NGPF Podcast: Burton Malkiel discusses his book, Random Walk Down Wall Street, and the index fund revolution that followed

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Sep 20, 2019
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Podcasts, Investing, Index Funds, Personal Finance

In 1973, Prof. Burton Malkiel's Random Walk Down Wall Street hit the bookshelves and the world of investing would never be the same again. Not only did Prof. Malkiel question the conventional wisdom that the "smart Wall Street money" knew best but he also made a revolutionary suggestion: give individual investors an opportunity to "buy the market." The foundation for  the index fund revolution that followed had been laid and Prof. Malkiel would play a leading role. In this NGPF podcast, he summarizes the wisdom of index fund investing and its advantages for the individual investor. He also shares his experiences as a director at Vanguard in its formative years, recalls his favorite Jack Bogle stories and describes the next investing revolution. Enjoy! 

Details:

  • 0:00~1:59 Introduction
  • 1:59~6:05 Writing A Random Walk Down Wall Street
  • 6:05~10:11 Start of index funds and the initial reactions to it
  • 10:11~12:53 From the book to working at Vanguard
  • 12:53~18:21 Legacy of Jack Bogle
  • 18:21~27:07 The early days of Vanguard and the power of index funds
  • 27:07~27:36 A word from NGPF
  • 27:36~30:51 Why is it so hard to beat the index?
  • 30:51~33:50 The monkey analogy
  • 33:50~36:41 The introduction of ETFs
  • 36:41~44:19 Debunking index fund criticisms
  • 44:19~50:30 Future of investing in robo-investing
  • 50:30~54:56 Three core principles of investing high school students should know
  • 54:56~56:24 Conclusion

Resources:

Quotes:

  • “Indexing continues to provide, not mediocre performance, but well-above-average performance.”

  • “I look at all of the criticisms. Frankly, I come out with the view that there is not enough indexing, not that there is too much. My view is that the next revolution will be in advice because right now advice is too expensive and it’s often conflicted.”

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For additional reading:

  • Index funds now hold a dominant share (over 50% of mutual fund assets); here are NGPF resources available to bring this topic to life for your students

 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.