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 PRAISE FOR
THE FOUR PILLARS
of INVESTING

When it comes to investing, risk control matters far more than chasing returns.
In this book Dr. Bill Bernstein will show you that you have probably been wor-
rying about the wrong risks when it comes to your investments. When you
understand the theory, history, psychology, and business of investing, you will
be far more likely to successfully reach your own financial goals, while taking as
little real risk as necessary.
—James M. Dahle, MD
founder of The White Coat Investor

Bill Bernstein possesses a rare combination of gifts: mathematician, historian,

statistician, psychologist, econometrician, and wordsmith. These and a pro-
found sense of what financial truths are misunderstood, crucial, and captivating
form the foundation for this welcome edition of The Four Pillars of Investing, a
pillar of my investment strategies course.
—Edward Tower
economics professor, Duke University

Successful investing is a mind game. You win by understanding and controlling

risk, not by plunging into the financial jungle in search of a unicorn. Your goal
is a comfortable life, a well-funded retirement, and, perhaps, legacies for your
children. This valuable book shows you how to keep your eye on the ball—
earning capital returns the intelligent way.
—Jane Bryant Quinn
author of How to Make Your Money Last:
The Indispensable Retirement Guide
In this fully revised investment classic, you can learn the lessons of a lifetime
from one of America’s most preeminent investment advisors. Writing in an
engaging and humorous style, Bernstein teaches us that successful investing
involves not only doing the right thing but also avoiding the all-too-common
blunders that can ruin any investment plan. Incorporating lessons from invest-
ment theory and history and understanding our psychological biases, this wise
and entertaining book provides a trusted source of investment advice.
—Burton G. Malkiel
economics professor, Princeton University,
and author of A Random Walk Down Wall Street,
50th Anniversary Edition, 2023

Bernstein has brilliantly distilled what is essentially four books into one here in
an enlightening tour through investing theory, history, psychology, and busi-
ness using practical examples, stories, metaphors, math, and a bit of humor. It’s
full of hard-won investing perspective and sage advice in an easily digestible
format—the kind of book you could recommend to someone new to investing
and know you did them right.
—Eric Balchunas
analyst, Bloomberg, and author of The Bogle Effect

Four Pillars has something for everybody. It’s the first investment book you
should read, and also the fiftieth. Few investment books appeal to both novices
and experts, and even fewer are a joy to read while doing so. It’s approachable
for novices, a revelation to apprentices, and instructive even for experts.
—John Rekenthaler
director of research, Morningstar
Also by William Bernstein
The Intelligent Asset Allocator
The Birth of Plenty
A Splendid Exchange
The Investor’s Manifesto
Rational Expectations
Masters of the Word
The Delusions of Crowds
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Title: The four pillars of investing : lessons for building a winning portfolio / William Bernstein.
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 CONTENTS

Foreword by Jonathan Clements ix

Acknowledgments xiii

INTRODUCTION
The Highway of Riches 1

PILLAR ONE
The Theory of Investing
CHAPTER 1
No Balls, No Blue Chips 13

CHAPTER 2
Odds and Ends 39

CHAPTER 3
The Recent History of Randomovia 55

CHAPTER 4
The Perfect Portfolio 79

CHAPTER 5
Asset Allocation for Investing Adults, Part 1 95

CHAPTER 6
Asset Allocation for Investing Adults, Part 2 101

CHAPTER 7
Asset Allocation for Investing Adults, Part 3 119

v
vi Contents

PILLAR TWO
The History of Investing
CHAPTER 8
A Brief History of Financial Time 133

CHAPTER 9
Tops 143

CHAPTER 10
Bottoms 161

PILLAR THREE
The Psychology of Investing
CHAPTER 11
Misbehavior 181

CHAPTER 12
Dealing with the Shakespeare 203

PILLAR FOUR
The Business of Investing
CHAPTER 13
Your Broker (Sorry, “Investment Advisor”)
Is Not Your Buddy 215

CHAPTER 14
The Improving Mutual Fund Scene 225

CHAPTER 15
Investment Pornography and You 239
 Contents vii

INVESTMENT STRATEGY
Assembling the Four Pillars
CHAPTER 16
How Much Do You Need to Retire? 251

CHAPTER 17
Building It, Maintaining It, and Spending It 257

CHAPTER 18
Nuts and Bolts 273

CHAPTER 19
A Final Word 303

Notes 307

Index 323
This page intentionally left blank
 FOREWORD
By Jonathan Clements

Risk Is a Many-Splendored Thing wasn’t a 1955 hit song by the Four Aces or an
award-winning movie starring William Holden and Jennifer Jones. Which is
a shame.
Bill’s book, on the other hand, is indeed about risk in all its many facets.
“What,” you cry, “are you telling me the pages ahead won’t show me how to
pick investments that’ll make me Rockefeller rich?”
Rockefeller rich might be overpromising, but rich is certainly a possibil-
ity. Here’s the thing that every investor needs to grasp: the road to investment
wealth isn’t a direct one. We won’t get there by scanning the shelves of Wall
Street merchandise and asking the obvious question, “Which of these turkeys
is going to fly?”
This, of course, is the question we all ask when we first start investing. We
scour lists of hot mutual funds and sizzling stocks. We study market trends and
try to divine which will be our friend. We use every trick in the book to find
investments that’ll make us obscenely wealthy. Along the way, mostly what we
find is that we’re embarrassingly clueless.
Many folks, alas, never learn the error of their ways, instead spending their
financial life bouncing from one failed investment scheme to the next. But
thoughtful investors eventually realize that they need to give up chasing perfor-
mance and start managing risk—and that, ironically, is when their investment
results get a whole lot better.
But which risks should we manage? This, I believe, is the true genius of Bill’s
book, which was first published two decades ago and is now widely considered
to be an investment classic. In words any educated adult can understand, Bill
describes the potholes that can derail our financial journey.
Those potholes include—and this is only a partial list—such things as
deflation, buying investments with borrowed money, miserably low long-run
stock and bond returns, confiscation of assets, chasing past performance,

ix
x Foreword

overestimating our risk tolerance, vicious stock market declines, stockbrokers,

skewness, our own gross overconfidence, rotten investment results early in
retirement, soaring inflation, and watching cable financial news.
Sound like a treacherous world? It is—and it isn’t. There are countless ways
to lose great gobs of money in the financial markets. But, as Bill explains in
the pages ahead, these losses can typically be sidestepped or made bearable
with the right mix of discipline and knowledge. That discipline and knowledge
can be obtained by studying Bill’s four pillars of money-management wisdom:
investment theory, financial history, investment psychology, and the business of
investing.
Looking to launch a prudent investment life or double-check you’re still on
the right track? You’d be hard-pressed to find a financial guide that’s wiser and
more entertaining than Bill’s The Four Pillars of Investing. But before I step out
of the way so you can delight in the pages that follow, let me highlight a few
ideas that both Bill and I embrace. As you think about the risks you’re taking
with your portfolio—and, indeed, with your broader financial life—I’d encour-
age you to pay particular attention to two key notions.
First, more things can happen than will happen. We all know the future is
uncertain. But to preserve our sanity and avoid sleepless nights, we tend to
downplay how much uncertainty exists. We assume that next year will look a
lot like this year, that we’ll go to bed in the same house, that our spouse will still
be there next to us, snoring merrily, and that we’ll get up in the morning and
head to the same job. Similarly, we assume that today’s dominant trends in the
economy and the financial markets will continue to prevail.
A brief tour through economic and market history, coupled with a quick
review of past turmoil in our own lives, suggests that such assumptions are
questionable at best. I’m not advocating that we spend our days on pins and
needles, braced for the next round of chaos. But at the same time, we shouldn’t
be too bold in our financial decisions, because such overconfidence can come
back to haunt us. Yes, by all means, maintain an unwavering commitment
to core financial principles—saving diligently, managing risk, holding down
investment costs, limiting taxes, and so on. But when it comes to our assump-
tions about the financial future, we should think like a serial philanderer and
never grow too attached to any of them.
Second, we get just one shot at making the financial journey from here to
retirement—and we can’t afford to fail. The implication: we need to think hard
about potential financial consequences. All this can be captured by one simple
question: What if I’m wrong?
For instance, what if I stick solely with US stocks, and they endure a three-
plus-decade bear market, just like Japan? What if I put off saving for retirement
 Foreword xi

