Someday I’m going to write a piece called “The Perils of Brilliance.” The times I have been most wrong are the times I thought I was most right. You asked me at the beginning about the things I’ve learned from all of this, and I have to repeat: It’s humility. I think the reason I’ve been able to survive 55 years in this business is because I developed humility, at least after 1958. It’s the only way to survive—not necessarily to be the top quartile—but survival is really the name of the game we’re playing with long-term considerations. — Peter Bernstein (source)

Visualize yourself looking back when you’re 80 years old, reviewing whether you invested your money wisely. Ask, “What is it I can trust myself to do in good times and in bad?” Then write it down on one side of a single sheet of paper — when you’ll put money in, how you’ll manage it, when and why you’ll take it out. The best plan, for most of us, is to commit to buying some index funds and do nothing else. Benign neglect is the secret to long-term success.  If you change your investment policy, you are likely to be wrong; if you change it with a sense of urgency, you’re guaranteed to be wrong. — Charles Ellis (source)

Those wonderful statistics on long-term returns are what the market did, not what any single individual or fund did, or would do, if history replayed itself. In my real-world experience, investors with smaller allocations to stocks and with some anchors to windward have been the ones most likely to be the winners over the long haul. The crucial element of success is the ability to make decisions without freezing up or slamming the panic button. In bear markets, the muted volatility and the contractual safety of bonds provide the most congenial environment for arriving at rational decisions about stocks. In bull markets, the balanced portfolio may not make for lively cocktail-party conversation, but with 60 percent in stocks, your wealth will still be participating and growing.

I cannot overemphasize the importance of this last point. Few decisions in life motivated by greed ever have happy outcomes. Unless you are that rarest of birds, someone who is cool under the rapid-fire, high-pressure decision making required to maximize your returns, let others take such risks, and allow your portfolio to plug along at a slower speed. In investing, tortoises tend to win far more often than hares over the turns of the market cycle (and, as we have recently been reminded, markets still do have cycles). — Peter Bernstein (source)