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Review: The four pillars of investing

Tue 23 March 2010

, Alberta Opoku, LEAP

There are hundreds of thousands of books about money: from making it to losing it. Some are entertaining, and others inspiring. With ‘The four pillars of investing’ any independent investor can construct a sensible investment portfolio.

If you’re planning on taking your investments into your own hands, William Bernstein’s The four pillars of investing: lessons for building a winning portfolio is an absolute must-read. Truth be said, I was reluctant to pick this book, knowing it is scientifically proven investment advice – what to buy and when to buy - has no added value. But I couldn’t have done myself a bigger favour!

Long-term success

Dr Bernstein explains the fundamental concepts, the four pillars, upon which successful investments are built. Bernstein starts with the foundations of classic financial theory and works his way to the practicalities of assembling an effective portfolio with a step-by-step programme for realising long-term success. It is this holistic approach that makes The four pillars of investing such a great book.

Four pillars

These are the fascinating fundamentals Bernstein shares with his readers:

The Theory of Investing: Don’t expect high returns without risks.

The History of Investing: About once every generation, the markets go barking mad. If you are unprepared, you are sure to fail.

The Psychology of Investing: Identify the era's conventional wisdom and assume that it is wrong. More often than not, it is.

The Business of Investing: The stockbroker services his clients in the same way that Bonnie and Clyde serviced banks.

About the author

Dr William Bernstein has become a grassroots hero to independent investors everywhere. He has made a name for himself by questioning the value of Wall Street wisdom, skewering the recommendations of self-serving stockbrokers, and showing legions of investors how to successfully manage their own investments smartly.

William Bernstein, The Four Pillars of Investing:
lessons for building a winning portfolio (240 pages, hardcover)

Publisher: McGraw Hill