until my final 20 years in the workforce, and those years are marked by layoffs
and long periods of unemployment? What if my retirement doesn’t last the 30
years that I’m expecting, but rather 40 or 50 years?
Managing risk can be tricky, not least because we’re human. We struggle
to imagine all the bad things that can happen, and we imagine that we know
things about the future that simply can’t be known. With every fiber of our
being, we resist accepting uncertainty and our own lack of prescience.
But if we do indeed accept those two realities, the benefits for our invest-
ment performance—and our own sense of well-being—can be remarkable.
Instead of thrashing around, with our investments and our mental state con-
stantly whipsawed by the financial markets, we can design a portfolio that
should fare reasonably well, no matter what the future throws at us. We can save
and invest in such a way that we know we’ll survive financially—and hopefully
thrive—in almost any economic environment. Trust me: the sense of financial
security and serenity that comes with that knowledge will leave you happier
than almost anything else that money can buy.
This page intentionally left blank
 ACKNOWLEDGMENTS

This book covers too many areas—financial theory, financial history, psychol-
ogy, and the nuts and bolts of the investment business—for anyone’s expertise
to fully cover the ground.
I’d like to thank the following individuals for their expert help: Amy
Arnott for fund flow and returns data, Christine Benz on target-date funds,
Jane Bryant Quinn on financial journalism, Ilia Dichev on the “other side” of
the dollar/time-weighted gap, Martin Fridson on high-yield bond defaults, Paul
Hyams and Jane Lockshin for background on the remarkable story of Sylvia
Bloom, Antti Ilmanen on (low) expected returns, Mike Nolan on aggregate
fund data, Wade Pfau on annuities and the life cycle, Craig Rowland on foreign
asset custody, Denise Schmandt-Besserat for image help, Dan Solin on broker-
age practices, Richard Sylla on the concept of “unimpaired capital,” and Greg
Zuckerman on D. E. Shaw and James Simons.
Mike Piper provided invaluable assistance on deferred annuities, Rick Ferri
helped me sort out multiple issues regarding ETFs, and Allan Roth responded
to my nearly incessant pestering about both these areas. Special thanks goes to
Jason Zweig, who has over the years taught me much about market history and
neuropsychology.
Jim Dahle, John Rekenthaler, Jonathan Clements, and my estimable busi-
ness partner, Susan Sharin, provided me with the benefit of their aggregate
century’s experience in the investment world and reviewed both the content and
style of this manuscript. I’ll happily take full credit for any remaining errors.
Thanks go to Steve Straus, Maki Wiering, Ingrid Case, and Pattie Amoroso
for deftly guiding the book’s production through to completion, and particu-
larly to Judith Newlin, who was not only involved in the project from the first
drafts to the final galleys, but who also graciously responded to a near continu-
ous stream of questions and issues from me.
Finally, as always, the alchemical literary skills of my dear wife, Jane,
turned the unformed blob of my rough prose, sentence by sentence, into copy
that I could unashamedly show to others. I would be lost without her.

xiii
This page intentionally left blank
 INTRODUCTION

THE HIGHWAY
OF RICHES

The year 1998 saw one of the most spectacular falls from grace in the long and
sordid history of high finance: the failure of Long-Term Capital Management
(LTCM).
The hedge fund, founded four years prior by legendary Salomon Brothers
executive John Meriwether, featured Wall Street’s best and brightest. Heading
the list were two Nobel Prize winners: Myron Scholes and Robert C. Merton,
the inventors of a groundbreaking theory of option pricing.
In the late 1990s, the firm enacted a financial tragedy worthy of Icarus.
LTCM’s blindingly complex derivatives-based trading strategy was leveraged
25 to 1 with borrowed funds; it quadrupled investors’ money over a four-year
period before it imploded.1
Over a much longer time span, an unassuming legal secretary named Sylvia
Bloom succeeded where LTCM had failed. She began her working life at a New
York law firm in 1947 and stayed there until 2014—an astounding 67 years. She
died a few years later, just shy of her ninety-ninth birthday.
The executor of Bloom’s estate, her niece Jane Lockshin, could not believe
her eyes: its assets were worth more than $9 million, consisting mainly of
common stocks. Two-thirds went to the Henry Street Settlement, the largest
bequest the storied Lower East Side social service charity had ever received. No
one, not even her late husband, a retired firefighter, was aware of her wealth.

1
2 THE FOUR PILLARS OF INVESTING

Ms. Lockshin regularly took her aunt out to lunch and, as one does for an
elderly relative, always paid the bill.
How had a secretary succeeded where the luminaries at LTCM had
failed? Bloom did so for three reasons. First, she did not invest with borrowed
money—that is, she did not employ leverage, let alone at LTCM’s stratospheric
25:1 ratio. At that level, a mere 4% fall in asset prices would bankrupt the fund.
The firm’s mathematical models, based on historical data, told LTCM that the
value of their holdings would never fall this much. The models could not have
been more wrong. The most brilliant minds in finance forgot the bald fact that
with alarming frequency the markets go barking mad and obliterate previously
well-established relationships among asset prices.
Second, Bloom had time on her side—decade upon decade of it. An apoc-
ryphal quote often attributed to Albert Einstein has it that “Compound interest
is the eighth wonder of the world. He who understands it, earns it. He who
doesn’t, pays it.” Sylvia Bloom had it, in spades.
Unlike the geniuses at LTCM, she wasn’t trying to get rich quick, but rather
to get rich slow—a much safer bet. Bloom could turn a secretary’s stream of sav-
ings into millions because her strategy allowed the magic of compound interest
to motor away for 67 long years; LTCM’s lasted barely 4 years. If compounding is
indeed the eighth wonder of the world, then the worst thing one can do is to cut
it short with dumb stuff: leverage, chasing star money managers, overestimating
risk tolerance, and watching financial cable shows, to name just a few things.
Ms. Bloom’s third advantage was her frugality. She certainly didn’t deprive
herself; she dressed well, occasionally sported a fur coat, and traveled frequently
with her husband. But when the Twin Towers came down on 9/11, the 84-year-
old secretary walked across the Brooklyn Bridge and took the bus home. Just
before she retired, a coworker and close friend, Paul Hyams, spied her climbing
out of the subway during a blinding snowstorm and asked her what she was
doing there, to which she replied, “Why, where should I be?”2 Had she lived
more lavishly, she wouldn’t have left such a large estate. One saves in order to
spend later—in Bloom’s case, on charity, not on herself.
Investing, distilled to its essence, is the conveyance of assets from your
present self to your future self. Alas, the financial highway between those two
different people is strewn with black ice and massive potholes. At the risk of
further torturing the highway metaphor, the average portfolio’s lifetime route
also winds through two or three of the financial world’s versions of treacherous
mountain passes with no guardrails—the brutal bear markets that accompany
financial panics.
Manifestly, the more slowly you drive, the more likely your assets are
to arrive safely at your destination. This is what Bloom did with her money;
 The Highway of Riches 3

