Quotes

Quotes by Burton Malkiel

(11)
(28) "Index funds have regularly produced rates of return exceeding those of active managers by close to 2 percentage points. Active management as a whole cannot achieve gross returns exceeding the market as a while and therefore they must, on average, underperform the indexes by the amount of these expense and transaction costs disadvantages."
2007
(35) "It's not that stock prices are capricious. It's that the news is capricious."
- A Random Walk Down Wall Street
(352) "Many of us economists who believe in efficiency do so because we view markets as amazingly successful devices for reflecting new information rapidly and, for the most part, accurately."
1973
- A Random Walk Down Wall Street (New York: W.W. Norton and Company), 246
(33) "Why does indexing outmaneuver the best minds on Wall Street? Paradoxically, it is because the best and brightest in the financial community have made the stock market very efficient. When information arises about individual stocks or the market as a whole, it gets reflected in stock prices without delay, making one stock as reasonably priced as another. Active managers who frequently shift from security to security actually detract from performance [compared to an index fund] by incurring transaction costs."
24-May-99
(29) "Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial portfolio turnover tend to reduce investment yields. Many people will find the guarantee of playing the stock-market game at par every round a very attractive one. The index fund is a sensible, serviceable method for obtaining the market's rate of return with absolutely no effort and minimal expense."
2007
(31) "We conclude that hedge funds are far riskier and provide much lower returns than is commonly supposed."
- "Hedge Funds: Risk and Return"Financial Analysts Journal November / Dec
(34) "It's like giving up a belief in Santa Claus."
- 20-20 Interview with John Stossel
(294) "I have become increasingly convinced that the past records of mutual fund managers are essentially worthless in predicting future success. The few examples of consistently superior performance occur no more frequently than can be expected by chance."
1973
- A Random Walk Down Wall Street
(30) "Index funds are...tax friendly, allowing investors to defer the realization of capital gains or avoid them completely if the shares are later bequeathed. To the extent that the long-run uptrend in stock prices continues, switching from security to security involves realizing capital gains that are subject to tax. Taxes are a crucially important financial consideration because the earlier realization of capital gains will substantially reduce net returns. Index funds do not trade from security to security and, thus, they tend to avoid capital gains taxes."
2007
(348) "The surest way to find an actively managed fund that will have top-quartile returns is to look for a fund that has bottom-quartile expenses."
2010
- “'Random Walk' author Malkiel bullish on international index funds,” Oregonian
(32) "Historically, the stock market is like a gambling casino with the odds in your favor. Over the long pull, stocks are given something like nine and a half to ten percent compounded per year. The banks have probably given you something in the order of four to five."
1992