an income-producing possession, such as a stock, bond, or working piece of real estate is a true investment.

A twenty-five year-old who is actively saving for retirement should get down on his knees and pray for a decades-long, brutal bear market so that he can accumulate stocks cheaply.

The purpose of investing is not to simply optimize returns and make yourself rich. The purpose is not to die poor.

The worst possible time to invest is when the skies are the clearest.

There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know.

Investment wisdom begins with the realization that long-term returns are the only ones that matter.

The most important investment ability of all is emotional discipline.

You have to understand your own psychology. You have to understand that human beings weren’t really designed to invest. We have all these emotions that are appropriate responses if you’re being chased by a tiger, but they’re terrible responses if you’ve got a 30-year time horizon to think about investment or when you’re trying to manage investment over 30 years.

One of the dumbest things any investor can do is to own stock in the company he works for, since he can lose both his job and portfolio simultaneously.



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