Rational Advisor

These are my book notes from “the four pillars of investing” and the “Intelligent Asset Allocator” by William Bernstein.

- Smart investors ignore the economy.

-  hedge funds: “The best vehicle known to man for separating country club members from their wealth.”

-  investors: “investors seem to have the attention span of a kindergarten class. I give them another five years before they’re back to playing the same melody with different instruments.”

-  BRIC investing: “A wire-house gimmick. The correlations of these four nations to the returns of U.S. equities aren’t any different from Argentina, Turkey, Indonesia, Malaysia or the Philippines. If someone makes the point that the BRIC nations have high growth rates, they might as well be wearing a bright red neon sign on their foreheads that flashes ‘I can’t read,’ since the correlation between economic growth and stock returns is negative.”

-  commodities: In theory, a good portfolio diversifier. “But in practice, I don’t trust any of the vehicles currently available, and I’m also generally skeptical of any ‘asset class du jour,’ which commodities certainly are. The time to expose yourself to an asset class is when no one else is interested.”

Rational

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