Peter Bernstein passed away on June 5th. He was the nation’s leading financial philosopher of risk. Bernstein was one of the wisest people I’ve ever interviewed over the years, vast in his learning, sound in his judgments, and a delight to talk to. I always lesrned something from him. He was smart and thoughtful.
Bernstin knew the history of intellectual breakthroughs when it comes to the history of risk, the mathematical insights of poet Omar Khayyam and Renaissance scholar Benvenuto Cellini to the quantitative genius of Paul Samuelson and Fisher Black. He was more than a scholar of risk as a history of ideas (and that would be enough of an achievement for almost anyone else.) He also had a ringside seat at some of the most turbulent moments in recent history, growing up during the Great Depression, living through Hitler’s rocket attacks on London, remarking on the many financial crisis of the past half-century, from the Great Inflation of the 1970s to the Great Repudiation of the ’00s. Along the way he wrote several towering books of finance, including one of my favorite, Against the Gods: The Remarkable Story of Risk.
The word risk derives from an old Italian word, risicare, which means “to dare. “To dare reminds us that the essence of risk is about making decisions or choices with unknown outcomes,” Bernstein said. “At its heart, risk management means considering the consequences of each choice we face.”
Of course, many more things can happen to you than will happen. “So you manage risks by comparing them to potential returns,” he added. “Remember, just because more things can happen than will happen doesn’t mean bad things will happen. The outcome may be better than you expect.” Or not.
The consulting firm McKinsey has an interview with Brenstein on risk here
I’ll miss him.
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