LTCM’s principals, to their and their investors’ detriment, put the pedal to the
metal. Warren Buffett, as he so often does, put it most succinctly: “To make
money they didn’t have and didn’t need, they risked what they did have and did
need.”3
Simply put, Bloom succeeded because her strategy survived, and LTCM’s
didn’t because their strategy “risked out.” Finance professionals and academics
often deem a portfolio that’s light on stocks suboptimal, but a “suboptimal”
strategy that survives fear and panic, or better yet, doesn’t produce it, is prefera-
ble to an optimal one that takes on unnecessary risk.
Speaking about geopolitics, author and historian Robert Kaplan observed
that “half of everything is geography; the other half is Shakespeare.” In the same
way, one can say that investing is half math and half Shakespeare. There’s the
essential but dry, Mr. Spock/mathematical part of finance, but also its human
half: the abject fear that suffuses bear markets, our empathy and tendency to
imitate and channel the fear and greed of others, and to privilege narratives
over data and facts. Often, investing’s math and Shakespeare are diametrically
opposed, and if you don’t master the Shakespeare, all the math in the world isn’t
going to help you. In other words, the Shakespeare is not the art and poetry of
investing, but rather its Hamlet, Lear, and Macbeth—the all too human irra-
tionality as expressed in human endeavor and by the cruel mistress of history.4
How, then, does the individual investor master both the math and
Shakespeare of the craft and avoid the dumb stuff that will send their magically
compounding investment vehicle skidding off the highway of riches? By master-
ing the Four Pillars of Investing.

PILLAR ONE: INVESTMENT THEORY

If you learn nothing else from this book, it should be this: risk and return go
hand in hand. Do not expect high returns without experiencing occasional
bone-crushing losses. As too many learned to their chagrin during the internet
bubble of the late 1990s, a stock that increases by 900% one year can just as
easily fall 90% the next. There is no way of avoiding the risks that come with
common stocks, and as we’ll soon see, there is no market timing fairy who can
reliably tell you when to get out of the stock market. At any given moment,
market Cassandras abound, and in every crash, purely by chance, one or two
will time that call perfectly. But almost like clockwork, the subsequent pre-
dictions of these geniuses fare worse than a coin flip. And even if you manage
to sell at just the right time, you still have to guess right a second time about
4 THE FOUR PILLARS OF INVESTING

when to get back in. Consider: from the market peak in late 2007 until its low
in early March 2009, an investment in the S&P 500 fell by 55.2% (including
dividends). By the end of 2022, it had gained 644% from that low point.5
Such losses are the ticket price for the theater of stock market returns. John
Maynard Keynes put it best when he opined:
I do not think it is the business, far less the duty, of an
institutional or any other serious investor to be constantly
considering whether he should cut and run on a falling mar-
ket, or to feel himself open to blame if shares depreciate on his
hands. I would go much further than that. I should say that
it is from time to time the duty of the serious investor to accept
the depreciation of his holdings with equanimity and without
reproaching himself.6 (italics added)
The key word in the preceding quote is “equanimity”: the ability to bear losses
calmly and as an ordinary matter of course. One of this book’s most impor-
tant investment secrets is that the most potent elixir of financial equanimity
is a large pile of safe assets—in the case of the US investor, dull, low-yielding
Treasury securities, which allow you to hold on when things look the darkest.
They are, in this sense, in fact the highest-returning asset in your portfolio, a
secret ignored by LTCM’s principals.
Over the past two decades my thoughts about life-cycle investing, partic-
ularly pertaining to the potentially devastating combined effects of low future
stock and bond returns and sequence-of-returns risk—the possibility of an
adverse initial returns draw early in retirement—have evolved. I’ve come to real-
ize that the major determinants of stock risk are in fact the age of the investor and
her “burn rate”: how much of her portfolio gets spent each year. Consequently,
I’ve shifted the discussion of how to vary asset allocation throughout the life
cycle toward the end of the “theory” section in Chapter 6.

PILLAR TWO: INVESTMENT HISTORY

Viewed over the decades and centuries, the capital markets seem as neat and tidy
as an English aristocrat’s rose garden: stocks return more than bonds, which in
turn return more than cash, all in an approximately predictable manner. But
over periods as long as several years, the financial markets can go off the rails,
as they did during the late 1990s, when companies needed only eyeballs and
clicks—forget earnings and dividends—to command ionospheric prices, or the
 The Highway of Riches 5

early 1930s, when the shares of some companies sold, incredibly, for less than
the value of their cash on hand.
If you’ve seen the movie before, you’ll know how it ends. Were you trans-
ported back in time to a dinner party in 1999, topic A would have been the
stupendous amounts of money being made by tech investors, and the easiest
way to pick out who did and who didn’t get snookered would have been to
administer a brief quiz on the 1929 crash: How was Goldman Sachs involved?
Just who was Samuel Insull?
Finance is not a hard science like physics or engineering; rather, it’s a social
science. The difference is this: a bridge, electrical circuit, or aircraft will always
respond in exactly the same way to a given set of circumstances, while the finan-
cial markets do not, a hard fact that brought LTCM’s principals and clients to
grief. The physician, physicist, or chemist who is unaware of their discipline’s
history does not suffer greatly from the lack thereof; the investor who is unaware
of financial history is irretrievably handicapped.
The successful investor needs familiarity with two historical concepts:

1. The long-term returns and short-term volatilities of various asset

classes
2. How Mr. Market, as the legendary Benjamin Graham referred to
the pullulating mass of investors, suffers from severe bipolar disorder,
periodically swinging between extremes of euphoria and depression

PILLAR THREE:
INVESTMENT PSYCHOLOGY
Our late-Pleistocene ancestors lived in a world where hair-trigger reactions to a
dangerous environment meant life or death. Over at least the previous hundreds
of thousands of years, our species evolved lightning-fast behaviors exquisitely
adapted to that environment.
Just 300 generations after the end of the last ice age, we live in a financial
world whose risk horizon is measured in decades, not seconds. Consequently,
the investor’s greatest enemy is the Stone Age face staring back in the mirror.
Consider the skunk. Over millions of years, it evolved an effective strat-
egy for dealing with large predators with sharp teeth: turn 180 degrees and
spray. This response, alas, does not work as well for its modern descendants in a
semi-urban environment, where the biggest threat is a multiton hunk of metal
moving at 60 miles per hour.
6 THE FOUR PILLARS OF INVESTING

Humans, then, are the investing equivalents of the modern skunk.

