With the Stock Market plunging over a thousand points, interest rates going up, and a Recession on the horizon, this is a good time to think about money. William Bernstein, former neurologist and savvy investor, writes: “The name of the game is not to get rich, but rather to avoid dying poor. In fact, if you follow the advice in this book, I can guarantee you that you will not get fabulously wealthy. Rather, I’ve striven to simultaneously maximize your chances of a comfortable retirement and minimize your chances of living out your final years in poverty. I know of no more laudable or worthy investment goal.” (p.193)
Since many of us may have decades of Life ahead of us, making smart moves with our money makes all the difference between a comfy Retirement and Disaster. Bernstein shows how money works and how to hedge against unexpected calamities. I really enjoyed Bernstein’s writing style. Many finance books can be as dry as sand, but The Investor’s Manifesto is lively and clever. Bernstein’s examples are fun reading. If you want to tweak your investment strategy and budget for the long haul, The Investor’s Manifesto is the place to start. Are you ready for the Tough Times ahead? GRADE: A
TABLE OF CONTENTS:
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