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A review by jmcphers
The Four Pillars of Investing by William J. Bernstein
4.0
The Four Pillars of Investing was a poor name for this book because it cojures the image of a rock-solid investment strategy based on complementary principles that, properly balanced, support a lifetime of strong returns regardless of the vagaries of the market.
A better name would be "Four Things Everyone Should Know About Investing". This name is so much better that I will refer to this book as FTESKAI for the rest of the review.
FTESKAI is not a book for someone who just wants to be told where to invest their money. The author appears to have already written one of those. It is, more than anything, a history lesson, so if you don't like history, you won't like FTESKAI.
As a history lesson, though, it is wonderful. The writing is witty, the pace brisk, and you can't help but feel as though you're listening to someone who's about to become your favorite economics professor. It's a walk through just enough math and history to make you understand the basics of investment, which have changed shockingly little since people started keeping records. I think this was the biggest takeaway for me from the whole of FTESKAI.
A few nits: the author tries so hard to explain the math in plain English that if you're someone who can actually read math you'll find yourself getting lost and wishing he would just show you the equation. The asset allocation bits are little thin, too; the author just gives a few scenarios and how he'd allocate assets for them without providing much explanation.
Perhaps for me the most challenging part of this book is applying its principles when they have become so mainstream. When it was written, the cry to invest in low-cost index funds was probably a lone voice in the desert comparable to that of John the Baptist. Now almost everyone seems to know that this is the smart move. If almost all investors dump money soley into index funds, what does that do to the market?
It's hard to take the exhortation to "presume that the conventional wisdom is wrong" when the book has become the conventional wisdom.
A better name would be "Four Things Everyone Should Know About Investing". This name is so much better that I will refer to this book as FTESKAI for the rest of the review.
FTESKAI is not a book for someone who just wants to be told where to invest their money. The author appears to have already written one of those. It is, more than anything, a history lesson, so if you don't like history, you won't like FTESKAI.
As a history lesson, though, it is wonderful. The writing is witty, the pace brisk, and you can't help but feel as though you're listening to someone who's about to become your favorite economics professor. It's a walk through just enough math and history to make you understand the basics of investment, which have changed shockingly little since people started keeping records. I think this was the biggest takeaway for me from the whole of FTESKAI.
A few nits: the author tries so hard to explain the math in plain English that if you're someone who can actually read math you'll find yourself getting lost and wishing he would just show you the equation. The asset allocation bits are little thin, too; the author just gives a few scenarios and how he'd allocate assets for them without providing much explanation.
Perhaps for me the most challenging part of this book is applying its principles when they have become so mainstream. When it was written, the cry to invest in low-cost index funds was probably a lone voice in the desert comparable to that of John the Baptist. Now almost everyone seems to know that this is the smart move. If almost all investors dump money soley into index funds, what does that do to the market?
It's hard to take the exhortation to "presume that the conventional wisdom is wrong" when the book has become the conventional wisdom.