William J. Bernstein

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William J. Bernstein (born 1948) is an American financial theorist and neurologist. His research is in the field of modern portfolio theory and he has published books for individual investors who wish to manage their own equity portfolios.[1] He lives in Portland, Oregon.

His bestselling books include The Birth of Plenty and A Splendid Exchange.


Bernstein is a proponent of the equity or index allocation school of thought, believing that all equity selection strategies should be focused on allocating between asset classes, rather than selecting individual stocks and bonds, or from the timing of their sales. Bernstein's first book, The Intelligent Asset Allocator, makes this case in detail; his second book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio (McGraw-Hill, 2002; ISBN 0-07-138529-0), is aimed for those less comfortable with statistical thought. It also puts asset-class returns into long-term historical perspective.

Bernstein is a proponent of modern portfolio theory, which stands in stark contrast to the view that skilled managers can succeed in picking particular investments that will outperform the market, whether through market timing, momentum investing, or finding assets whose future value have been underestimated by the market. He argues that the financial research literature shows that most return is determined by the asset allocation of the portfolio rather than by asset selection.

In 1996, Bernstein introduced Coward's Portfolio, a popular form of lazy portfolio. He explained "a rational coward might split their equity exposure equally between S&P, EAFE, US small, and foreign small stocks."[2] A contemporary implementation of the Portfolio includes 40% short-term bonds, and 15% international equity evenly divided into Europe, Pacific, and emerging markets funds.[3]

Bernstein's third book, The Birth of Plenty, is a history of the world's standard of living; it proposes four conditions that have historically been necessary for it to rise. His fourth book, A Splendid Exchange: How Trade Shaped the World, published in 2008 by Grove Atlantic, is a history of trade. In 2009 his fifth book, The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between, was published, which continues the theme of asset allocation in a more accessible way.

In 2014 his sixth book, Rational Expectations: Asset Allocation for Investing Adults, was published. It updated his earlier books on investing to cover the position after the 2007–2008 financial crisis, and the most recent research on investing, including that by Elroy Dimson, Paul Marsh, and Mike Staunton, authors of Triumph of the Optimists.

Bernstein holds a PhD in chemistry and an MD; he practiced neurology until retiring from the field.[4]



  1. ^ Burns, Scott (3 December 2000). "The Couch Potato Portfolio, Plus". Dallas Morning News. Retrieved 25 September 2011.
  2. ^ "The Coward's Portfolio -- A Modest Proposal".
  3. ^ "Lazy Portfolio: Coward's Portfolio". Bogleheads.
  4. ^ Adiga, Aravind (September 1, 2003). "The Man Who Knows Too Much". CNN Money. Retrieved July 7, 2022.

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