CHICAGO, July 5 (Reuters) – Bill Bernstein is both a
neurologist and a money manager, which gives him a unique
perspective on the human impulses that he says typically
short-circuit people’s portfolio decisions. Author of six books,
including “The Four Pillars of Investing,” he says we need to
rewire our brains to do the right things at the right times.
Long a rare voice of wisdom in an increasingly bi-polar
market environment, Bernstein says the trick to smart investing
is “learning how to behave. You have to fight your worst
Here are some behavioral guidelines he suggests:
1. Be careful with advisers.
It’s perfectly understandable if you don’t want to go it
alone in investing because there’s a lot to know and only a few
people are experts. If you choose an adviser, make sure that
they are a fiduciary; they must put your interests above that of
their firm. They also shouldn’t overcharge you, meaning annual
fees of less than 1 percent.
And if they aggressively push loaded (sales commissions
charged), hedge funds, alternatives or actively managed funds?
“Make a 180-degree turn and run,” says Bernstein.
2. Buy and hold is okay – then rebalance.
With market volatility soaring in this young century, you
have to evaluate how much risk you can take. You need an
investment policy statement, which is a roadmap to what kind of
stocks/bonds/alternatives allocation is best for your time of
life, vocation and personal goals.