Bernstein argues that the successful investor must understand four essential content areas: the theory, history, psychology, and business of investing. Practically speaking, he argues that the best portfolios build on that understanding will be based on indexed mutual funds in several key asset classes.

Bernstein’s theoretical understanding of the market is complex, and any short review will not do it justice. It is fair to say, however, that he argues that the market is much smarter and more efficient than any one of its actors. Trying to beat the market consistently, year after year, is a pursuit doomed to failure. Also key to his understanding is the assessment that risk and reward go hand in hand. The latter does not come without the former.

His history of the market is to some extent a way to support the theory outlined in the book’s first section, but he’s a good storyteller, and many of the theoretical technicalities are easier to understand in historical narrative than pure mathematics. Berstein emphasizes the historical fact that the market periodically goes mad, resulting in bubbles and bursts.

Bernstein’s market psychology can be summed up by saying that the investor is his own worst enemy. It’s easy to understand “buy low, sell high.” It’s quite another thing to buy when the whole world is selling, or vice-versa. Following fads, however, is a quick way to deplete a portfolio!

It’s not unusual to hear insiders critique their own industry. Politicians, educators, athletes, academics, and many others routinely dismiss others in their fields. It was still surprising, however, to read the near utter contempt in which Bernstein holds the profession of finance. They’re all out to get your money! Stock brokers, mutual fund managers, and finance writers—he heaps scorn on them all. Which isn’t to say he doesn’t back up his scorn with lots of data. He certainly does, but in the end the people who profess to want to help you earn money are really more interested in taking it from you.

It may be trite to boil Bernstein’s investment advice down to “if you can’t beat, join ’em,” but that’s pretty close to it. Since the individual investor or fund manager is highly unlikely to beat the market consistently over the life of a decent portfolio, the best thing to do is bet with the market indices themselves. His advice is more subtle than that, of course, but playing the index is a pretty close approximation of his thesis.

Other than a long-ago reading of Peter Lynch’s Beat the Street, this is the first serious treatment of investing that I’ve read, so I’m not particularly qualified to critique Bernstein’s arguments. It is fair to say, however, that he argues clearly, backs up his assessments with understandable data, and is quick to point out the weaker or more questionable points of his thesis.