Behavioral finance has received a lot of attention—perhaps a little too much—
of late, but it still can teach us. The successful investor learns how to avoid
the most common behavioral mistakes and to confront their own dysfunctional
investment behavior. We’ll find that unsuccessful investors:

■ Are grossly overconfident, not only about their ability to time the
market and to pick stocks and successful asset managers, but even
worse, about their risk tolerance.
■ Overpay for certain classes of stocks.
■ Trade too much, at great cost.
■ Seek out financial choices that carry low probabilities of high payoffs,
but have low long-term returns, such as IPOs and lottery tickets. One
of the quickest ways to the poorhouse is to make finding the next
Amazon.com your primary investing goal.

Learning how to deal with these foibles, among many others, pays a generous
stream of dividends.

PILLAR FOUR: THE BUSINESS

OF INVESTMENT
The prudent traveler stays away from war zones. It’s the same in finance. In fact,
you won’t go far wrong by treating the entire financial services industry as a
battlefield—certainly any stockbroker or full-service brokerage firm, any news-
letter, any advisor who purchases individual securities, and any hedge fund. It’s
not too much of an exaggeration to say that the average stockbroker services his
clients in the same way that Baby Face Nelson serviced banks.
Many financial advisors and brokers, for example, are shockingly ignorant
of the fundamentals of investment theory. The reason for this sorry state of
affairs is simple: neither the industry nor the government imposes any educa-
tional requirements on brokers or financial advisors, or even on the managers of
hedge, pension, or mutual funds, and the industry observes a moral code that
would give the tobacco industry a run for its money.
In short, you are locked in a constant zero-sum battle with this behemoth.
The good news is that with each passing year it becomes easier to tame the
beast. When I published this book’s first edition two decades ago, there was
only one safe place to shelter from it, and that was the Vanguard Group’s
 The Highway of Riches 7

family of low-cost mutual funds. In the interim, several other major investment
firms, having had their collective lunches eaten by Vanguard, decided that if
they couldn’t beat it, they would join it. They began to offer a wide range of
inexpensive mutual funds and ETFs, even Vanguard’s, on their own platforms.
Meanwhile, Vanguard has become the victim of its own success and has poorly
handled the flood of new customers. It remains a viable choice, but certainly
now not the only one.

USING THE FOUR PILLARS

The book’s last section will translate the four pillars into the mechanics of
designing and maintaining an efficient investment portfolio:

■ Choosing which mutual funds and securities to employ

■ Getting off dead center and building your portfolio
■ Maintaining and adjusting your portfolio over the long haul

* * *
I’ve been writing about finance for the past quarter century, and I’ve learned a
few things along the way. I initially approached the subject as a mathematical
exercise: collect return series on various broad classes of stocks and bonds, select
the mix that optimizes the trade-off between risk and return, then figure out
how to deploy that mix through the selection of commercially available vehicles.
My first effort, The Intelligent Asset Allocator, initially published electron-
ically in 1995, then later in hard copy by McGraw Hill, was mathematically
dense—enough so that it appealed mainly to scientists and engineers, but not
to many other readers. In the words of one of my friends, it was a “successful
failure.” A few years later, I attempted to broaden my audience with the first
edition of The Four Pillars of Investing, but only partially succeeded. My medical
colleagues—certainly a well-educated and quantitatively competent bunch—
still got cross-eyed from all the math.
Since I wrote this book’s last edition in 2002, a few things have changed.
The most spectacular was the biggest financial crisis since the Great Depression,
which roiled the world’s financial markets in 2007–2009, then echoed through
Europe a few years later, followed by a global pandemic. Ironically, the remark-
able decline in interest rates and resultant ballooning of stock markets that
followed presented investors at the end of 2021 with one of the most daunting
8 THE FOUR PILLARS OF INVESTING

challenges in the history of finance: bloated asset prices with low expected
returns, a phenomenon that was only partially attenuated by 2022’s carnage in
both stocks and bonds.
Over a quarter century of writing about finance and history, I’ve learned
that readers greatly prefer compelling narratives to data and math. With luck,
this book’s critically important data can be cut up into easily digested morsels
embedded within the book’s stories. The math cannot be so effortlessly pro-
cessed, but fortunately the book can be understood without it. In order to avoid
disappointing the minority of readers who actually enjoy all the numbers, I’ve
segregated them into “math boxes” that the general reader can ignore.
Finally, my journey through finance in the two decades since this book’s
first edition has taught me more than a few things:

■ If you can’t save, it doesn’t matter how well you invest, and an
understanding of money’s true utility determines how well you’re able
to accumulate it. If you think that money’s purpose is to buy stuff,
you are doomed to fail, since you’ll quickly find yourself trapped on
the “hedonic treadmill,” the insidious evolving hunger for a yet more
expensive car, a yet fancier house, or a yet more swish vacation. The
best money in the world, if you’ll allow me the book’s only F-bomb, is
“fuck-you money”: that used to buy time and autonomy.
■ What one might call “The Treasury Bill Theory of Investing
Equanimity”: Your ability to stay the course is directly proportional to
the amount of short-term safe assets in your portfolio, denominated
in years of living expenses. By far the biggest determinant of your
investment success is how well you respond to the worst few percent
of times, when the world around you and many of the things you had
previously taken for granted melt before your eyes. You will experience
such moments at least a few times in your investment career, and
nothing will see you through them as well as your T-bills and CDs, no
matter how low their yield.
■ When you’ve won the retirement game, stop playing it with the money
you need to pay the rent and groceries. I suggest at least 10 years’ worth
of basic expenses; 20 years or 25 years is even better. Take whatever
risk you like with what assets you have beyond this, whether they’re to
buy the odd business-class ticket and the beamer you’ve always wanted,
or to bequeath to your heirs, to your charities, and to Uncle Sam, to
whom you owe a debt of gratitude for the institutions that made the
nation and you along with it wealthy.
 The Highway of Riches 9

■ Volatility, most commonly measured as standard deviation (SD),

is a pretty good measure of an asset’s risk, but it lacks a significant
dimension: when its losses occur. A classic example is corporate bonds,
particularly lower-rated, high-yield (“junk”) bonds. A given Treasury
security and a given corporate security may have the same SD, but
the corporate is a whole lot riskier, since in a financial crisis, you’ll be
aching for liquidity to purchase stocks at the fire sale or merely to put
food on the table. At such times, corporates will get clobbered, while
Treasuries will likely rise in price.
■ The essence of investing is not maximizing returns, but rather
maximizing the odds of success, defined as funding retirement,
educational expenses, a house down payment, or endowing charities
and heirs. Maximizing returns and maximizing the odds of success are
two entirely different animals. In other words, more Sylvia Bloom, less
Merton and Scholes.

The first stop along that road to maximizing your odds of success is to
plumb financial theory for clues on how to do so.
This page intentionally left blank
 PILLAR ONE

The Theory
of Investing

I n 1798, a French expedition led by Napoleon invaded Egypt. His forces pos-
sessed only the most rudimentary maps and had almost no knowledge of the
climate or terrain; unsurprisingly, the invasion was a disaster from start to finish
when, three years later, the last French troops, dispirited, diseased, starving, and
abandoned by their leader, were mopped up by Turkish and British forces.
Sadly, most investors apply the same degree of planning to their investing,
unaware of the nature of the investment terrain and climate. Without an under-
standing of the relationship between risk and reward, how to estimate returns, the
interplay between other investors and themselves, and the mechanics of portfo-
lio design over the approximately half-century of the average investing life cycle,
investors are doomed, like Napoleon’s troops, to fail. The book’s first section will
deal, chapter by chapter, with each of these essential topics.

