Quotes from William J. Bernstein

It's human nature to find patterns where there are none and to find skill where luck is a more likely explanation (particularly if you're the lucky manager).

Psychologist Richard Gerrig defines a narrative as a device that temporarily mentally transports the listener or reader away from their immediate surroundings; when it ends, they return to their surroundings "somewhat changed by the journey.

Christians and Jews often taunted the Arabs about their polytheistic beliefs and their lack of an overarching creed and an afterlife. Consequently, a sense of religious inferiority arose among the desert dwellers, along with a pent-up desire for a comprehensive belief system of their own.

Although there is a limit beyond which belief will not withstand disconfirmation, it is clear that the introduction of contrary evidence can serve to increase the conviction and enthusiasm of the believer.

While religious and financial manias might seem to have little in common, the underlying forces that give them rise are identical: the desire to improve one's well-being in this life or the next. And the factors that amplify the contagion of financial and religious mass delusions are also similar: the hardwired human propensity to imitate, to fabricate and consume compelling narratives, and to seek status.

The primary function of financial capitalism is to efficiently funnel money from those with an excess of it to those who need it.

Although the Anatolians and the people of the Indus Valley knew each other's products, it is not known whether or not they met each other face-to-face; rather, they would have been separated by an unknown number of middlemen.

How do you avoid overconfidence? By telling yourself at least a few times per year, 'The market is much smarter than I will ever be.

Our urge to trade has profoundly affected the trajectory of the human species. Simply by allowing nations to concentrate on producing those things that their geographic, climatic, and intellectual endowments best enable them to do, and to exchange those goods for what is best produced elsewhere, trade has directly propelled our global prosperity.

But if you can understand the chapter's central point—that the value of a stock or a bond is simply the present value of its future income stream—then you will have a better grasp of the investment process than most professionals. As

First, we invest now so that we may spend later. In fact, this is the essence of investing: the forbearance of immediate spending in exchange for future income. Because of the mathematics of compound interest, spending even a tiny fraction on a regular basis devastates final wealth over the long haul.

In every field of human endeavor, whether it is flying, medicine, or armed combat, this reflexive/reflective split cleaves the world into amateurs and professionals, the former driven by their emotions, the latter by calculation and logic.

Disconfirmation of deeply held beliefs causes severe psychic pain; what better way of alleviating it than in the company of newly won believers? As put by Festinger, "If more and more people can be persuaded that the system of belief is correct, then clearly it must, after all, be correct.

Dramatic conquests often lead to startling serendipities: the most momentous Muslim acquisition at Talas was not territory or silk, but a commodity at once prosaic and precious. Among the Chinese prisoners taken at Talas were papermakers, who soon spread their wondrous craft into the Islamic world, and then to Europe, changing forever human culture and the course of history.

I'm amused when financial planners and academics talk about methods that predict a 40-year success rate of, say, 95%. If you think about it, this implies that our political and financial institutions will remain intact for about the next millenium (40 years divided by a failure rate of 5% equals 800 years). Considering the history of human civilization, this is a pretty heroic assumption.

Such high interest rates are prohibitive for long-term projects; at 20% per annum, the amount owed doubles in less than four years. With such a crushing future burden, no rational businessman or corporation borrows to fund a project that will not become profitable for five or ten years, as is the case with most large commercial undertakings.

Ideally, a fine painting, like a house, is neither a speculation nor an investment; it is a purchase. Its value consists solely of the pleasure and utility it provides now and in the future. The dividend the painting provides is of the non-financial variety. How

Venice earned its wealth not only from rare Oriental goods, but also from the pilgrim and crusader traffic to and from the Holy Land.

Never forget that the portfolio's the thing: Inevitably, it will contain poorly performing asset classes—there will always be at least one—but its identity will change from year to year.

Linguists had long known that Latin script—the everyday alphabet of today's Western world—evolved from Greek letters, which had themselves derived from Phoenician, as did Hebrew.6

Although you should not let your emotional responses dictate your allocation, you do need to sleep at night, and your personal preferences are an important part of your asset class structure.

most authorities believe that the proto-Semitic inscriptions the Petries first found at Serabit derived from Egyptian hieratic or hieroglyphic writing.

Although the Muslim commercial web possessed many advanced features, including bills of exchange, sophisticated lending institutions, and futures markets, no Islamic state ever established the bedrock financial institution of the modern world: a national or central bank

some have speculated that Moses was influenced by Atenism, or was perhaps even a believer. Thus, in the middle of the second millennium, the Egypt/Sinai area saw the advent of Western monotheism