The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between »

William J. Bernstein, PhD, MD, is a bestselling author known as a grassroots hero to independent investors. Formerly a practicing neurologist, Bernstein approaches the problems of saving and investing as someone who had to figure it out for himself—from first principles up. He is the author of The Intelligent Asset Allocator and The Four Pillars of Investing—highly regarded, plain-spoken guides on how to build a diversified portfolio without the help of a financial advisor—the editor of the asset allocation journal Efficient Frontier, and the founder of the popular Web site efficientfrontier.com. He has also written two volumes of economic history, The Birth of Plenty and A Splendid Exchange, and is a coprincipal in Efficient Frontier Advisors.

As recently as a generation or two ago, the lack of financial ability wasn't a handicap for the average person. But in today's world—where most of us have been forced to manage our own investment and retirement portfolios—it has become essential to understand the finer points of our financial life.

While the meltdown of 2008–2009 has compounded the complexity of the investment landscape, timeless investment principles can help you navigate even the toughest investment terrain. That's why bestselling author William Bernstein—a grassroots hero to independent investors—has written The Investor's Manifesto.

Approaching the problems of investing and saving from the perspective of someone who has had to figure it out for himself, Bernstein knows firsthand how difficult these endeavors can be—especially for those with little professional experience in this arena. Now, with the current market maelstrom as a backdrop, he skillfully describes what it takes to plan for a lifetime of investing, discussing stocks and bonds as well as the relationship between risk and return. Written in a straightforward and accessible style, The Investor's Manifesto:

• Explores the theoretical basis of investing and designing portfolios, drawn in large part from financial history

• Offers insights on dealing with the emotions and attitudes that routinely cripple investors

• Discusses how to deal with the investment industry when executing strategies designed for anything from saving for retirement to putting a child through college

• Addresses ways in which individual investors can construct diversified portfolios that can blunt potentially damaging market forces

• Covers the concept of Pascal's Wager—which will enable you to identify and avoid worst-case investing scenarios

If there were ever a time to take control of your financial future, it is now. Potentially generous returns are available to the brave, the disciplined, and the liquid. If you follow the advice found here and keep your head while others lose theirs, then you will have a fighting chance of avoiding the financial pitfalls in front of you and profiting over the long-term.

Foreword.

Preface.

Chapter 1 A Brief History of Financial Time.

In the Beginning.

Near-Death in Venice.

The Incredible Shrinking Risk Premium.

Summary. 

Chapter 2 The Nature of the Beast.

Of Ravens and Returns.

History versus Math.

Mr. Gordon's Curious Equation.

Math Detail: The Discounted Dividend Model. 

Home Sweet Home?

Adventures in Equity.

Math Detail: Risk.

Throwing Dice with God.

Gene Fama Looks for Angle and Finds None.

Sandbagged by a Superstar.

Jack Bogle Outfoxes the Suits.

It's Better to be Lucky than Smart.

Bond Funds: A Flatter Playing Field.

Summary.

Chapter 3 The Nature of the Portfolio.

Four Essential Preliminaries.

The Asset Allocation Two-Step.

Math Detail: Mean-Variance Analysis. 

With Luck, Zigs and Zags.

Chasing Rainbows.

Summary.

Chapter 4 The Enemy in the Mirror.

Inner Demons.

Behaving Badly.

Bargain-Basement Psychotherapy.

Summary.

Chapter 5 Muggers and Worse.

The World's Largest Bad Neighborhood.

The Fund Funhouse.

Summary.

Chapter 6 Building Your Portfolio.

Financial Planning for a Lifetime: The Basics.

Saving for Retirement: Nuts and Bolts.

How to Save: Dollar Cost Averaging and Value Averaging.

Four Investors, Four Plans.

The Rebalancing Question.

Math Detail: Rebalancing, Momentum, and Mean Reversion. 

Teach Your Children Well.

Summary.

Chapter 7 The Name of the Game.

Investment Theory and History: The Short Course.

The Portfolio Theory of Everything.

We Have Met the Enemy, and He is Us.

Heads I Win, Tails You Lose.

Fire When Ready.

The Books You Need...Aged Like Fine Wine.

Notes.

Acknowledgments.

About the Author.

Index.