The Four Pillars of Investing with William Bernstein

Novum Organum, written in Latin and published in 1620, is a key work by Francis Bacon that critiques traditional deductive reasoning and Aristotelian logic. It proposes a new method of scientific inquiry based on inductive reasoning, emphasizing the importance of empirical observation and experimentation. The book is part of Bacon's larger, unfinished work, Instauratio Magna (The Great Instauration), and it introduces the concept of 'idols' that mislead human reasoning. Bacon's method involves meticulous observation, the removal of biases, and the systematic gathering of data to form conclusions, laying the groundwork for the modern scientific method[1][2][5].

This book provides a detailed approach to investing by emphasizing four essential pillars. The first pillar, investment theory, explains the relationship between risk and return and the importance of diversification. The second pillar, history, highlights the importance of understanding past market trends to make informed decisions. The third pillar, psychology, addresses the behavioral biases that can affect investment decisions. The fourth pillar, business, discusses the financial industry and how to navigate it effectively by minimizing costs and avoiding biased advice. Bernstein advocates for a long-term, buy-and-hold strategy using passively managed index funds and emphasizes the need to control costs and ignore most investment media[3][4][5].