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An Index-Fund Evangelist Is Straying From His Gospel Common Sense By JAMES B. STEWART JUNE 22, 2017
An Index-Fund Evangelist Is Straying From His Gospel Common Sense By JAMES B. STEWART JUNE 22, 2017 In his classic 1973 book “A Random Walk Down Wall Street,” Burton Malkiel, a Princeton economics professor, made an assertion that was startling at the time: that “ a blindfolded monkey throwing darts at the stock listings could select a portfolio that would do just as well as one selected by the experts.” Three years later, Vanguard, the asset manager where Mr. Malkiel served on the board for 27 years, started the first passive index fund, an innovation that has swept the financial world. Now, at age 84, Mr. Malkiel has had a remarkable change of heart: Maybe the experts can beat the monkeys after all. That is, if the experts are software engineers writing sophisticated algorithms for computer-generated trading. Mr. Malkiel is chief investment adviser for Wealthfront, a pioneering automated investment manager that last week adopted a new approach it calls Advanced...
Burton Malkiel: Index Investing Beats Wasteful Active Management
Burton Malkiel: Index Investing Beats Wasteful Active Management http://www.newsmax.com/Finance/StreetTalk/Burton-Malkiel-active-passive-index-investing/2017/06/07/id/794680/ Burton Malkiel, an Princeton professor and author of the best-selling “A Random Walk Down Wall Street,” said new data add to the evidence that putting money into an index fund that tracks the stock market is better than investing in a mutual fund that picks stocks to buy and sell. “During 2016, two-thirds of active managers of large-capitalization U.S. stocks underperformed the S&P 500 large-capital index,” Malkiel wrote in The Wall Street Journal, citing data from Standard & Poor’s. “Nor were managers any better in the supposedly less efficient small-capitalization universe. Over 85 percent of small-cap managers underperformed the S&P Small-Cap Index.” Investors this year have continued to put more money into index funds than into actively managed funds. About $17 b...
