William J. Bernstein
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William J. Bernstein (born 1948) is an American financial theorist and
neurologist Neurology (from el, νεῦρον (neûron), "string, nerve" and the suffix -logia, "study of") is the branch of medicine dealing with the diagnosis and treatment of all categories of conditions and disease involving the brain, the spinal c ...
. His research is in the field of
modern portfolio theory Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk. It is a formalization and extension of diversificati ...
and he has published books for individual investors who wish to manage their own equity portfolios. He lives in
Portland, Oregon Portland (, ) is a port city in the Pacific Northwest and the largest city in the U.S. state of Oregon. Situated at the confluence of the Willamette and Columbia rivers, Portland is the county seat of Multnomah County, the most populous ...
. His bestselling books include '' The Birth of Plenty'' and '' A Splendid Exchange''.


Biography

Bernstein is a proponent of the equity or index allocation school of thought, believing that all equity selection strategies should be focused on allocating between asset classes, rather than selecting individual stocks and bonds, or from the timing of their sales. Bernstein's first book, ''The Intelligent Asset Allocator'', makes this case in detail; his second book'', The Four Pillars of Investing: Lessons for Building a Winning Portfolio'' (McGraw-Hill, 2002; ), is aimed for those less comfortable with statistical thought. It also puts asset-class returns into long-term historical perspective. Bernstein is a proponent of
modern portfolio theory Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk. It is a formalization and extension of diversificati ...
, which stands in stark contrast to the view that skilled managers can succeed in picking particular investments that will outperform the market, whether through market timing,
momentum investing Momentum investing is a system of buying stocks or other securities that have had high returns over the past three to twelve months, and selling those that have had poor returns over the same period. While momentum investing is well-established as ...
, or finding assets whose future value have been underestimated by the market. He argues that the financial research literature shows that most return is determined by the
asset allocation Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment t ...
of the portfolio rather than by asset selection. In 1996, Bernstein introduced Coward's Portfolio, a popular form of lazy portfolio. He explained "a rational coward might split their equity exposure equally between S&P, EAFE, US small, and foreign small stocks." A contemporary implementation of the Portfolio includes 40% short-term bonds, and 15% international equity evenly divided into Europe, Pacific, and emerging markets funds. Bernstein's third book, ''The Birth of Plenty'', is a history of the world's standard of living; it proposes four conditions that have historically been necessary for it to rise. His fourth book, ''A Splendid Exchange: How Trade Shaped the World,'' published in 2008 by
Grove Atlantic Grove Atlantic, Inc. is an American independent publisher, based in New York City. Formerly styled "Grove/Atlantic, Inc.", it was created in 1993 by the merger of Grove Press and Atlantic Monthly Press. As of 2018 Grove Atlantic calls itself "An ...
, is a history of trade. In 2009 his fifth book was published "The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between" which continues the theme of asset allocation in a more accessible way. In 2014 his sixth book, "Rational Expectations: Asset Allocation for Investing Adults" was published. It updated his earlier books on investing to cover the position after the Great Financial Crisis (GFC) of 2008-09, and the most recent research on investing, including that by Elroy Dimson, Paul Marsh, and Mike Staunton, authors of "Triumph of the Optimists." Bernstein holds a PhD in chemistry and an MD; he practiced neurology until retiring from the field.


Bibliography

* ''The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk''. McGraw-Hill, New York, 2000, . * ''The Four Pillars of Investing: Lessons for Building a Winning Portfolio''. McGraw-Hill, New York, 2002, . * '' The Birth of Plenty: How the Prosperity of the Modern World was Created''. McGraw-Hill, New York, 2004, . * '' A Splendid Exchange: How Trade Shaped the World from Prehistory to Today''. Atlantic Books, London, 2008, . * ''The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between''. Wiley, New York, 2009, . * ''Masters of the Word: How Media Shaped History''. Grove, 2013, . * ''Rational Expectations: Asset Allocation for Investing Adults''. 2013, . * ''The Delusions of Crowds: Why People Go Mad in Groups''. Atlantic Monthly Press, New York, 2021, .


References


External links


Official web site
*
Coward's Portfolio Simulation
on Hello Money {{DEFAULTSORT:Bernstein, William J. Living people American male non-fiction writers 21st-century American chemists 21st-century American economists American neurologists 1948 births Date of birth missing (living people) Place of birth missing (living people)