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The India SENSEX Index, an index of 30 large companies listed on the Bombay Stock Exchange, is up 18% this year. The iShares MSCI India ETF (INDA) is at a new high. You run several international ETFs focused on the internet and ecommerce, including the India Internet & Ecommerce ETF (INQQ). The internet companies are the fastest growing consumer companies. The India Internet economy may grow 500% by 2030.
Persons: Burton Malkiel, Kevin Carter, Todd Sohn, There's Organizations: Bombay Stock Exchange, Edge, Chemical Bank, Princeton University, EMQQ, India, Ecommerce, Strategas Securities, Microsoft, Apple, India's Tata Group, Bajaj Financial, China ETF, White House Locations: Europe, India, China, United States
Our Heard on the Street columnists picked a portfolio by throwing darts at a newspaper’s stock pages to see how their stocks compare to professional fund managers. Photo: Josh LoockPlease don’t feed or throw objects at the fund managers. David Einhorn and Stanley Druckenmiller , both scheduled speakers at Tuesday’s Sohn Investment Conference, each have earned billions of dollars through investing. Heard on the Street’s columnists are paid peanuts by comparison, but that didn’t stop us from making monkeys out of the conference’s hedge-fund luminaries five years ago. Inspired by Prof. Burton Malkiel ’s book “A Random Walk Down Wall Street” in which he quipped 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 the experts,” our dart-picked stocks beat the Sohn Conference’s picks by a bruising 22 percentage points.
Insider's Phil Rosen asked ChatGPT to share book recommendations for someone looking to become a better investor. OpenAI's language bot listed five titles, including two with ties to Warren Buffett. ChatGPT generated a list of five books, including two that have ties to Berkshire Hathaway Chairman and CEO Warren Buffett. 'The Intelligent Investor' by Benjamin GrahamThis is the first book ChatGPT listed with ties to Buffett: Graham was one of Buffett's mentors. "These books provide a solid foundation for understanding how to invest in the stock market intelligently," ChatGPT concluded.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWhy Wall Street Legend Burton Malkiel is not a fan of ESG investingBurton Malkiel, author of 'A Random Walk Down Wall Street,' joins 'The Exchange' to discuss index investing as well as active versus passive investing.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWall Street Legend Burton Malkiel says returns over the next decade will likely be 5 to 6 percentBurton Malkiel, author of 'A Random Walk Down Wall Street,' joins 'The Exchange' to discuss index investing and active versus passive investing.
You recommended index funds 50 years ago even before index funds existed. Standard & Poor's publishes annual reports showing how actively managed funds compare with index funds. Random Walk means that the history of past stock market prices cannot be used to predict the future. Exchange Traded Funds (ETFs), most of which are tied to index funds, are continuing to rake in money. This suggests that returns over the next decade are likely to be below the 9%-10% long-run historical stock market returns.
Two classic books on long-term investing are out in new editions. In December, the Wharton School's Jeremy Siegel published a new (6th) edition of his classic, Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies. Like Malkiel, Ellis urged investors to diversify into low-cost index fund investing, which was a radical idea because there were no low-cost index funds at the time! The market eventually caught up with Malkiel, Siegel, Ellis and Bogle. Investors now had not just an index fund, they had a low-cost, tax-efficient wrapper they could buy it in.
But selling the public on just buying an index fund that mimicked the S&P 500 was a tough sell. Keep costs low by owning index funds, or at least low-cost actively managed funds. He made a case for owning a single balanced fund (65/35 stocks/bonds) and said it could capture 97% of total market returns. Having too many funds (Bogle believed no more than four or five were necessary) would result in over-diversification. The total portfolio would come to resemble an index fund, but would likely incur higher costs.
Fifty years ago this January, an economist named Burton Malkiel published a book calling for an innovation on behalf of the small investor. “What we need,” he wrote, “is a no-load, minimum-management-fee mutual fund that simply buys the hundreds of stocks making up the broad stock-market averages and does no trading from security to security in an attempt to catch the winners.”Hard as it may be to believe, index investments weren’t readily available to the average saver in those days. But Dr. Malkiel was convinced that active management couldn’t consistently beat passive index investing. And in 1976 Vanguard came out with just the kind of fund he advocated. Today the sum of indexed assets is now in the trillions, and index funds, he reports, “account for more than 40% of the total invested in mutual funds and ETFs.”
It's been eight years since the last edition of "Stocks For the Long Run." I think the key takeaway here is that in the long run stocks do tend to overcome inflation. And secondly, as you point out, not only do stocks tend to overcome inflation in the long run, they completely overcome inflation. Remember that is 4% before inflation, take that and compare it with the long run real return on stocks, which is 6.7% after inflation. You should own your home… But don't forget the real estate market and all the commercial real estate.
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