Burton Malkiel quotes

Burton Malkiel is a renowned economist and author known for his expertise in investment strategies. He is the author of the bestselling book "A Random Walk Down Wall Street," which revolutionized the way investors approach the stock market. With over 1.5 million copies sold, Malkiel's book offers invaluable insights into market trends and the importance of a diversified portfolio. As a former professor at Princeton University, Malkiel's teachings continue to influence investors worldwide. Stay updated on Burton Malkiel's latest insights and recommendations for achieving financial success.

You, far more than the market or the economy, are the most important factor in your long-term investment success.

- Burton Malkiel

You should diversify over time. Don’t make all your investments at a single time.

- Burton Malkiel

You don’t care if it’s cold and raining or warm and sunny 10,000 miles away because it’s not your weather. The same detachment should apply to your 401(k) investments until you approach retirement.

- Burton Malkiel

You can save time, anxiety, and money by ignoring all market forecasts.

- Burton Malkiel

You can reduce risk by building up your investments slowly with regular, periodic investments over time. Investing regular amounts monthly or quarterly will ensure that you put some of your money to work during favorable periods, when prices are relatively low. Investment advisers call this technique 'dollar-cost averaging'. With equal dollar investments over time, the investor buys fewer shares when prices are high and more shares when prices are low. It won’t eliminate risk but it will ensure that you don’t buy your entire portfolio at temporarily inflated prices.

- Burton Malkiel

When pessimism is rampant and market prices are down is the worst time to sell out or to stop making regular investment contributions. The time to buy is when stocks are on sale.

- Burton Malkiel

What does diversification mean in practice? It means that when you invest in the stock market, you want a broadly diversified portfolio holding hundreds of stocks. For people of modest means, and even quite wealthy people, the way to accomplish that is to buy one or more low-cost equity index mutual funds. The fund pools the money from thousands of investors and buys a portfolio of hundreds of individual common stocks. The mutual fund collects all the dividends, does all the accounting, and lets mutual fund owners reinvest all cash distributions in more shares of the fund if they so wish.

- Burton Malkiel

We have believed for many years that investors will be much better off bowing to the wisdom of the market and investing in low-cost, broad-based index funds, which simply buy and hold all the stocks in the market as a whole. As more and more evidence accumulates, we have become more convinced than ever of the effectiveness of index funds. Over 10-year periods, broad stock market index funds have regularly outperformed two-thirds or more of the actively managed mutual funds.

- Burton Malkiel

To overcome the drag of expenses and taxes, an actively managed fund would have to outperform the market by 4.3 percentage points per year just to break even with index funds. The odds that you can find an actively managed mutual fund that will perform that much better than an index fund are virtually zero.

- Burton Malkiel

This simple investment strategy—indexing—has outperformed all but a handful of the thousands of equity and bond funds that are sold to the public. But you wouldn’t know this when Wall Street throws everything but the kitchen sink at you to convince you otherwise. This is the plan we use ourselves for our retirement funds, and this is the plan we urge you to follow, too.

- Burton Malkiel

There is one investment truism that, if followed, can dependably increase your investment returns: Minimize your investment costs.

- Burton Malkiel

There is no simple road to riches for you and your family. The secret to getting wealthy is that there is no secret. The only way to get rich—unless you inherit or marry a fortune or hit the lottery—is to get rich slowly. Start early and contribute as much as possible to your savings for as long as possible.

- Burton Malkiel

There are few, if any, absolute rules in saving and investing, but here’s ours: Never, never, never take on credit card debt. This rule comes as close as any to being an inviolable commandment.

- Burton Malkiel

The stock market as a whole has delivered an average rate of return of about 9½ percent over long periods of time. But that return only measures what a buy-and-hold investor would earn by putting money in at the start of the period and keeping her money invested through thick and thin.

- Burton Malkiel

The secret to success and enjoyment in so many parts of life is to know your capabilities and stay within them. Similarly, the key to success in investing is to know yourself and invest within your investing capabilities and within your emotional capacities.

