William Bernstein Quotes & Sayings

Bluntly put, there's no chance that your doctor, dentist, or attorney is a high-school dropout. Your stockbroker, however, just might be. — William J. Bernstein

No one in his right mind would walk into the cockpit of an airplane and try to fly it, or into an operating theater and open a belly. And yet they think nothing of managing their retirement assets. I've done all three, and I'm here to tell you that managing money is, in its most critical elements even more demanding than the first two. — William J. Bernstein

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. — William J. Bernstein

The key aspect of an index fund is that many of them, not all of them, but many of them are extremely cheap. — William J. Bernstein

It's pretty clear that there's a relationship between return and risk - you enjoy high returns only by taking substantial risk. If you want to earn high returns, be prepared to suffer grievous losses from time to time. And if you want perfect safety, resign yourself to low returns. — William J. Bernstein

The key thing about any fund is to make sure its expenses are low. You know, if you look at the funds in your plan and you see that they're all charging 1.5 and 2 percent,you've gota bad plan. — William J. Bernstein

Wall Street is littered with the bones of those who knew just what to do, but could not bring themselves to do it. — William J. Bernstein

all democratic societies based on the rule of law, on the Tinkerbell Principle: it functioned only so long as its participants believed in it.48 — William J. Bernstein

The typical fund company services 401k plan participants in the same way that Baby Face Nelson serviced banks. — William J. Bernstein

A fast food job, for most people, should be an entry level position. If you see no path for advancement beyond that, it's time to take a real fast look at your human capital and learn a skill that will make you more money. — William J. Bernstein

As William Bernstein describes in 'A Splendid Exchange', 'The Arabs, invigorated by their conquests, experienced a cultural renaissance that extended to many fields; the era's greatest literature, art, mathematics, and astronomy was not found in Rome, Constantinople, or Paris, but in Damascus, Baghdad and Cordova. — Christopher Lascelles

It's bad enough that you have to take market risk. Only a fool takes on the additional risk of doing yet more damage by failing to diversify properly with his or her nest egg. Avoid the problem-buy a well-run index fund and own the whole market. — William J. Bernstein

During bull markets, everyone believes that he is committed to stocks for the long term. Unfortunately, history also tells us that during bear markets, you can hardly give stocks away. Most investors are simply not capable of withstanding the vicissitudes of an all-stock investment strategy. The — William J. Bernstein

An index fund is a fund that simply invests in all of the stocks in a market. So, for example, an index fund might invest in every single stock or almost every single stock in the U.S. market, it might invest in every single stock abroad, or it might invest in all of the bonds that are out there. And you can make a perfectly fine investing portfolio that mixes equal parts of all three of those. — William J. Bernstein

You have to ask yourself, what are the things that matter to you most in your life? If you have to have a latte every day that'snice to have right now, but if you take that latte every day right now, you may wind up eating cat food when you are 70. And you have to decide which is worse. — William J. Bernstein

If your broker or investment advisor is not familiar with the concept of standard deviation of returns, get a new one. — William J. Bernstein

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

99% of fund managers demonstrate no evidence of skill whatsoever. — William J. Bernstein

Looked at from another perspective, in the 30 years from 1952 to 1981, stocks returned 9.9% and bonds returned only 2.3%, while inflation annualized out at 4.3%. Thus, during this period, the bond investor lost 2% of real value on an annualized basis, while the stock investor made a 5.6% real annualized return. The last fifteen years of that period were years of high inflation, so this is just another way of saying that stocks withstand inflation better than bonds. Short-term — William J. Bernstein

The essence of effective portfolio construction is the use of a large number of poorly correlated assets. — William J. Bernstein

Humans abstract and record information in five major ways: with writing, mathematical notation, painting/photography/videography, maps, and clocks - that is, we can abstract and record verbal, numerical, visual, spatial, and temporal information. — William J. Bernstein

