William Bernstein – Never Invest Based on the Headlines

BIO: William Bernstein is a neurologist, a co-founder of Efficient Frontier Advisors – an investment management firm, and has written several titles on finance and economic history.STORY: William lost money after investing in palladium futures under the belief that a couple of physicists had perfected the technique of cold fusion to get helium.LEARNING: Never invest based on the headlines. Something that everyone knows isn’t worth knowing. “Something that everyone knows has already been pounded into the market, so it isn’t worth knowing.”William Bernstein Guest profileWilliam Bernstein is a neurologist, a co-founder of Efficient Frontier Advisors – an investment management firm, and has written several titles on finance and economic history. He has contributed to the peer-reviewed finance literature and has written for several national publications, including Money Magazine and The Wall Street Journal.He has produced several finance titles and four volumes of history, The Birth of Plenty, A Splendid Exchange, Masters of the Word, and The Delusions of Crowds, about, respectively, the economic growth inflection of the early nineteenth century, the history of world trade, the effects of access to technology on human relations and politics, and the history and social psychology of mass manias. He was also the 2017 winner of the CFA Institute’s James R. Vertin Award.Worst investment everAbout 35 years ago, a couple of physicists announced that they had perfected the technique of cold fusion, which enables you to take hydrogen atoms, smash them together, and get helium—the same thing that goes on in a hydrogen bomb. If that were the case, then it meant there was now a source of energy that was too cheap to meter. The limiting factor in that technique was palladium, which was the catalyst. So, palladium went from $100 to $400 an ounce. William thought it would be a good idea to buy palladium futures. He lost his money in that investment.Lessons learnedNever invest based on the headlines.Something that everyone knows isn’t worth knowing.Andrew’s takeawaysDon’t be lured by the seductiveness of headlines.Actionable adviceStart slow, see how you react to the bear market, and find out your actual risk tolerance in the real world because there’s a big gap between talking to talk and walking the walk.No.1 goal for the next 12 monthsWilliam’s number one goal for the next 12 months is to read good nonfiction books and then write reviews.Parting words “Just keep buying.”William Bernstein [spp-transcript] Connect with William BernsteinWebsiteBooksAndrew’s books