William J. Bernstein Quotes

For the taxable investor, indexing means never having to say you're sorry.

The deeper one delves, the worse things look for actively managed funds.

Still, I figure we shouldn't' discourage fans of actively managed funds. With all their buying and selling, active investors ensure the market is reasonably efficient. That makes it possible for the rest of us to do the sensible thing, which is to index. Want to join me in this parasitic behavior? To build a well-diversified portfolio, you might stash 70 percent of your stock portfolio into a Wilshire 5000-index fund and the remaining 30 percent in an international-index fund.

Indexing is a successful approach to investing not because it's simple, but because it has performed so much better than the average active manager (the opposite of indexing), and the simplicity is just an added bonus.

[With] closet indexing....you're paying a manager a fortune and he has 85% of his assets invested parallel to the indexes. If you have such a system, you're being played for a sucker.

Most investors would be better off in an index fund.

Index investing outperforms active management year after year.

It seems to me - particularly for these retirement-plan investors, the vast majority of whom are not particularly financially sophisticated - by far the best way is to invest in index funds.

Invest as efficiently as you can, using low-cost funds that can be bought and held for a lifetime.

If you're going to buy something which compounds for 30 years at 15% per annum and you pay one 35% tax at the very end, the way that works out is that after taxes, you keep 13.3% per annum. In contrast, if you bought the same investment, but had to pay taxes every year of 35% out of the 15% that you earned, then your return would be 15% minus 35% of 15%-or only 9.75% per year compounded. So the difference there is over 3.5%. And what 3.5% does to the numbers over long holding periods like 30 years is truly eye-opening.

99% of fund managers demonstrate no evidence of skill whatsoever.

The word passive does a disservice to investors considering their options. Indexing provides an effective means of owning the market and allows investors to participate in the returns of a basket of stocks. The basket of stocks changes over time as stocks are added or removed based on its rules.

The S&P is up 343.8 percent for 10 years. That is a four-bagger. The general equity funds are up 283 percent. So it's getting worse, the deterioration by professionals is getting worse. The public would be better off in an index fund.

The scary truth is 96 percent of mutual funds fail to match the market, and the 4 percent that do, they're always changing.

The active investors will have their returns diminished by a far greater percentage than will their inactive brethren. That means that the passive group - the "know-nothings" - must win.

If you invested in a very low cost index fund - where you don't put the money in at one time, but average in over 10 years -you'll do better than 90% of people who start investing at the same time.

I'm making a case against how money managers are handling customers' money. The objective of the customer is not being met if the fund managers are diversifying their assets into hundreds of businesses. If they do this, they are typically performing close to the indexes. But that's not the way wealth is created.

Active investment is a zero-sum game. Passive managers don't play the game. They buy something resembling the market as a whole, or some segment of the market, and they don't respond to the actions of active managers.

If you're trading individual securities, you're almost certainly making a mistake. Because most professional managers can't outperform their benchmarks, and there's little reason to think that individuals can.

Low-volatility funds, which tend to smooth out performance, have been especially popular since the financial crisis. The PowerShares S&P 500 Low Volatility Fund is the oldest, begun in 2011.

I'd say the general outline of a sound investment approach is, first of all, you have to decide are you going to try to be an investor yourself? The answer for most people is probably they shouldn't try. You should put your money in index funds and not try to be a stock picker.

In investing, you get what you don't pay for. Costs matter. So intelligent investors will use low-cost index funds to build a diversified portfolio of stocks and bonds, and they will stay the course. And they won't be foolish enough to think that they can consistently outsmart the market.

I have mutual funds. I have a lot of individual stocks. I'm across the board, really well diversified.

The business side of real estate investing is fraught with risk. Unlike purchasing mutual funds or savings bonds, with real estate, you can lose money; this is one of the reasons that seasoned real estate investors caution neophytes never to get too emotional about a property and always be willing to walk away.

I like Burton Malkiel's 'A Random Walk Down Wall Street.' He comes to the same conclusion that I do - that indexing is the way. My 'Little Book of Common Sense Investing' says pretty much the same thing.