9781264715916_Bernstein_PASS4.indd 11 5/26/23 8:52 AM

9781264715916_Bernstein_PASS4.indd 12 5/26/23 8:52 AM
Another random document with
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closest friends.
Mansur was not at home, having gone to fetch the bride; so Amor
was the only one of the Khalifa’s sons who bade me welcome.
I was shown to my quarters in the guest-cave, and our horses
were stabled in the cave passage, as on my first visit. A first-rate
gala dinner refreshed me; the table being laden with dishes and
bowls of well-cooked food, which I relished with the good appetite of
a hungry man. The Khalifa himself came to look after me during my
meal, followed by an inquisitive mob who crouched round the cave,
darkening the entrance.
The onlookers remained silent while the meal lasted, and when it
was over were hustled out, and I ordered Hamed to post himself at
the door and forbid ingress to each and all, as I desired to change
my dress and attire myself in my festal costume—a white linen suit.
When this was done, Hamed entered, leading by the hand a
sprightly eleven-year-old lad, who addressed me in pure French, and
was introduced by Hamed as his little brother Ali, who was invited to
the festival, and had arrived with his mother and sister from Gabés,
having ridden thence on a donkey.
Ali attended a French school at Gabés, and, being a bright
intelligent lad, had soon learnt to talk fluent French. He told me that
the Khalifa had said he might come and ask if I would employ him as
interpreter.
I was much pleased with this acquisition, and during the hour
which remained before the bride’s arrival, and the consequent
commencement of festivities, occupied myself, with little Ali’s help, in
gathering information on the subject of the wedding customs in the
Matmata mountains, which enabled me to more fully understand
what I witnessed later in the day, and thus add to the knowledge I
had already acquired from both Mansur and Amor, and from several
others of the better class of mountaineers.
And here I will diverge a little to describe the ceremonies that had
preceded this last great function; and, in the meantime, my readers
may picture to themselves the crowd eagerly scanning the
mountains to espy the expected little caravan led by Mansur, who
was to bring home the bride; the guests steadily increasing in
numbers, and the bridegroom in his hiding-place, listening to the
sounds of rejoicing, and perhaps dreaming of his bride-elect; whilst
muskets were being loaded, locks examined, horses saddled,
women adorned, and the bridal chamber made ready.
On his son Mohammed’s behalf, the old Khalifa discussed the
necessary arrangements with the bride’s father, who is one of the
tribe of Uled Sliman. The marriage is then concluded, but by merely
a civil contract. Before the bridegroom can be left in peace with his
second wife, there must be much feu de joie, many songs sung,
quantities of kus-kus eaten, and many preparations made in both the
bride’s and the bridegroom’s homes. In the latter especially, where
festivities must be kept up for eight days, men and women vie with
each other in making ready for great rejoicings.
It was, as my readers may remember, eight days earlier, on the
17th October, that I had witnessed the festival of the opening day. At
first the women had been mainly occupied in collecting wheat and
barley to be ground in their small stone handmills, many people
being expected; so there was much work that had to be done, but joy
and festivity would reign in Hadeij, so the village women met in the
evenings and tried to surpass each other in improvising songs.
Whilst the chorus and joyful “Yu, yu” re-echoed in the still
evenings, the men, as we have seen, sat in groups listening to the
songs of the women, the negro comic singers, and the noisy drums
and clarionets. Now and again there would be the flash of powder
and report following report, all tokens of universal rejoicing.
The two first fête days are called “Faraja.” The third, “El Henna,” is
so named after the plant, the leaves of which stain red the nails on
the hands and feet of the women. A young bride must never be
without this beautifying preparation in her new home, and every day
she must adorn herself to please and attract her husband.
On the fourth day, “Nugera,” the women again assemble and work
and sing, busying themselves with preparations for the festival.
 At last on the fifth day, “Mahal,” the rejoicings begin. The
tribesmen and women arrive to devour enormous quantities of
various kinds of food, in addition to their well-loved “kus-kus.” The
negroes dance, sing, and earn much money, as they are never
overlooked by either host or guests.
The next morning, that is, of the sixth day, called “Follag,” the men
begin by again revelling in “kus-kus” and meat dishes; they require to
be well fed and strengthened, for in the evening after sunset they
must sally out to collect wood for fuel. They return in the early
morning, and then the women’s turn comes, when they will make
their last and greatest effort to render the bridal banquet worthy of
the occasion, and to do credit to themselves and to the Khalifa.
Many oxen and some score of sheep are slaughtered, for no festive
occasion passes without every man gorging until he is almost unfit to
move.
The seventh day, “El Kesuar,” is appointed for the presentation to
the bride of her dresses and ornaments. In this case this honourable
commission was entrusted to Amor, the Khalifa’s second son.
Soon after midday he swung himself into his saddle and led the
way, followed by some ten horsemen and a number of men on foot.
The latter led mules laden with the bridal gifts. On the way the riders
galloped in wildest “fantasia,” riding gallantly as they proceeded
towards the bride’s home on the other side of the mountains, whilst
muskets were discharged, and the smoke of the gunpowder rose
amongst the hills. The negro musicians, who accompanied them,
played on their flutes and beat their drums to warn the Uled Sliman
of the approach of the people from Hadeij.
These are expected, and a festal welcome prepared in the village;
for there also, during many days, great preparations have been
made, the tribe being proud that little Mena should go to Hadeij as
bride to the Khalifa’s son.
What a crowd there was the other evening, when, after sunset,
she stepped from the cave into the open court, shy and timid, to
allow herself to be seen by the men of her homestead, who had
gathered on the top of the bank, whence they could see down into
the deep courtyard to where the light flickered from the candle she
carried, and where her shadow wavered on the perpendicular walls.
For the last time they looked on her maiden form and beautiful
features, and could not but acknowledge that little Mena was a fitting
bride for Mohammed, son of the Khalifa of Hadeij.
The previous day the village women of the Uled Sliman sang the
live-long day—morning, noon, and night their joyful songs arose from
the caves.
There was no more work to be done. Enough food was provided
for their own tribesmen, and for the strangers who were to come and
fetch the bride.
After Amor and his men have done honour to the Uled Sliman by
the “fantasia” on horseback, they are led into a cave, the residence
of the bride’s father. Here they hand over the lovely clothes, and are
regaled with roast and stewed meats.
Before leaving, they pass into another room, where the women
have ranged themselves along the walls, each seated on her own
“senduk” (chest). On the head of every woman they place pieces of
money, intended for the negress who will adorn the bride, for she
must have encouragement and be paid in ringing coin to embellish
the bride, that she may prove attractive in the eyes of her future
husband.
Not until after sunset does Amor return to Hadeij, where again the
musket shots re-echo and the negroes dance and play, richly
rewarded by the spectators.
In the village of Uled Sliman there is also feasting: the last great
festival before the little girl leaves her home for ever, for next day she
must bid farewell to all those who have been so good to her, to
become the wife of a stranger, a man with whom she may be
scarcely acquainted, except by name. But she probably dreams of
her coming prosperity, and of him who will shortly be her husband
and master. Lucky for her if she does not dwell on the thought that
perhaps in seven, eight, or even fewer, years,—when she is faded,
old, and ugly,—she may become a beast of burden, and make way
for another and more youthful woman, whom she may gratefully
welcome as a help in her work.
But we will not overshadow a happy hour with such forebodings.
Sorrow may come early, but, possibly, never!
At dawn of the final day, called “Sjiffa” (a canopy), all were early
afoot in Hadeij. During the previous evening, and late into the night,
guests kept arriving from distant regions, and more would arrive that
day. People had been invited from all the villages in the Matmata
mountains—first and foremost, those of Uled Sliman, but also from
Ras-el Ned, Beni Sultan, Tujan, Smerten, Beni Aissa. Many
hundreds would assemble, and, with the men, women, and children
of Hadeij, between one and two thousand would be present.
In the Khalifa’s house, in all the caves, and in the tents, the guests
were fed in the early morning. Belkassim had his hands full, taking
care that everyone had his appointed place.
The meal soon being finished, the people flocked to watch
Mansur start with the canopy (Sjiffa) perched on the bridal camel. He
rode a donkey, and was accompanied by both horsemen and men
on foot, the latter firing off muskets and performing the most graceful
and joyous “fantasia,” whilst the negroes played gaily on flutes and
tambourines as they disappeared amongst the mountain paths.
But we must glance at the home of the bride, where Mansur is
expected to arrive some hours later.
The father of the bride had given a banquet to the men, women,
and children, and even to the negroes, followed by much feu de joie.
Towards midday, when the bride has been adorned, and only
waits to be fetched, the men of her tribe enter, and each lays his mite
on her head. All is for the negress who has dressed her and striven
faithfully that the result may be superlatively impressive.
But hark! The report of guns is heard in the distance, the men
from Hadeij are coming. Haste, oh, Uled Sliman, to receive them, for
the powder speaks, the clarionets shrill, and the tom-toms boom
incessantly.
 CAMEL WITH CANOPY.

