SUCCESSFUL INVESTING is simple, but it’s rarely easy. Yet millions of investors, both professional and amateur, assume they know what they’re doing. “We live in this mystical state where everybody thinks they can practice finance,” notes William Bernstein, retired neurologist and author of a fistful of acclaimed finance books. “But you shouldn’t practice without understanding the science of finance.”
What science? Bernstein, whom I’ve known for more than two decades, says it has four elements: investment theory,

UNIVERSITY OF California finance professors Brad Barber and Terrance Odean published a research paper on investor behavior in early 2000. The results weren’t pretty. By their reckoning, individual investors lagged the overall market by an average of almost four percentage points a year. The culprit: the costs involved in trading individual stocks.
It isn’t just individuals who struggle with stock-picking. Professional money managers, on average, also trail behind the overall market. Over the past five years,

SOMETIMES WE DON’T give kids enough credit. Last week, my first-grader reminded me of this fact. On a trip to CVS, he was looking through the drink cooler, when he asked, “What’s Smartwater?” Before I could answer, he started with his own commentary. Seeing the price tag—which was more than double that of the regular water next to it—he wondered, “Why’s it smart? It’s just water. Is it really going to make me smart?”
This made me realize something: As consumers,

IN NOVEMBER 2006, I wrote an article for The Wall Street Journal about how to get started as an investor, even if you didn’t have much money to spare. The article was read by Charlie Cutelli, a high school teacher and coach in St. Louis, Missouri.
“At the end of the article, there was a nugget about T. Rowe Price waiving the $2,500 minimum ‘if you commit to socking away at least $50 a month through an automatic investment plan’,”

TRYING TO BEAT THE market isn’t just a risky endeavor that will almost certainly end in failure. It’s also unnecessary and, arguably, an astonishing waste of money and time.
As I grow older, the clock ticks ever more loudly in my head. I hate to be kept waiting. I keep chores to a minimum. I try to eliminate activities from my day that bring little pleasure and have no purpose. I think hard before acquiring new possessions,

MY INTEREST IN personal finance began during a road trip five years ago. Driving alone, in a desolate part of the state, my choice of radio stations was limited. Desperate to find something other than static to listen to, I punched the “seek” button and came across Dave Ramsey’s radio show.
As someone who has always tried to live within or below my means, I appreciated his “beans and rice, rice and beans” philosophy.

I LOVE THE QUESTIONS that kids ask. This week, my first grader told me he had heard the word “caricature” and wanted to know what it meant. I explained it and then we went online to see some examples. In our highly politicized culture, we didn’t have to look far to see some exaggerated cartoon depictions of various political leaders.
It occurred to me, though, that our posture toward investments isn’t all that different.

WHEN I FIRST BEGAN investing 16 years ago, I threw a bunch of investments at a wall to see what would stick. Someone I respected encouraged me to invest in master limited partnerships, so I purchased a few companies. I had no real idea what an MLP was or did. Sure, I spent some time surfing the net. But that was about it.
Fast forward one year to tax time. I had lost money and had no idea I had to file with the IRS for an extension,

THE MARKET IS ALWAYS right. It may have a different opinion tomorrow—perhaps radically different—but that doesn’t mean current prices aren’t the right ones.
Holler all you want that the stock market ought to be far lower. I do a fair amount of that myself (though the shouting is more akin to grumpy mumbling). But whether we like today’s share prices or not, they reflect the collective wisdom of all investors—and, if we want to buy or sell,

IF THIS TURNS OUT to be a major bear market, there will be a slew of articles to be written. It’s the negative correlation enjoyed by every financial writer: Even as our portfolios shrink, our potential for pontification soars.
But what if the market bounces back? It’s almost too painful to contemplate. Think of all the articles that won’t get written. If the past week’s rally continues, here are 10 stories that will have to wait for the next market downturn:
1.

WARREN BUFFETT ONCE quipped that, “You only find out who is swimming naked when the tide goes out.”
I’ve been thinking about this idea over the past two weeks, as markets around the world have given up all their year-to-date gains and then some. Since peaking on Jan. 26, the U.S. market, as measured by the S&P 500, has lost 8.8% of its value.
When the tide goes out like this, the emotional impact can be powerful—and the headlines just make it worse.

AFTER THE WILD RIDE of the past two weeks, stock investors are in search of reassurance. Will this movie have a happy ending?
If we’re venturing into the stock market, we should ideally have at least a 15-year time horizon. That gives us 10 years to make money and another five years to look for the exit. Those final five years may prove crucial if the first 10 years don’t turn out so well.

SO WE’RE ALL POORER, right? The S&P 500-stock index has fallen 10.2% over the past nine trading days. Yet all we’ve done is give back a sliver of the huge gains notched since 2009. My contention: Not only is much of the handwringing unjustified, but arguably it’s also wrongheaded.

Seasoned investors don’t get nervous when the market declines. Rather, they get excited by the prospect of buying shares at much cheaper prices. So far,

I FEAR I’M GROWING wealthy at my children’s expense. My investing life began in the late 1980s. Yes, there have been stock market bumps since then, notably the 2000-02 and 2007-09 market crashes, and even a minor hiccup over the past week. But if you look at the broad trend, it’s been three decades of rising stock market valuations.
From year-end 1987 to year-end 2017, the S&P 500’s price-earnings multiple climbed from 13.8 to 24.6,

A YOUNG GRADUATE student named Harry Markowitz wrote a paper in 1952 that sought to prove, mathematically, the old maxim “don’t put all your eggs in one basket.” Through his work, Markowitz taught investors how to diversify their investments effectively, something that was not well understood at the time.
For instance, he explained that the number of stocks you hold is far less important than the number of types of stocks you own.