- Burton Malkiel

The secret of getting rich slowly but surely is the miracle of compound interest. Albert Einstein is said to have described compound interest as the most powerful force in the universe. The concept simply involves earning a return not only on your original savings but also on the accumulated interest that you have earned on your past investment of your savings.

- Burton Malkiel

The largest, longest study of experts’ economic forecasts was performed by Philip Tetlock, a professor at the Haas Business School of the University of California–Berkeley. He studied 82,000 predictions over 25 years by 300 selected experts. Tetlock concludes that expert predictions barely beat random guesses. Ironically, the more famous the expert, the less accurate his or her predictions tended to be.

- Burton Malkiel

The cardinal rule of investing: Broad diversification is essential.

- Burton Malkiel

The buy-and-hold investor who prudently holds a diversified portfolio of low-cost index funds through thick and thin is the investor most likely to achieve her long-term investment goals.

- Burton Malkiel

The best choice for your equity investments is a fund indexed to the total world stock market. If you are truly uncomfortable investing in foreign stocks, you could choose a domestic total stock market fund. We recommend that you be diversified internationally because the United States represents less than half of the world’s economic activity and stock market capitalization. For your bonds, choose a total U.S. bond market index fund.

- Burton Malkiel

The average actively managed mutual fund charges about one percentage point of assets each year for managing the portfolio. It is the expenses charged by professional 'active' managers that drag their return well below that of the market as a whole. Low-cost index funds charge only one-tenth as much for portfolio management. Index funds do not need to hire highly paid security analysts to travel around the world in a vain attempt to find 'undervalued' securities.

- Burton Malkiel

Rebalancing will not always increase returns. But it will always reduce the riskiness of the portfolio and it will always ensure that your actual allocation stays consistent with the right allocation for your needs and temperament.

- Burton Malkiel

Psychologists also remind us that investors are far more distressed by losses than they are delighted by gains. This leads people to discard their winners if they need cash and hold onto their losers because they don’t want to recognize or admit that they made a mistake. Remember: Selling winners means paying capital gains taxes while selling losers can produce tax deductions. So if you need to sell, sell your losers. At least that way you get a tax deduction rather than an increase in your tax liability.

- Burton Malkiel

Never buy anything from someone who is out of breath.

- Burton Malkiel

Look for growth situations with low price-earnings multiples. If the growth takes place, there’s often a double bonus—both the earnings and the multiple rise, producing large gains. Beware of very high multiple stocks in which future growth is already discounted. If growth doesn’t materialize, losses are doubly heavy—both the earnings and the multiples drop.

- Burton Malkiel

Kahneman and Tversky concluded that losses were 2½ times as undesirable as equivalent gains were desirable. In other words, a dollar loss is 2½ times as painful as a dollar gain is pleasurable. People exhibit extreme loss aversion, even though a change of $100 of wealth would hardly be noticed for most people with substantial assets. We’ll see later how loss aversion leads many investors to make costly mistakes.

- Burton Malkiel

It is the definition of the time period for the investment return and the predictability of the returns that often distinguish an investment from a speculation. A speculator buys stocks hoping for a short-term gain over the next days or weeks. An investor buys stocks likely to produce a dependable future stream of cash returns and capital gains when measured over years or decades.

- Burton Malkiel

It is not hard to make money in the market. What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges. It is an obvious lesson, but one frequently ignored.

- Burton Malkiel

In crowds it is stupidity and not mother-wit that is accumulated, Gustave Le Bon noted in his 1895 classic on crowd psychology.

- Burton Malkiel

If you bought $1,000 worth of Nortel stock one year ago, it would now be worth $49. If you bought $1,000 worth of Budweiser (the beer, not the stock) one year ago, drank all the beer, and traded in the cans for the nickel deposit, you would have $79. My advice to you… start drinking heavily.

- Burton Malkiel