The palanquin is decorated and enveloped in many coloured

draperies. Within it is placed the bride, completely veiled, the
hangings are drawn around it, so that she can neither see nor be
seen, and the joyous procession starts homewards towards Hadeij,
Mansur leading. The bride’s mother, sister, and father follow afoot,
the negress with them—all walking immediately behind the
palanquin. Before it go the negro musicians playing.
A message was brought me that the bridal procession was to be
seen coming down the mountain. We hastened out and joined the
stream of people hurrying to a great open space, where the
“fantasia” was to be held. Thither rushed also a flock of females,
enveloped in yellow and red draperies. These were the young and
half-grown girls. They kept close together, and grouped themselves
under the shade of a palm tree. The old Khalifa sat on his mule, a
clubbed stick in his hand. He, Belkassim, Amor, and some of the
men, directed the crowd to stand in long rows on either side of the
open space.
My place, on a chair under a palm tree, was pointed out to me.
Beside me were Ali and Hamed; and the Khalifa rode up now and
again and halted near me, when we would smile at each other; while
he inquired whether I was satisfied, if I was comfortably seated, and
expressed his gratification at my presence on this festal day.
Behind me rose a rampart of earth, banked up about the palm
trees; it was tightly packed with rows of men; and above this white
crowd the palms towered into the air. Farther off the crowns of other
palms and olives were visible, scattered here and there over the
valley of which the horizon is bounded by blue mountains. Clinging
to the tops of the neighbouring palm trees I saw boys, who had
climbed there for a better view.
Behind the men stood groups of women; amongst the former
were the negro musicians, and beside these were men in silken
apparel and carrying muskets, in readiness to perform the gun dance
(or powder-play).
Far to the left, on an open space between two roads, were
gathered a number of horsemen, clothed in flowing garments and
with their silver-inlaid guns held pointing upwards, prepared to spring
forward at a given moment and pass us at flying speed.
To the right, the ground rose in a gentle incline to the caves in the
bank.
It was hot at the midday hour, and the sun burnt scorchingly in the
valley, but the attention of all was strained watching for the long-
expected procession, so no one noticed the heat.
The flutes, clarionets, and drums began to play. The boys started
running across the open space, followed and driven back by
Belkassim and his assistants, and roundly abused even by the
Khalifa himself; for the space had to be kept clear for the horses to
gallop over.
 Suddenly the sound of gun-shots was heard coming from the
opposite groups. The smoke rose amongst the palm leaves, and
then I saw men beautifully dressed and wearing red caps and full
white trousers, performing the gun dance, either two or four at a
time.
Two men sprang forward from the group. The first rested his
cheek on his gun, aimed at his companion, and danced round in a
circle with little tripping steps, still steadily sighting the other, who,
opposite to him, danced in the same circle, the butt end of his gun
held in a similar position. Thus they tripped from side to side,
keeping with their guns a steady aim at each other. Then, suddenly,
a report sounded from the two guns simultaneously. The dancers
then sprang round to the staccato and nasal notes of the clarionets,
now playing in quicker time. One of the men threw his musket up in
the air to catch it again as it fell, the other whirled his whizzing round
in his hand. So they danced for a while, and then dropped into
slower measure, aiming at each other as at first, and ending by
abruptly vanishing amongst the crowd to reload their guns, whilst
others danced forward and the firing was repeated.
Two and two, aiming at each other, four men danced in a circle;
as they tripped from one side to the other, reports re-echoed and
guns whirled in the air. The sun gleamed on silver-inlaid weapons,
on the dust, the dazzling white burnouses of the men, on the women,
the palms and the olive trees, whilst the music’s monotonous nasal
clamour resounded hideously.
Then the riders to the left stirred into activity. Two men started
their horses at a gallop, forcing them along at furious speed. Like
lightning they approached, the riders leaning towards each other so
that their heads pressed cheek to cheek. Their caps seemed one red
spot, their two faces were not distinguishable the one from the other.
The rider on the right held his gun in his right hand, the other in his
left, and as they galloped they swung them to and fro and up and
down in the air. When they were quite in front of us, just outside the
group of dancers, one of them fired his gun into the ground and the
other into the air, then they parted, galloping quickly back to join their
ranks.
 Other horsemen followed in the same fashion.
In El Hamma I had noticed some riders whose horses had silken
coverings flowing over their quarters, but here I saw none.
Some thirty horsemen came forward in turn to take part in the
powder-play. The dancing group did not cease firing when the riders
passed; the flutes and clarionets wildly intermingled their din—it was
deafening. But the riders’ prowess was a beautiful sight. Some of
them had no guns and only galloped past; one carried, hanging by
his saddle, a splendid long silver-mounted sword, resembling our
own old Viking swords. This I was to see used later, during the bridal
ceremony.
After some time passed in this way, I heard the sound of other
flutes and drums. The dancers and riders redoubled their exertions,
for at last the bridal procession was on the point of arriving.
Mansur on his mule came riding into the square, and was nearly
trampled on by the “fantasia” riders.
After him followed the camel with the canopy. It was led forward
by men on foot, others supporting the palanquin on either side as it
swayed backwards and forwards.
Behind the camel came some women, and the procession was
closed by a mule laden with dresses and gifts.
Just as the camel was about to halt beneath the shade of the
palm trees in front of me, two horsemen came tearing up. They fired
their guns quite close to the canopy. Their horses reared, and I saw
their forelegs right up in the air as the guns whirled over the men’s
heads.
At short intervals other riders followed, some singly, others in
couples, or even three riding side by side. In the last case, the two
outside riders leant towards the central figure. All fired off their guns
close to the palanquin, where the bride sat ensconced. She must
have been unconscious of all save the fiendish noise made in her
honour, and the unpleasant rocking motion produced by a camel’s
action.
 THE BRIDE ESCORTED OVER THE MOUNTAINS.
(From a sketch by Knud Gamborg.)

