Burton G. Malkiel* of “A Random Walk Down Wall Street,” fame has just published “The Elements of Investing” with Charles Ellis, an investment consultant. He argues that wealthy people lose out by chasing the latest, greatest investment: they should be index funds, ” the economy cars of the investing world”.
“His assertion that even the wealthiest investors should use indexes is intriguing” and this article from NYT examines “his main arguments in favor of indexing and the rebuttals from advisers who earn their livings doing the opposite”.
And no, I’ve not forgotten that I promised that I would blog on rebalancing a portfolio that uses index funds.
“Mr. Malkiel, a professor of economics at Princeton University, has long advocated index funds … He has long said that no one can consistently pick winning stocks and bonds. He argues that index funds are the best, low-cost ways to invest money you will need … This is still a strategy that is good for people of all income levels,” he said. “If I took all the mutual funds that existed in the early 1970s and asked the question how many really beat the market through 2009, you can count them on the fingers of one hand.”