William Bernstein

EVEN AFTER BEAR markets in 2020 and 2022, investors’ appetite for stocks remains as robust as ever. But what if stocks had not just a rough year or two, but a dismal stretch that lasted more than a decade? Below is an excerpt from the second edition of my book The Four Pillars of Investing, which was published earlier this month.
In August 1979, BusinessWeek ran a cover story with the headline “The Death of Equities,” and few had trouble believing it.

YIELDS ON SAFE investments—namely Treasurys, certificates of deposit, savings accounts and money market funds—are in the basement. Yes, Series I savings bonds currently offer an annualized 7.12%. But that rate is only guaranteed for six months, plus regular purchases are limited to $10,000 a year.

“Where can I go for yield?” goes the cry heard throughout the land. Nowhere, of course. As put by money manager Raymond DeVoe Jr., “More money has been lost reaching for yield than at the point of a gun.”

Still,