The horsemen returned to their starting-point after each gallop.

The reel and gold canopied palanquin with its pointed top was now
just in front of me. The music continued, and the clatter of the
horses’ hoofs, and of shots fired into the ground; whilst the
spectators in their white burnouses stood almost motionless,
enjoying the beautiful sight. The sun shone brightly, and many drew
their hoods over their heads to protect themselves from its rays, and
the horses were white with foam from excitement and heat.
Behind a couple of the horsemen, a stark-naked negro lad,
bestriding a little jennet, came galloping up. He waved his arms and
gesticulated wildly with a stick, using it as a gun. Alas! the mule
stopped suddenly, sticking his forefeet into the ground. The negro
lad, with an indescribable grimace, threw his arms about its neck.
The mule reared with a bound; the lad clung fast and anxiously to its
neck as he still hung on, but was fated to fall, for the mule finally
plunged to one side, pitching the naked boy on to the sand. For the
first time I saw the spectators smile, some even laughed aloud. The
mule trotted off towards the hills, followed by the shouting lad, whose
unclothed form was covered with dust.
Such clowns often appear on the scene during a festival; the part
always being played by a negro.
The black boy must soon have caught his mule, for a few minutes
after his first performance he again rushed by to repeat his uncouth
“fantasia.”
After the palanquin had been present at the “powder-play” for
about half an hour, it was conducted towards the caves. The
“fantasia” being at an end, all the people followed the bride; some
going before, some behind the camel, and others alongside of it. The
whole ground seemed sown with a crop of burnouses.
The Khalifa rode up and gave directions to Hamed and Ali as to
where I was to be placed during the remainder of the function.
We took a short cut back to the Khalifa’s house, where I was
stationed on a chair, over the entrance gate through which the bride
would pass.
From my commanding position I looked down on the spot where
the women sat and sang to me on my first evening.
Gradually more and more men and boys arrived, till the slopes
were crowded. In front of the gate was Belkassim, the ubiquitous
Belkassim, keeping back the boys with his marshal’s stick. Amor was
there also, and a little later the Khalifa arrived on his mule. These
kept a small space clear near the gate. Pressed together close
beside it was a group of girls, mostly half-grown; in their light-
coloured clothes they were very effective. They chaffed one another
as they watched for the advent of the bride. By chance one of them
looked up and caught sight of me; in an instant she had imparted her
interesting discovery to the others, and many a pretty, roguish, or
inquisitive glance was cast on me. When I nodded to them, they
tittered, and the biggest girl withdrew the kerchief from before her
face.
 FANTASIA.
(From a sketch by Knud Gamborg.)

