Summary of William J. Bernstein's The Investor's Manifesto

Everest Media

Description

Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 The interplay between risk and return is what makes investing so fascinating. In the past, stocks have had high returns because they were risky. But stocks are now so expensive that there are only two possibilities: they are going to fall dramatically in price and then have higher returns after that, or there will be no big fall in price and little risk but low returns thereafter.
#2 The first part of the saga of investing is the development of loan capital. From the beginning of human civilization, consumers have bought products from farmers and merchants, and all three have needed to borrow. The cost of capital was very high in those days, due to supply and demand factors.
#3 The cost of capital is the same for investors and borrowers, and it is the investor’s job to understand the risks and rewards of the consumers of his capital. Because of the risks of equity ownership, it did not develop on a large scale until relatively late in history.
#4 The English and Dutch East India Companies, around A. D. 1600, sold shares in their trading ventures, which were initially aimed at exploiting the fabulously profitable East Asian spice trade. The differences between the two companies spoke volumes about the power, wealth, and sophistication of these two nations.

Sujets

• General
• Business
• Economics
• General officer
• Personal Finance

Informations

• Publié par: Everest Media LLC
• Date de parution: 05 mai 2022
• Nombre de lectures: 0
• EAN13: 9798822502079
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Insights on William J. Bernstein's The Investor's Manifesto
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4 Insights from Chapter 5 Insights from Chapter 6 Insights from Chapter 7
Insights from Chapter 1

#1

The interplay between risk and return is what makes investing so fascinating. In the past, stocks have had high returns because they were risky. But stocks are now so expensive that there are only two possibilities: they are going to fall dramatically in price and then have higher returns after that, or there will be no big fall in price and little risk but low returns thereafter.

#2

The first part of the saga of investing is the development of loan capital. From the beginning of human civilization, consumers have bought products from farmers and merchants, and all three have needed to borrow. The cost of capital was very high in those days, due to supply and demand factors.

#3

The cost of capital is the same for investors and borrowers, and it is the investor’s job to understand the risks and rewards of the consumers of his capital. Because of the risks of equity ownership, it did not develop on a large scale until relatively late in history.

#4

The English and Dutch East India Companies, around A. D. 1600, sold shares in their trading ventures, which were initially aimed at exploiting the fabulously profitable East Asian spice trade. The differences between the two companies spoke volumes about the power, wealth, and sophistication of these two nations.

#5

Debt and equity capital exist, but markets for them do not always. The loan of a bushel of grain by one farmer to another in Mesopotamia in 2500 B. C. remained simply an agreement between these two men.

#6

The capital markets began in the fifth century A. D. , when the Roman Empire collapsed and a small group of refugees fled to Italy to seek shelter. They found it in an island group situated in an obscure lagoon in the northern Adriatic coastline.

#7

The history of the prestiti, a Venetian debt instrument, demonstrates the close relationship between risk and return. Those who purchased prestiti at high prices in the secondary market during the calmest years earned the lowest returns.

#8

In 2000, many financial professionals understood the shrinking equity risk premium. However, many of them, particularly hedge fund managers, made a fatal mistake: they reasoned that the only way to earn higher returns was to leverage those paltry premiums.

#9

The two basic forms of capital are loans and equity. The latter has a lower legal standing than the former, and it is thus riskier and requires a higher long-term return to attract investors. During times of great social, political, and military turbulence, the prices of both stocks and bonds usually decline precipitously.
Insights from Chapter 2

#1

The relationship between risk and return is inextricably linked. In almost every country where economists have studied securities returns, stocks have had higher returns than bonds.

#2