10 of the Best from Bernstein

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Robert T
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10 of the Best from Bernstein

Post by Robert T » Fri Jan 04, 2008 5:45 pm

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William Bernstein, author of The Intelligent Asset Allocator and The Four Pillars of Investing, also authored a quarterly set of articles which appeared on his website Efficient Frontier. While he has slowed the article writing to ‘periodic’ his previous articles are still available on his site. They are a wonderful resource and are entertaining to read. I highly recommend a visit. Here are ten of my best from the site.In the last of the list, he gives a rare insight on how he has invested.
  • "While I’m not going to reveal precisely how I’ve allocated assets in the past, it’s in the ballpark of the DFA Model Strategies—heavily weighted towards small cap, value, and foreign equities, keeping the bond portion of the portfolio relatively short. And, of course, as passive as possible.”
Thank you Bill Bernstein - I have learned a tremendous amount from your articles and books.

Robert
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Post by edge » Fri Jan 04, 2008 6:02 pm

I also enjoy Bernstein's site, its a really good resource.

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Post by George-J » Sat Jan 05, 2008 4:55 am

For new readers who may not appreciate the compounding of small percentages and how "costs matter", here is one of my Bernstein favourites, from 1996:

11. Bequething Your Assets to Your Broker

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Post by Warner » Sun Jan 06, 2008 9:55 am

saw James Grant on TV yesterday & it reminded me of Bernstein's article, The James Grant Paradox.
The point is this; some problems are so difficult that any effort to solve them is counterproductive. This is the reason why no one can predict the direction of the financial markets with any consistency. The main purpose of market strategists is to make astrologers look good. I never cease to be amazed that most investors think that financial "experts" can forecast stock prices and interest rates from data on unemployment, the Fed Funds rate, and the like. Remember that the best time to buy stocks is usually when economic indicators are the gloomiest. The best time to sell is when there is unlimited blue sky.
So the next time you hear someone predict the direction of stock prices from economic data, ignore them. Even if they're on Lou Rukeyser every week. Even if their verbal SAT score is 800. Even if they're wearing a $2000 suit.
On the TV show, when asked for his predictions, Grant replied he wasn't in that game anymore.

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Post by Sunny Sarkar » Sun Jan 06, 2008 10:22 am

So I was at the check in counter at the hotel for the Diehards IV reunion in Denver. Another casually dressed bearded man approached the counter.

"Are you here for the diehards event?", I asked.
"Yes".
"I'm Sunny. Sunny Sarkar on the forum".
"I'm Bill", he replied, shaking hands.
"Bill...?", I enquired, eager to put faces on the forum usernames.
"Bill Bernstein".

I swear I felt 10,000 volt current flow through that handshake :-)
Last edited by Sunny Sarkar on Sun Jan 06, 2008 10:29 am, edited 1 time in total.

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Post by Sunny Sarkar » Sun Jan 06, 2008 10:27 am

As many of you know, Dr.Bernstein posts on the original M* forum. His username is "wbern". Here is a search link to his posts:

Posts by wbern

One of the longest threads he started was:
Tower on Active versus Indexing at Vanguard

Prof. Tower also posts on the forum and has attended the last couple of diehard reunions.

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Post by mickeyd » Sun Jan 06, 2008 1:42 pm

Even if they're on Lou Rukeyser every week.
Wow...Flashback...Remember when this was the only TV show dedicated to investing? It seems so long ago.
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

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Re: 10 of the Best from Bernstein

Post by jar2574 » Sun Jan 06, 2008 3:03 pm

Robert T:

Thanks for this thread. Good for an afternoon's worth of reading. And a nice refresher course.
Robert T wrote:.
William Bernstein, author of The Intelligent Asset Allocator and The Four Pillars of Investing, also authored a quarterly set of articles which appeared on his website Efficient Frontier. While he has slowed the article writing to ‘periodic’ his previous articles are still available on his site. They are a wonderful resource and are entertaining to read. I highly recommend a visit. Here are ten of my best from the site.In the last of the list, he gives a rare insight on how he has invested.
  • "While I’m not going to reveal precisely how I’ve allocated assets in the past, it’s in the ballpark of the DFA Model Strategies—heavily weighted towards small cap, value, and foreign equities, keeping the bond portion of the portfolio relatively short. And, of course, as passive as possible.”
Thank you Bill Bernstein - I have learned a tremendous amount from your articles and books.

Robert
.

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Post by Robert T » Sun Jan 06, 2008 8:51 pm

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As many of you know, Dr.Bernstein posts on the original M* forum. His username is "wbern".
This message from one of Bill Bernstein’s earlier posts has stuck with me:
  • --------------------------------------------------------------------------------------

    Over the long haul, what matters is factor exposure and expense.

    --------------------------------------------------------------------------------------
Simple but profound.

Robert
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Post by DRiP Guy » Sun Jan 06, 2008 9:00 pm

Robert,

I'd say there is only one element even more profound than those two gems, and I did not get it from Bogle, but instead from the humble rain-smeared stub of a raffle ticket, I found buried in an old jacket:

"You must be present to win."


So while the chestnut about valuations is indeed accurate and important, I think most investors realize that a moderated response is in order; for instance, sitting out the entire game for twenty years or so hoping for some optimal entry point is a loser's proposition.

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Post by Warner » Sun Jan 06, 2008 9:43 pm

or from Woody Allen: "Eighty percent of success is showing up. "

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Post by Robert T » Sun Jan 06, 2008 9:57 pm

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DRiP Guy.

I agree – if you’re not exposed to any risk factors it will make a huge difference to your bottom line over the long-term. I read the Bernstein message to be inclusive of being in the market or not. That’s why I like the message – its simple but fairly encompassing (at least my reading).

Robert
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Post by DRiP Guy » Sun Jan 06, 2008 10:17 pm

Robert T wrote:.
DRiP Guy.

I agree – if you’re not exposed to any risk factors it will make a huge difference to your bottom line over the long-term. I read the Bernstein message to be inclusive of being in the market or not. That’s why I like the message – its simple but fairly encompassing (at least my reading).

Robert
.
Oh, yes, I was not finding fault with the post or message at all -- it is indeed self-contained and really needs no constraint or amplification... it just seems that in these days, everyone wants to go to extremes... so, thought I would add that in for those who might wish that a candy bar will someday cost a nickel again.... :)

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