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Philospher Of Risk

Author and high-powered investment adviser Peter Bernstein holds forth on low rates, rising volatility, and the surprising reliability of equities

Peter Bernstein is the financial market's leading philosopher of risk. The octogenarian Bernstein, long an adviser to institutional investors, is known to a wider audience through his books explaining how modern financial theory operates in today's capital markets and how we can use it to shape our own investments. Among his best-known are 1992's Capital Ideas, an examination of how concepts developed in academia transformed Wall Street, and Against the Gods, a sweeping history of risk and return in the financial markets, published in 1996. Capital Ideas Evolving, a follow-up to the 1992 work, is due out this month. Contributing Editor Christopher Farrell recently caught up with Bernstein. The following are excerpts from their chat:

How do you define risk?