Latest news with #Malkiel
Business Insider
03-08-2025
- Business
- Business Insider
Finance legend Burt Malkiel is still working at 92. He tells BI why people should retire later.
A 92-year-old Wall Street veteran says young people should be open-minded about their career paths, and workers should retire later. In a wide-ranging interview with Business Insider, Burt Malkiel said he could have never predicted his winding career trajectory. In addition to being Wealthfront's chief investor and the author of the regularly revised "A Random Walk Down Wall Street," Malkiel is a former Princeton economics professor, investment banker, US Army lieutenant, and economic advisor to President Gerald Ford. If someone had told him that he would become an academic when he was growing up poor in Boston, he would have told them they were "absolutely crazy," he said. 'Put a little aside each week' As a young child, Malkiel planned to spend his whole career on Wall Street. "I loved the stock market even though I never had a dollar to invest," he said, adding that he paid as much attention to General Motors' stock price as he did "Ted Williams' batting average." Malkiel eventually landed a job at Smith Barney, a storied wealth manager, but, after a few years, took a leave of absence to complete an economics Ph.D. at Princeton. He abandoned plans to return to banking after he was recruited to teach at the university and to be a director at Prudential Financial. When it comes to their chosen career, young people should "be flexible and realize that you could very well change your mind," Malkiel said. "Don't close off any opportunities," he continued, adding that unexpected detours can make life "richer." Malkiel, an evangelist for passive investing via index funds, also said young people should "put a little aside each week" to invest in a diversified portfolio of "index-type securities." That's "something that you will be very happy that you did later in life," he said. Working later in life Malkiel told BI he's still "spending a fair amount of time each day working" despite being in his 90s, and he believes many older Americans without physically demanding jobs should remain in the workforce for longer. The US is "wasting an enormous amount of talent by encouraging earlier and earlier retirement," he said. Continuing to work "absolutely" contributes to a person's "feeling of worth" and being interested and engaged in "what's going on," he added. "I'm sure that the rest of us probably will feel much better by working longer, and the economy will be stronger," Malkiel said. He said the government should raise the retirement age"very gradually" and predicted that this might be necessary to avoid bankrupting the Social Security system. What keeps him awake at night Asked what kept him up at night, Malkiel chuckled and said his Cavapoo, Lucy, who was barking in the background. He described her as a "hellion" — but an "extremely sweet" one. Answering the question less literally, Malkiel said he's a "card-carrying Republican," but still "quite concerned" about Donald Trump's actions as president. He said that tariffs would make the US and its trade partners worse off, an immigration crackdown could magnify the threat of an ageing population, and Trump's "apparent hatred" for universities and efforts to withhold research funding from them will hurt the country. "I don't see how you make America great by weakening some of our greatest institutions that are the envy of the world," he added. But Malkiel said he was optimistic the US would overcome its challenges in the long run, despite "stumbles along the way."
Business Insider
31-07-2025
- Business
- Business Insider
An investing guru explains why you shouldn't cash out if you think a crash is coming
The chipmaker's share price has surged 12-fold since the start of 2023, supercharging its valuation to an unmatched $4.4 trillion. Malkiel told Business Insider that he's happy to have owned the stock as part of the S&P 500, as the idea of investing directly in Nvidia a couple of years ago — when it was trading at more than 100 times forward earnings — "would have scared the hell out of me." Malkiel, 92, the chief investor of Wealthfront, a robo-advisor with over $80 billion of client assets, warned against selling stocks with a plan to reinvest once prices retreat from all-time highs. The retired Princeton economics professor — a renowned advocate of passive investing — told BI the "biggest unforced error" that investors make is trying to time when to sell and when to get back in, adding it is "virtually impossible" to get both right. Malkiel said he understands people feel pressure to sell when stocks are dropping and they're watching their life savings shrink. "Boy, I know the emotions, I know how hard it is," he said. But cashing out is "invariably the wrong decision," he added. Malkiel argued this in a Thursday letter titled "Don't Miss the Market Rebound," cowritten with Wealthfront's investment-research boss, Alex Michalka. In the letter, Malkiel said that the 10 best days for US stocks in the last 50 years closely followed significant market declines. Five were during the global financial crisis, three were at the height of the COVID-19 pandemic, and one was after Black Monday. The final and third-best day on the list was April 9 this year, when the S&P rebounded 10% to register its largest one-day gain in 17 years. The index had fallen 12% between April 2 and April 8 in reaction to Donald Trump unveiling his tariff plans. Emotions, concentration, and memes Malkiel recommended that people invest part of every paycheck into a diversified index fund, a strategy called " dollar-cost averaging." This "set it and forget it" approach minimizes advisory and transaction fees, and helps investors avoid making hasty decisions and missing out on returns, he said. He criticized leveraged ETFs that promise a multiplied return on a stock or index. "These are just sort of pure speculative pieces of paper, and that bothers me," he said. Meme stocks, which are having a renaissance, "invariably lead you astray," Malkiel said. "Like any gambler, you can have some hits and make some money, but over the long run, you're going to lose money."
