Capital Ideas Evolving Summary

The SQUEEZE: Recently, the business of managing other people’s money has become a science. Since the early 1970s, academics have changed the way we look at risk and reward, diversification, and financial valuation. A particular school of thought, “behavioral finance,” proposes that investors base their assumptions upon psychological biases that are not rational. It is within this context that Peter L. Bernstein, an American financial historian, examines the theoretical concept of market theory related to investment pricing and index fund tracking. In “Capital Ideas Evolving,” Bernstein explores market anomalies, highlighting the behavioral financier’s failure to exploit the idea as an academic concept. Bernstein explores the frantic activities of three major financial giants, giving attention to their efforts to “beat the market” systematically using physics and computing power. Bernstein’s “Capital Ideas Evolving” is a challenging, but insightful and provocative read.


Notable Endorsement: “‘Capital Ideas Evolving’ provides us with a unique appreciation for the pervasive impact that the theory of modern finance has had on the development of our capital markets. Peter Bernstein once again has produced a masterpiece that is must reading for practitioners, educators and students of finance." —André F. Perold, Professor of Finance, Harvard Business School


Common Q’s Answered by this Book:

  • How is today’s investment world characterized?
  • What is the “investment process? How is it defined within the context of modern financial innovation?
  • How have financial theories migrated from the ivory tower to the glass tower on Wall Street?
  • How do today’s financial investment practices evolve into core ideas that form the basis of finance theory?
  • What are the leading institutional investors that use strategies based upon financial theory?


About the Author: Born January 22, 1919, Peter L. Bernstein was an American financial historian who developed and refined the “efficient-market hypothesis,” which claims that financial markets are effectively efficient based upon the information available to the current market. Bernstein popularized the concept of investment economics, making him the foremost authority on the subject. Bernstein was a native of New York City. Graduating from Harvard College with a bachelor’s degree in economics, Bernstein later became a research staff member of the Federal Reserve Bank of New York. Bernstein’s earlier titles include “Capital Ideas: The Improbable Origins of Modern Wall Street” (1992) and “The Price of Prosperity” (1962). For a bibliography listing of all of Bernstein’s works, visit


Book Vitals:

Publisher: John Wiley & Sons, Inc. (May 2009)

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