Four Pillars of Investing

About Four Pillars of Investing

William Bernsteins 2002 book The Four Pillars of Investing became a foundational text of modern investing theory. The four pillars are theory, history, psychology, and business. Pillar one: returns come from risk. Pillar two: markets revert to mean. Pillar three: investors are their own worst enemies. Pillar four: individual companies are unpredictable, so diversify. Bernsteins work, alongside Jack Bogles and Burton Malkiels, popularized index investing. The idea that markets are mostly efficient and that stock picking is a losers game for most investors gained widespread acceptance in the 2000s. This philosophy drove trillions of dollars into passive index funds.