Economics and management books often present dense content in the beginning but then lose density in the second half, but Bernstein's book is different.
We will gradually unravel, in order of thought, what noise is and how to deal with it to become free from it.
Since the second half of the book does not deepen the first half but instead leads to various other cases, this book maintains focus until the end.
---From "Recommendations"

To be honest, the noise is interesting.
Noise excites us.
We brag about how we've made money with our latest picks, and we also tell you about new and popular stocks.
We like frequent trading because it's more fun.
In the long run, it is better to maintain a well-diversified portfolio for better performance.
But the reason people don't do that is because it's no fun.

---「Chapter 1.
From "Noise is after your money"

Why did I name it this way? The first letter alone reads "RANDO-M," meaning random! The stocks used in this strategy were selected completely at random.
The name is plausible, though (from "It's an absurd pun").
We randomly selected S&P 500 stocks using random numbers, bought them at the end of each year, and held them for one year.
I listed the S&P 500 stocks in order of market capitalization, generated a random number between 1 and 500, and purchased the corresponding stock.
If the random number 366 comes out, buy the stock ranked 366th in market capitalization in the S&P 500.
There is no economic logic to this strategy, it is simply random.
And yet, look at these backtest results:
The results are excellent!
---「Chapter 2.
From "Noise encourages direct investment"

Why do value investors buy stocks so early? It's probably because there's so much negative noise.
Growth investors tend to hold stocks for too long because positive news about the company's prospects encourages long-term holding.
The reason value investors are so quick to buy stocks is because there is a lot of bad news about the company.
They believe that companies with a lot of bad news can deliver earnings surprises even with a slight improvement in fundamentals.
However, the best time to buy stocks with a contrarian strategy is not when the news is overwhelmingly negative, but when there is no news at all.

---「Chapter 3.
From “Noise Manipulates Investor Expectations”

There are three advantages to reviewing your long-term investment strategy over time.
First, it prevents frequent trading due to noise.
Noise and hype can encourage frequent trading, but rebalancing your portfolio over time can help curb impulsive trading.
Second, you will keep your eyes on the goal.
When you get caught up in the noise, it's easy to lose sight of your goals, distracted by trivial incidents that will be forgotten in a few weeks.
Third, it prevents you from being distracted by noise and deviating from your existing investment strategy.
For example, if you establish an investment strategy but it doesn't produce results for a certain period of time, you may become distracted by the noise and easily replace it with a so-called "better" strategy.

---「Chapter 4.
From "Strategies for Long-Term Investors"

When diversifying investments internationally, it is more rational to buy small-cap stocks.
This is because small-cap stocks are mainly influenced by the domestic economy of the country, so they have a high diversification effect.
For example, if an American investor wants to diversify the risk of his or her American stock portfolio by investing in Japan, it would be rational to buy Japanese small-cap stocks.
This is because large Japanese companies have a large proportion of their sales in the U.S., so purchasing their stocks does not provide a significant diversification effect, whereas small Japanese companies are primarily influenced by the Japanese economy.
Even when foreign investors invest in the United States to diversify the risks of their international stock portfolios, it is rational to purchase small-cap U.S. stocks, whose performance is largely influenced by the U.S. economy.

---「Chapter 5.
From “The Impact of Noise on Diversification Investment”

In other words, choices 1 through 5 in both quizzes refer to the same asset.
Quiz 1 is just the name of the asset and Quiz 2 is just the return on the asset.
Both quizzes compare U.S. assets with emerging market assets, semiconductor stocks with food stocks, long-term Treasury bonds with short-term Treasury bonds, internet stocks with traditional retail stocks, and biotech stocks with insurance stocks.
Why don't your choices match in the two quizzes? In reality, it's rare for people taking these quizzes to choose the same choices.

---「Chapter 6.
Understand your risk tolerance

However, when the investment period is long and the investor is uncertain about the risk characteristics of the asset, the investor's time horizon can be significantly altered by noise.
In other words, the time horizon changes not because of the risk of the asset, but because investors are uncertain about the risk of the asset.
Investors who are fully aware of the risks of their assets are not surprised by losses or volatility.
And investors who know for sure the safety of their assets don't listen to the noise.
However, investors who believe their long-term investment assets are safe but are not sure of this can be greatly swayed by noise.
Investors who lack confidence are prone to succumbing to noise.

---「Chapter 7.
From "Expand Your Time Horizon"

Why don't securities analysts discuss competition and why doesn't Warren Buffett invest in tech stocks? I think it's the noise.
The more you know an industry or company, the less likely you are to be swept away by the noise.
We know our toothpaste and soda so well that we rarely fall for the hype about their manufacturers.
But because we know less about fiber optics than we do about toothpaste, it's easy to get excited when we hear the prospects of fiber optic manufacturers.
It is difficult to judge because there is no standard for comparison.

---「Chapter 8.
From "Find good stocks, not good companies"

It's a well-known fact that Wall Street analysts give more buy ratings than sell ratings.
There are several reasons for this.
A common response is that analysts are afraid to give the stock a sell rating because they fear their investment banking clients.
That's true to some extent, but the most fearful entities are institutional investors such as pension funds and asset management companies.
Institutional investors do not readily accept a decline in the stock price of a major stock when it is given a sell rating.
Because analyst evaluations are usually determined by votes from institutional investors, analysts are bound to fear institutional investors more than their clients.

---Chapter 9.
From "Find an Excellent Analyst"

Companies that had access to cheap capital thanks to the tech bubble's surge in stock prices began to change how they operated.
When a company raises capital at a PER of 50, the cost is reduced to one-tenth of that when it raises capital at a PER of 5.
By March 2000, funds with a near-zero cost of capital were pouring into the technology sector.
Because the stock was so overvalued, tech companies paid with stock instead of cash.
He acquired companies with stock, paid salaries, and even bought office furniture and coffee machines.

---「Chapter 10.
From "Cutting Out the Noise with Style Investment Strategies"

Do you prefer good companies? If the economy is slowing and profits are declining, good companies are advantageous. However, if the economy is booming and profits are rising, good companies are disadvantaged.
Remember that in the long run, stocks of bad companies outperform stocks of good companies.
If you're not confident in finding stocks of distressed companies that will yield high returns, consider investing in indirect investment products that invest in distressed or underperforming stocks.

---「Chapter 11.
Among the 12 filtering methods that extract only the key information,