Bonds are even worse, since their returns do not mean revert - a series of bad years is likely to be followed by even more bad ones, as happened during the 1970s. This is the point made by Jeremy Siegel in his superb treatise, Stocks For The Long Run. Professor Siegel pointed out that stocks outperformed bonds in only 61% of the years after 1802, but that they bested bonds in 80% of ten-year periods and in 99% of 30-year periods. Looked — William J. Bernstein

Arguably the most substantive domestic issue facing the republic is the fate of Social Security, with privatization the most frequently mentioned option. For the first time in history, a familiarity with the behavior of the financial markets has become a prerequisite for competent citizenship, apart from its obvious pecuniary value. Using — William J. Bernstein

In ancient societies, the law functioned as a two-edged sword; while standardizing procedure and bringing it out into the open, the law also concentrated power in those few who could read and write. — William J. Bernstein

Combating myopic risk aversion is the most difficult emotional task facing any investor. I know of only two ways of doing this. The first is to check on your portfolios as infrequently as possible. ... The other way to avoid myopic risk aversion is to hold enough cash so that you have a certain equanimity about market falls. — William J. Bernstein

If you find yourself stimulated in any way by your portfolio performance, then you are probably doing something very wrong. A superior portfolio strategy should be intrinsically boring. — William J. Bernstein

The definition of investment is the deferring ofpresent consumption for future consumption. So, you dohave 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 — William J. Bernstein

The Story of the Telegraph and a History of the Great Atlantic Cable, in which they breathlessly proclaimed, How potent a power, then, is the telegraphic destined to become in the civilization of the world! This binds together by a vital cord all the nations of the earth. It is impossible that old prejudices and hostilities should longer exist, while such an instrument has been created for an exchange of thought between all the nations of the earth.46 — William J. Bernstein

If you still crave financial thrills or feel compelled to have exciting investments to talk about with folk at parties, then designate a very small corner of your portfolio as mad money, to be deployed in 'exciting' investments. Just make sure to promise yourself that when it's gone, it's gone. — William J. Bernstein

We tend to extrapolate the recent past indefinitely into the future; in the 1970s, investors thought that inflation would never end, whereas now most people think it will never occur again. The first viewpoint was proven wrong within a few years, and the latter viewpoint most likely will be soon. — William J. Bernstein

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. — William J. Bernstein

The deeper one delves, the worse things look for actively managed funds. — William J. Bernstein

When it comes to fund managers and market strategists, this year's hero usually turns into next year's zero. — William J. Bernstein

Personal finance, like most important aspects of life, is a never-ending quest. The competent investor never stops learning. — William J. Bernstein

The reason that 'guru' is such a popular word is because 'charlatan' is so hard to spell. — William J. Bernstein

Paradoxically, in the long run, bonds are at least as risky as stocks. This is because stock returns are "mean reverting." That is, a series of bad years is likely to be followed by a series of good ones, repairing some of the damage. — William J. Bernstein

The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor. — William J. Bernstein

It's human nature to find patterns where there are none and to find skill where luck is a more likely explanation (particularly if you're the lucky manager). — William J. Bernstein

A decade ago, I really did believe that the average investor could do it himself. I was wrong. I've come to the sad conclusion that only a tiny minority, at most one percent, are capable of pulling it off. Heck, if Helen Young Hayes, Robert Sanborn, Julian Robertson, and the nation's largest pension funds can't get it right, what chance does John Q. Investor have? — William J. Bernstein

Market risk is like taking a plunge into a cool pool ... a lot of people are finding out right now what their risk tolerance is. — William J. Bernstein

Mutual fund manager performance does not persist and the return of stock picking is zero. — William J. Bernstein

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 what they don't know. Then again, there is a third type of investor: the investment professional, who indeed knows he doesn't know, but whose livelihood depends upon appearing to know. — William J. Bernstein

most paleographers now believe that the "idea of writing" must have spread along with commerce, most likely from Sumer to Egypt.33 — William J. Bernstein