My practicality consists in this, in the knowledge that if you beat your head against the wall it is your head which breaks and not the wall.

 --Antonio Gramsci

Between falsehood and useless truth there is little difference. As gold which he cannot spend will make no man rich, so knowledge which he cannot apply will make no man wise.

 --Samuel Johnson

How does everything we've learned so far translate into portfolio management? This chapter won't be comprehensive—like the bulk of this book. Here we're going to cover a few basics about how to think about portfolio management using what we've learned so far. What are the baseline assumptions and perspectives a long-term, successful portfolio strategy should employ?

For the nuts and bolts of portfolio construction, I recommend any of the sector guides in the Fisher Investments On series, or Aaron Anderson's excellent Own the World, a study on how to create a diversified portfolio of global stocks.

If there's one thing we've seen in our travails, it's that managing portfolios in a practical way requires keeping things as simple as possible. Oversimplification can be a bad thing, true, but we are too full of biases and blindnesses not to find some basic heuristics to make things easier on ourselves. Each piece of advice in this section in some form or another is traceable back to the lessons of previous chapters.

This chapter is geared toward investors who want to beat the stock markets over the ...

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