Peter Bernstein (Remembrance of a mentor, 1919-2009)

"The stock market has a split personality; it gives -- and it is unforgiving. Investors can't possibly know in advance which character they are going to encounter, so the best of them prepare for both." - sage advice by Peter Bernstein

Peter L. Bernstein, the financial historian, economist, educator, and best-selling author, understood this reality better than most. "I begin every day with the mantra, 'I don't know,'" he once told an interviewer.

Of course, only someone supremely confident and insatiably curious could make such a statement. In fact, Bernstein knew quite a lot about the philosophy and psychology of risk that guides and beguiles investors. In recent years he shared these insights in a twice-monthly newsletter and in seminal books including "Against the Gods: The Remarkable Story of Risk" and "Capital Ideas: The Improbable Origins of Modern Wall Street."

Bernstein passed away on June 5th in New York; he was 90. For more than half a century, he enjoyed a front-row seat to the parade of ideas and theories that Wall Street transformed into useable -- if not always useful -- investment products. But he kept his distance from the salesmen and other promoters lining the route. As an eyewitness, Bernstein was objective, clear-minded, and scrupulously honest. As a judge, he was unafraid to question the status quo.

Above all, Bernstein put investors first. Gently, but adamantly, he advised investors to have broadly diversified portfolios, so they might stand a fighting chance to survive the market's worst. Bernstein was, as one admirer put it, a master of the "art of holding hands." Investors will always feel his reassuring grip as will I. Thank you, and Rest in Peace.

Eric Linser, CFA | June 15, 2009

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