Highlights from William Bernstein's 'Investor's Manifesto'

William Bernstein, author of The Four Pillars of Investing, has a new book out. It’s called The Investor’s Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between.

What’s it like? Here is a summary and some highlights (in “Coles Notes” fashion):

• Much shorter and more to the point than Four Pillars
• Readers of Bogle, Swedroe, Swenson, etc. may not find too much new
• One reader called it 4 Pillars for Dummies
• More emphasis on simpler index portfolios: e.g. portfolios based on three broad-market funds
• Tilt toward small cap/value indexing not as prominent
• Seems more concerned about implementation risk and burden
• “More complex portfolios, particularly those with value and small stock emphasis, may have higher returns, but come at the cost of time and effort.”
• If young with less than $250k, recommends All World, Total Stock and Total Bond ETF; once older and richer, then slice and dice
• Less emphasis on short-term bonds, more open to total bond market
• “A perfectly simple and serviceable portfolio [for U.S. investors] might be: 42% US Total Stock Market; 18% Total Foreign Market, 40% Total Bond Market. That’s it.“
• Bernstein’s distaste for financial services industry as strong as ever:

If rigorous precautions are not taken, the financial services industry will strip investors of their wealth faster than they can say ‘Bernie Madoff …The average stock broker services his clients in the same way that Baby Face Nelson serviced banks … Unlike your doctor, lawyer, or accountant, your broker is not a ‘fiduciary’: that is, he is under no legal obligation to place your interest above his … Don’t come anywhere near a stock broker or brokerage firm; sooner rather than later you will get fleeced … Do not invest with any mutual fund family that is owned by a publicly traded parent company.