Analysis Of Bernstein's Four Pillars Of Investing

As the title suggests, Bernstein describes how to be a successful investor using his four pillars of Investing. This easy to understand book lays out Bernstein’s four essential topics that investors should understand: the relationship between risk and reward, market history, the psychology of the market and investors, and understanding what it means to take financial advice from investment salespeople. The author devotes a section of his book to each pillar; which in short are theory, history, psychology and business.

The first pillar is arguably the most important pillar. This is where Bernstein describes the relationship between risk and return and describes how to increase return while decreasing risk. While reading about pillar one three pieces of information really stood out for me. I feel these three facts really represent what pillar one stands for. Firstly, the highest returns are obtained by accepting prudent

Focuses on the various legs of the finance industry. Bernstein dedicates a chapter to brokers, mutual funds, and the press which is the three legs that he feels makes up the finance industry. The author dedicates a chapter to broker sand says they should be avoided if possible. The one thing Bernstein wants us to know is that your broker is not your friend. He also wants you to know that your mutual fund is not your friend either. Many investors unknowingly pay huge fees because they are heavily invested in high fee mutual funds. It is important that investors research the fees that are associated to the mutual fund. Bernstein suggests that investors look at index funds rather than mutual funds due to their low fee structure. They are also a good idea because they allow you to easily diversify your investments. Bernstein says that by indexing, you are tapping into into a powerful resource in the finance world, you are tapping into he collective wisdom of the