A towering intellect of the market

My friend Peter Bernstein has died at 90.

I met Peter in the 1990s. I travelled a lot to New York when I worked for Bankers Trust. I was a former fund manger who'd had to hand in his ticket to become a CEO, so I still loved investment ideas and the people who wrote about them. Peter did that better than anyone.

Somehow, I came across Peter's name, and I contacted him cold. He invited me to lunch with his business partner and wife Barbara. For someone with a fascination for history, it was a great start to a relationship. We lunched at Peter's club, the Harvard Club, in a big old dining room with silver service.

Peter gave me a brief glimpse of an already full life. He'd been in John F Kennedy's class at Harvard in 1940. Keynes' General Theory was then all the buzz on campus. With US entry into the war Peter interrupted a stint at the Federal Reserve with an appointment to today's equivalent of the CIA in London during the blitz. He told of concerts at Albert Hall with buzz bombs flying overhead.

Peter was born in 1919. His grandfather made a fortune making chamois, used in the car boom that Henry Ford created. The family had a huge Manhattan apartment with many servants, but most was lost in the 1930s – so Peter had been introduced to risk early.

At lunch, Peter's friendship with writers I'd admired from a long distance – Galbraith, Heilbroner, Samuelson and Kindleberger – became gently apparent. It was like lunching with almost a century of history – boosted by Peter's enthusiasm, which showed in his favourite words, 'wow' and 'fun'.

On subsequent trips, I'd often stay with Peter and Barbara, sometimes in Santa Barbara where they summered with Barbara's brother nearby. Or in a little cottage in Brattleboro, Vermont, sleeping in a cosy basement apartment with a photo of Peter's German mother on the wall.

In Santa Barbara, there was a wonderful impressionist-style painting in my bedroom of roof tops and palms in Santa Barbara, by Peter's mother I think.

In Manhattan, in Peter and Barbara's friendly apartment, Peter's proudly achieved original needle points were hanging – in particular, a masculine one of the New York skyline. On another wall, a cherubic self portrait of Peter smiled out at me. So there was artistry in the family as well as wisdom and financial acumen.

It wasn't just Peter's positivism that inspired, but also his energy – ten books, the founding editor of the Journal of Portfolio Management in 1973, his fortnightly newsletter, all in his simple style. Boy, could he write. Five of his books came after the age of 75, which puts him in a special league of late bloomers. Barbara used to whisper to me that he deserved all the late recognition he was getting – 500,000 copies of his classic 'Against the Gods' were sold, for example, yet he had been the unsung modest hero of many. I agreed.

As Jason Zweig wrote in an article on Peter, he was like Yoda in Star Wars– but a Yoda for the financial markets and life. He was "an open minded creative thinker with a wealth of experience and an encyclopaedic knowledge of psychology and market history”, and, like Yoda, he seemed ageless. He could reach back to the 1920s but was as modern, with his computer skills, as a young nerd.

Peter was an academic or, better put, an intellectual whose expertise was markets and the people that invest in them – he wasn't an academic who'd come to Wall Street full of hubris, but an investment practitioner who'd gone to academia full of the humility that is imbued in any long term practitioner. Our thinking on markets in the past few decades has been marred by an excess of the former and a severe shortage of the later.

My relationship with Peter and Barbara faded after Bankers Trust's demise, but I saw them a few more times when my daughter Rachel and her husband Pete lived in New York. I spoke to Peter a few months back and he was working on a new book – again! He told me once his next book would be on the Corn Laws in England: a formidable challenge, typical of Peter. I encouraged him but he chose instead a history of the Erie Canal – another entre to the start of globalisation in the industrial era, but from a US rather than an English angle. Once again it was a success.

There was something very special about Peter, apart from his being the best chronicler of the markets for the last 40 years. He was modest, humble, a gentle man. He spoke about the positives of people and left out the negatives. He lifted your spirits.

When I rate people in my mental scale of qualities I have two little tests. Would you want them in the 'trenches' with you in war, and, are they on the right wave length? Some people qualify for the first, but for me only a handful make the second cut. Peter passed both with flying colours. I felt on a wonderful wave length with Peter.

Being in his presence and talking to him lifted my ideas and mental creativity to euphoric peaks. All of a sudden I was lucid. Peter's presence was a rare drug. Some have criticised Peter as a purveyor of the now much maligned 'efficient market' thesis. They haven't read him properly. He reported all, with style, but with a big caveat. It was a theory, not a fact – a useful guide. He always warned about the dangers of extrapolation and the lurking presence of variation back to the mean.

I came across a quote the other day which I think was relevant to models and theories. I would have liked to have tried it on him but didn't get the chance. It goes: all models are wrong but some are useful. He probably had heard it already, but I think he certainly would have agreed with it.

Peter's life was rich and long. Like Yoda, he had, as Jason Zweig said, 'an ageless air to him' – like a great bull market that just went on and on and on. But one day he slipped and broke his hip and soon it was all over. Bull markets end the same way, with something unexpected and out of the blue. Peter always tried to remind us that, despite our hopes, we can't know the future. He knew that, and so he lived each day to the full.

Rob Ferguson is chairman of IMF (Australia).