Business Insider
31-07-2025
- Business
- Business Insider
An investing guru explains why you shouldn't cash out if you think a crash is coming
As tech stocks propel the market to record highs, Wall Street legend Burt Malkiel is glad he invested in Nvidia — but only through index funds. The chipmaker's share price has surged 12-fold since the start of 2023, supercharging its valuation to an unmatched $4.4 trillion. Malkiel told Business Insider that he's happy to have owned the stock as part of the S&P 500, as the idea of investing directly in Nvidia a couple of years ago — when it was trading at more than 100 times forward earnings — "would have scared the hell out of me." Malkiel, 92, the chief investor of Wealthfront, a robo-advisor with over $80 billion of client assets, warned against selling stocks with a plan to reinvest once prices retreat from all-time highs. The retired Princeton economics professor — a renowned advocate of passive investing — told BI the "biggest unforced error" that investors make is trying to time when to sell and when to get back in, adding it is "virtually impossible" to get both right. Malkiel said he understands people feel pressure to sell when stocks are dropping and they're watching their life savings shrink. "Boy, I know the emotions, I know how hard it is," he said. But cashing out is "invariably the wrong decision," he added. Malkiel argued this in a Thursday letter titled "Don't Miss the Market Rebound," cowritten with Wealthfront's investment-research boss, Alex Michalka. In the letter, Malkiel said that the 10 best days for US stocks in the last 50 years closely followed significant market declines. Five were during the global financial crisis, three were at the height of the COVID-19 pandemic, and one was after Black Monday. The final and third-best day on the list was April 9 this year, when the S&P rebounded 10% to register its largest one-day gain in 17 years. The index had fallen 12% between April 2 and April 8 in reaction to Donald Trump unveiling his tariff plans. Emotions, concentration, and memes Malkiel recommended that people invest part of every paycheck into a diversified index fund, a strategy called " dollar-cost averaging." This "set it and forget it" approach minimizes advisory and transaction fees, and helps investors avoid making hasty decisions and missing out on returns, he said. He criticized leveraged ETFs that promise a multiplied return on a stock or index. "These are just sort of pure speculative pieces of paper, and that bothers me," he said. Meme stocks, which are having a renaissance, "invariably lead you astray," Malkiel said. "Like any gambler, you can have some hits and make some money, but over the long run, you're going to lose money." The market's long-term performance remains "damn hard to beat," he said, adding that believing you know better is "likely to be a recipe for disaster."
Mint
15-05-2025
- Business
- Mint
Master smart investing with 7 timeless lessons from ‘A Random Walk Down Wall Street' by Burton Malkiel
Burton Malkiel's, 'A Random Walk Down Wall Street' remains an enduring and must read book for both seasoned investors and new investors. First published in 1973, the book provides timeless insights and words of wisdom that still remain highly significant in today's dynamic global markets. Here are seven lessons from this book every smart investor should recall while making investment decisions: Malkiel's core thesis is that markets clearly reflect all available information. He even stated that, 'A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts.' This means it is a given that inefficiencies and shortcomings exist, that is why consistently beating the equity markets through stock selection or timing investments is something extremely difficult to do. Trying to predict short term market fluctuations and movements is a losing game. Even well trained professional fund managers struggle with timing markets. For the same Malkiel warns, 'Far more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves.' This simply means that investors should follow a calm, diligent and disciplined approach towards investing. As an investor, always try to look at the larger scheme of things and make investments with a long term vision. A well diversified portfolio helps in reducing risk without sacrificing long term returns. Malkiel suggests diversification and spreading of investments across sectors and geographies to prevent over-exposure in one asset. 'Diversification reduces risk without sacrificing expected return,' he states. Therefore, well thought out diversification of your portfolio will not only boost long term returns but it will also defend your portfolio from underperformance. Actively managed funds are often outperformed by low cost index funds that mirror market averages. This happens because of lower fees and relatively reduced trading activity. According to Malkiel, 'The investor who buys the market reaps the rewards of all companies that do well, and loses from those that don't.' Hence, the idea of investing in index funds for long term wealth creation should also be given its due consideration. To make the most of the power of compounding you should start your investment journey as early as possible. Starting early and investing on a consistent basis allow compounding to work its magic efficiently. Even small consistent contributions grow significantly over time, making patience an invaluable trait. 'Time is your friend; impulse is your enemy,' Malkiel suggests. Financial history is filled with episodes of irrational exuberance. From the dot-com bubble to the surge in speculative assets such as cryptocurrencies. Malkeil warns investors to never get caught up in market hype or the fear of missing out on a rally. 'A 'hot' tip is often a dangerous recipe for a cold sweat,' he believes, highlighting the dangers of following the herd mentality. Running behind popular stocks, trends or developments in equity markets may provide short lived excitement. Still, it often ends in regret. Malkiel on the other hand advocates staying humble in fundamentals and sticking to a calm and disciplined approach towards investing. Every single investment in equity markets carries risk, that is why understanding your own risk tolerance capacity helps in building a portfolio you can stick with during both bull markets and economic downturns. As Malkiel reminds us on similar lines to what even Warren Buffett has suggested, 'Risk comes from not knowing what you're doing.' Hence, to conclude, 'A Random Walk Down Wall Street' teaches that discipline, simplicity and composure trump thrill based short term strategies. Therefore, for anyone serious about building wealth, these timeless principles are as significant today as they were five decades ago. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult a qualified advisor before making investment decisions.