The Khalifa on his mule had enough to do keeping order. His

angry voice thundered not only at the boys, but also at the men who
pushed forward to have a look.
At length the musicians and the red-topped palanquin came in
sight. Gun-shots exploded all around. Four negroes appeared,
tripping along with a swaying motion from their hips, and playing, two
on drums, and two on clarionets; the music shrieking hideously over
the hill. Behind them came the palanquin, followed by the mule with
the gifts.
A short distance from the gateway they halted, and the camel was
ordered to kneel. The obstinate beast refused; supported by the
men, the palanquin swayed from left to right. Poor little Mena: you
were to be worried yet a little longer before you were to be allowed to
leave your cage.
At last the men succeeded in making the camel kneel and in
binding its foreleg, its complaining roar mingling with the rest of the
infernal din.
The negress stood beside the palanquin, and I saw that she
conversed with the captive—perhaps seeking to reassure her. She
stretched her black arm beneath the canopy to pass in a finger-ring
which Amor handed her. It was evidently a wedding present, but
whether from Amor himself or from his brother, the bridegroom, I was
unable to ascertain.
In the meanwhile, on the small clear space in front of the gate, a
carpet had been spread, and on it a mattress, on which was placed a
large flat pan filled with sand.
The men busied themselves stripping the palanquin of its canopy
of hangings and kerchiefs, and when this was done they lifted down
the closely veiled bride and set her on the ground. The negress took
her by the hand and led her within a couple of paces of the edge of
the carpet, where they remained standing. Round it some men had
stationed themselves, holding unfolded burnouses spread above
their heads, so that carpet and mattress were hidden from view.
I could not understand what these preparations could portend,
and asked Hamed. He explained, in a whisper, that some small boys
were to be circumcised, and pointed out three men each holding a
child in his arms. These children were from two to four years old: one
of them was little Hamed, the bridegroom’s son by his first wife;
another, Amor’s son Mahmud; and the third little boy was also a
relative.
The children wore red caps with tassels richly adorned with gold
and silver ornaments, and, so far as I could make out, chains hung
about their ears and necks. They were dressed in coloured coats,
below which appeared white shirts and bare legs encircled by
anklets. The two elder children cried incessantly, as if they knew
what awaited them, but the youngest smiled and looked about him.
The music in the meantime drowned the screams of the small
boys. Belkassim disappeared beneath the coverings, and one of the
small boys was carried in. After a time he was brought out, fainting,
and was taken to the cave; the other boys followed in the same
manner.
During this ceremony, which lasted at least twenty minutes, the
bride stood, closely veiled, by the carpet. Extending her right hand,
decked with gold and silver rings, she took some leaves from a basin
held by a negress and strewed them over the covering, and, whilst
the music played and the drums boomed, I saw the slender little arm
continually moving to and fro sprinkling the “henna” leaves above the
boys and men.
At last the boys were taken away, and the carpet, etc. removed.
The maiden bride had fulfilled the first of her duties—she had
blessed the ceremony. The children being now purified, in token
thereof water-coolers were broken on the ground, I observed also
that chopped eggs and a great quantity of food were distributed to
the assembled children.
The scene I had just witnessed was so full of charm, and, above
all, so impressive, that for a moment I was almost awed by its
solemnity.
At the end of the enclosure the crowd kept moving restlessly
backwards and forwards, endeavouring to see what was going on,
for the bride was about to enter her house.
 Mohammed’s first wife, closely veiled, came forward, and, taking
her rival by the hand, led her into their dwelling. On the other side of
the bride walked the negress, who for the last time, after many years
of loving care, directed her little Mena’s footsteps. On her head was
held a little mirror, whilst she herself grasped with her right hand the
hilt of a long, straight, double-edged sword, the point of which,
carried foremost, was borne by a man. “Beware! Ill befall those who
would injure this pure young woman; the sword would avenge her!”
Thus, to the screaming of the music, the young bride entered the
gate.
As soon as the door had swung-to on its creaking hinges, guns
were discharged in every direction with a deafening noise, and I was
compelled to abandon in haste my exalted seat, for the smoke nearly
choked me as the men and boys fired wildly in front of the gate.
It was then past noon, and there ensued a pause in the festivities,
the musicians requiring rest, being expected to play with renewed
vigour in the evening.
The numerous guests were fed in the dwellings and tents. Before
the meal the people collected in groups under the trees, and friends
and acquaintances conversed together. The Khalifa, who sat
surrounded by the sheikhs of the villages, requested me to seat
myself near him.
Several of these men were known to me, and I thanked them for
their hospitality; others invited me to their villages. I replied that time
was short, and I must hasten over the mountains and on to Medinin
on the plains; so on this occasion they must excuse me, for I could
not accept their invitation.
“But you have visited Judlig, Ben Aissa, Tujud, Zaraua, and many
other villages in our land. You accepted the invitations of their
sheikhs—wherefore, then, will you not also visit Beni Sultan?” said
the sheikh of that village. “Come to our ‘Ksar,’ and if you will remain
a long time you will be welcome.”
I explained that I had to go all the way to Medinin, where I was
expected, but the sheikh would take no refusal, and the Khalifa put in
his word, saying—
“You can ride to-morrow to Beni Sultan, and eat ‘kus-kus’ there;
thence you can go on to Tujan, sleep there, and next day ride
straight to Medinin.”
“But I was informed at Gabés that I could not ride a horse over the
mountain on account of the road being rough and impracticable.”
“You shall have a mule which will carry you anywhere.”
“But my horse and my Spahi’s horse, what shall I do with them?”
“I will take them to Gabés with greetings from you,” said the
Sheikh of Tujan. “I am just about to travel there to confer with the
Khalifa, and so must also the Sheikh of Beni Sultan.”
“That is all very well, but I shall not see anything of yourselves.”
“No, unfortunately we are compelled to be away, as the Khalifa
has summoned us; but the men in our villages will receive you well,
and be pleased at your visit.”
I could but consent, and thank them for their invitation.
The Sheikh of Beni Sultan was a proud, generous man, who was
said to be very wealthy.
Tujan is under the Khalifa of Gabés. This official had sent his
friend, the Khalifa of Hadeij, a fine bull and five goats as an offering
towards the feast.
For an hour I sat in conversation with the men, to whom I offered
cigarettes, the old Khalifa having a positive weakness for these, to
him rare, articles of commerce.
After sauntering for some time amongst the various groups to
greet the people, I returned to my cave. It was quite dark; I lit a
couple of candles, and occupied myself making notes of all I had
seen and heard, Mansur, Amor, and several others sitting round me,
and giving me any explanations I desired. Little Ali and his brother
were my faithful interpreters, but my work was often interrupted, so
many came to salute me, perhaps in hopes of being offered
cigarettes; and the room filled by degrees.
 At last meal-time approached, and they left me. So for once I ate
all the good things in peace. Soup, ragout of fowl, roast kid, kus-kus,
bread and honey, and dates. Only Mansur remained with me, and
overwhelmed me with assurances of his friendship, which I heartily
returned.
When I had eaten, I looked out into the courtyard. The great
vaulted chamber opposite was lighted, and was choke full of men
eating amongst the pillars. Deep silence reigned, for it is not
considered correct to be noisy when eating.
In the room next my cave were Ali, Hamed, and many others,
busy eating up the remains of my meal, and in the long cavern
passage stood our horses devouring their plentiful fodder. Under the
palms, the olive trees, and beneath the tents, all were in full
enjoyment of the wedding feast.
I stepped out and went up the hill, where the stars twinkled above
me, and all was still.
Out of the caves in the heart of the earth, streaming up from the
courtyards on every side, I saw rays of light coming from the
women’s dwellings, where they and the children also enjoyed the
banquet.
It was nearly seven o’clock, and it would not be long ere the
rejoicings recommenced in the enclosure before the gate with song
music, and dancing. But the hour was also near when the
bridegroom would present himself to his bride, accompanied only by
a few friends.
As I stood, lost in thought, Ali came hastily and pulled at my
burnous, whispering that the bridegroom had sent me a message by
one of his friends, who was seeking me.
As I returned to learn particulars, I met the messenger.
“Mohammed asks if you will accompany him, Sidi. Will you? And
shall I lead you?”
I consented without hesitation, whereupon we, the messenger, Ali,
and I, started at once on our way in the dark, going through narrow
lanes in the direction of the mountains.
All around was quiet, and became even more so as we put a
distance between ourselves and the festivities. Suddenly a dog
barked in the darkness; we were probably in the neighbourhood of a
dwelling-place. Soon after, it ceased barking; we were beyond its
domain.
The messenger, who was one of the bridegroom’s intimate
friends, took my hand and led me, as he perceived that I had some
difficulty in finding secure footing, and my little Ali walked on the
other side of me, clinging to a fold of my burnous.
When we had proceeded thus some ten minutes, I made out
some dark figures before me. These were the bridegroom and his
friends. They were squatted on the ground, but rose when I
approached.
By the faint light of the stars I distinguished an average-sized man
clothed in a red burnous, beneath which showed a white haik—could
it be, perchance, my gift? On his head he wore a red fez with a
tassel. This was evidently the bridegroom.
Addressing me he said, “If you will be my friend, as you have
become that of my father and my brothers, I shall be grateful to you,
and will beg of you to accompany me shortly to my house.”
I thanked him for his invitation, which I was delighted to accept.
The bridegroom’s toilet was evidently only just completed, for a
young Jew was still present, whose father I had visited during my
first visit to Hadeij. He was very busy arranging the folds of the
bridegroom’s costume, having doubtless acted as his valet.
We all sat down together. A pleasant scent of attar of rose was
wafted from the bridegroom’s clothing towards me, and he produced
a little phial of this, and passed it to me to use from. When he
stretched out his hand, I noticed that rings glittered on his fingers,
and that he held a pocket-handkerchief, a luxury I was not
accustomed to see hereabouts.
“Are you married?” he asked me.
 I answered, “Yes, surely.”
“How many wives have you?”
“I have only one.”
“Only one!”
I explained that in our country we were in the habit of having only
one wife. It was forbidden to us to have several. Why, he could not
comprehend, and at that moment I did not think fit to explain.
“See, Mohammed,” I said, “I will confess to you that it is not good
to have only one wife, for a man is her slave. Two wives must
doubtless be worse, for then there can be no peace; but I tell you
that, in my opinion, a man ought to have three wives, neither more
nor less. With that number he can pit two against each other, and
take refuge with the third; but in such case he must be careful to
vary.”
Mohammed understood my joke, and invited me at once to visit
Hadeij next time he should marry.
Lighting one of my cigarettes, I passed them round. When I was
about to offer them to the Jew, little Ali hastily pulled my sleeve and
whispered, “You must not offer him any; he is a Jew.” I did so
notwithstanding, and probably by this act fell low in Ali’s estimation,
so innate is the contempt for the Jewish race—“Those dogs!”
Afterwards I found it had been a great piece of stupidity on my
part to have shown civility to the Jew. He misunderstood it, and
became intrusive and impertinent, so that later in the evening I had
to set him down sharply, causing little Ali to laugh a laugh of
superiority.
Although much tempted, I did not try to converse with the
bridegroom about his home life, knowing that it would be considered
indelicate. For an Arab never asks even his best friend after his
wife’s health. The most he may say is, “How is it with your house?”
When we had waited there for about an hour, a man came
running in to say that it was time. We rose, and I was told that
amongst good friends it was always customary to carry the