04-22-2004, 8:39 PM | Post #110476 |
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This is a great book. It is written by William Bernstein, a frequent Diehard contributor, and publisher of www.efficientfrontier.com. Here are excerpts:
PILLAR ONE--Investment Theory:
"Anyone promising high returns with low risk is guilty of fraud."
"The long-term return of high-grade bonds is essentially the same as the dividend yield."
"The market is brutally efficient and can be thought of as being smarter than even its wisest individual participants."
"Stock picking and market timing are expensive, risky, and ultimately futile excercises."
"A prudent course is to make the broad market and a lesser amount of small U.S. and large foreign stocks your core stock holdings."
"Financial history provides us with invaluable wisdom about the nature of the capital markets and of returns on securities."
"No one--not the pundits from the big brokerage firms, not the newsletter writers, not the mutual fund managers, and certainly not your broker--can predict where the market will go tomorrow or next year."
"From the market peak in September 1929 to the bottom in July 1932, the market lost an astonishing 83%."
"The message to the average investor is brutally clear: expect at least one, and perhaps two, very severe bear markets during your investment career."
"Most investors are simply not capable of withstanding the vicissitudes of an all-stock invesment strategy."
"A young person saving for retirement should get down on his knees and pray for a market crash, so that he can purchase his nest egg at fire sale prices."
"For the 50 years from 1932 to 1981, Treasury bonds returned just 2.95% per year."
"The fundamental investment choice faced by any individual is the overall stock/bond mix."
"Alfred Cowles was directly responsible for the collection and analysis of most of the nation's stock and bond data from 1871 to 1930. Without Cowles, we would still be financial cave dwel
Originally posted in thread: 34480