Skip to Main Content
The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between
book

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

by William J. Bernstein
November 2009
Beginner content levelBeginner
201 pages
4h 40m
English
Wiley
Content preview from The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between
CHAPTER 2
The Nature of the Beast
No balls, no blue chips.
—Old Wall Street adage
If you learn nothing else from this book, it should be that risk and return are inextricably intertwined. In almost every country where economists have studied securities returns, stocks have had higher returns than bonds.1 Further, if you want those high stock returns, you are going to have to pay for them by bearing risk; this is a polite way of saying that in the course of earning those higher returns, your portfolio is going to lose a truckload of money from time to time. Conversely, if you desire perfect safety, then resign yourself to low returns. It really cannot be any other way.

Of Ravens and Returns

Let’s start our journey through the land of risk and return by imagining a clear, crisp winter afternoon in the halcyon days of late 1998. You are out for a stroll, and as your thoughts turn to your financial health, your mood elevates. Your portfolio, which consists of a mix of judiciously picked stocks and bonds, has doubled in value during the roaring bull market of the past four years. While you have not done as well as your acquaintances, who are flush with dot-com options and aggressive tech funds, your modest portfolio has landed you squarely on the road to a comfortable retirement.
Suddenly, a winged creature lands on your shoulder. Ah, you say to yourself optimistically, the bluebird of happiness! Well, no; closer inspection reveals plumage of a darker hue. “Hello,” it intones gravely, ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Great Investors, The

Great Investors, The

Glen Arnold

Publisher Resources

ISBN: 9780470505144Purchase book