Now technically, this chapter summary is in itself a summary of provided by Bernstein. For the sake of summarizing the whole book, I will essentially semi-copying what he summarizes for your pleasure.
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CH. IV - The Name of the Game
- Risk & return are linked (the promise of high returns & small risk = fraud).
- To prevent panicking, one needs to learn all about financial market history.
- Gordon Equation. For stocks = growth rate + dividend yield, for bonds = interest rate - default rate
- Don’t be overconfident!
- There are no patterns.
- Avoid brokers/brokerage houses at all cost.
- Choose fund companies that are nonprofit.
- Save as much as possible.
- It’s not about getting rich but about not dying poor.
And Bernstein ends his fabulously useful book with other books we should probably tackle.
A Random Walk Down Wall Street by Burton G. Malkiel
Devil Take the Hindmost by Edward Chandellor
Your Money and Your Brain by Jason Zweig
Common Sense on Mutual Funds by Jack Bogle
Value Averaging : The Safe and Easy Strategy for Higher Investment Returns by Michael Edleson (foreword by Bernstein!)