11 Burst results for "Burton Malcolm"
"burton malcolm" Discussed on Bleeding Green Nation
"The last time i looked That's pretty much philadelphia. That's this fan base. That's where people could turn around and relate to a guy like that as opposed to someone like cautioned went to go here with this. He ran away and that that that bothered guys. That bothered guys. Yeah i mean Bothers me is. It should bother people looking at it from a standpoint. I think so many people have said. I understand it to a point of like well. Why would wentz wannabe here. Because things are a mess. And i think there is a validity to that sentiment because things are a mess but Carson wentz is part of the myth created part of the mess and also like this is supposed to be. You know a leader on your team. This is supposed to be a guy. Ideally who is supposed to help things get right like if that's your standard like are say that about every player so every player should just leave the team and give up and quit. His things are tough. Like i think the way jimmy kamsky on the podcast we did for. Bgn radio about the wentz the emergency so it's like the tough guy going and carson wentz like didn't wanna be part of it like in a and i think there's between that and between what we saw Late in the year after he got benched the you know the anonymous reports that came out which we are clearly from his camper at least had the motivation to be in terms of carson wentz. Not wanting to be here. If jalen hurts continued to start down the stretch and i feel like ultimately a big reason. Why among other reasons that are isn't ear anymore. Because he lost faith in the organization as a whole not just not just how he not just doug but the whole decision making process and i think that's kinda weak and it also makes me totally not feel confident that he's going to rebound. Because how do you look at this guy Who doesn't seem to think he's part of the problem or at least maybe a at appropriate part of the problem. A the percentage that he is. And how do you expect that guy to get fixed So that's where. That's what i come back to thinking about that and also joe. I want to touch on this because something you talked about in what you said. There are reminded me of this theory. I'd kind of been crafting back. Was this article late. September and i said carson wentz is almost just like the quarterback version of chip kelly. They've never won a playoff game. They both have lacked emotional. Intelligence chip couldn't relate to players talked about whence know being criticized by his teammates on numerous occasions anonymously They both had control issues. Very much apparent you know tip overstepping his bounds in personnel whence having a lot of influence over the offense and then even personnel. In you know a lot of different factors there to their credit. They both indirectly helped the eagles win the super bowl Because they play in the game but you know obviously went said the the lead up to the position and then a lot of chip kelly players snack. Lower zachary lane johnson. Trae burton malcolm jenkins in the super bowl and big contributors. They had a major role and moving on from nicole's both times and then They both had one excellent year. That kind of convinced. A lot of people that that was the norm and not everything else was the norm. And i'll add a put a bow on this by saying i think larry At some level like getting rid of carson wentz's almost when the here's how let me start that over when the eagles got rid of chip kelly. I remember the phrase being out there. That like larry was taking his team back. And i almost feel like there's some sentiment of that with carson wentz. It's like he's taking the team back it's not carson wentz esteem anymore. It's really really feels like a tally. Roseman steam but It's the eagles in their mind. So all that is basically just rambling on. But i want to ask you I guess you kind of set it in here but the question i had written down do you think the eagles will regret shade. Trading carson wentz. At all. And i want to kind of pick that up from our conversation from week to like knowing what you know after we talked yet. Yeah and how the season devolved like. Do you feel even more confident that they won't regret the street. I don't think eagles are straight Agree with a lot of things that you're saying. I'm trying to be trying to be as fair as i can. Beat to carson wentz the big piece that i did again an affiliate voice on monday february eighth. The sentiment ran across these lines. That hurts has Leadership yes he has the intangibles the leadership to character. A guy that god's will rally around the guy that that's never got to give up and once had all the physical skills on the planet What's the saying. I think the old saying is The million dollar arm into ten cent head. And.
"burton malcolm" Discussed on The Ezra Klein Show
"The last one in my mind. One thousand nine hundred eighty. We're working off the Ronald Reagan playbook. I believe it's totally failed. I think Mr Trump is following the Ronald Reagan. Playbook I mean I would take you through. Why think he's he's a much less genial much more overtly cruel man but actually they hold exactly the same policies and so to me? They're all failed and the question is are we going to turn the page on the failure of that revolution and were. It's a new day in America and the way will know that true the way we'll measure that is not just flips but turn out that American say were. Something is so wrong here that even though I don't normally Aleve Haute I'm GonNa make sure vote this time. 'cause I realize if I don't it's going to be bad and if I do it's going to make a major difference that's the question in two thousand twenty. I WANNA a put a pin in national referendums because I want to come back to it but I wanna follow threat and something you just said because when you say that the Reagan Revolution failed in the ideas failed. I think you're an interesting messenger for that. You're somebody who began your career. Morgan Stanley Goldman Sachs. He started a hedge fund. You made a tremendous amount of money in the markets and to believe that it is to say that there is something deeply wrong in the market. So I'm curious what that background has taught you about. I guess what Bill. Now call neoliberal economics but in general about the ways in which market Stewart Stewart on serve people's needs will let me say something else just to defend what you said as because that those things are all true but they're not. I also took the giving pledge to give away the bulk of my money money while I'm alive to good causes. I've also spent ten years working against corporations and putting together coalitions of Americans to fight corporate influence in government. But that's a bit. What but I mean? You have an interesting class. Trader mental thing happened that I look when I started. I was a young guy who believed America works. You went to school in the United States. I went to school in the United States. You took fourth grade civics. IDAG fourth grade civics. They told us where the greatest democracy in the history of the world and it worked and it's the will of the people and their three parts of government and everything else. They teach in fourth grade. And I believed and I thought okay. We're not a perfect system but basically the way America works is we have two parties. They scream aiming yellowed each other. They compromise and solve a problem. They move on and then they scream and yell at each other a little more but it but it works and as I was as a process of actually actually being involved in the world I realize a gun it. It's not working. What I thought was true? So if you have a government that works you vote vote. We were talking about the government of Mexico. I'm actually interested in your view on markets. I deeply inside the one of the things that you about markets is I probably we know more about markets than these politicians. I A hundred percent believe you do i. I know and anyone who thinks that markets are just or that you can trust. CEO's and boards of directors to save. America doesn't know what they're talking about that ridiculous tell me why which part any of them. Okay look the job of a CEO. Now is to make money for his or her shareholders so prominent his and when it when people say oh they're gonNA take the money that they get from this tax cut and share it with their workers answers. There's quite a deal with their workers and this is completely unaffected by tax break so they get an extra hundred dollars. They're not gonNA take one dollar and go. Oh you know I really like Ezra I'm GonNa give them one of the hundred dollars. They're not going to say that they're gonNA say I have a deal with Israel. This is what he makes and someone just gave me a hundred dollars my my shareholders one hundred dollars. That's awesome when people said they're gonNA shared. I never believed it for a single second. Wasn't true. Didn't turn out to be true when you talk. Augmented market being just why whoever said a market was just our markets if not just are they efficient. They're efficient but not in the way that you mean. The idea of an efficient market is the idea that there are a hundred companies making widgets and a thousand people buying widgets so the company that wins is the one that basically remake widgets the best wages at the lowest price and get thousand people to buy most of their which. That's the theory the sign America. That's not what's happening when you look at these companies sir selling drugs. They have one customer. They have a patent. There's no hundred companies making that drug selling to a thousand people. Here's one company selling to one government and there's a political relationship so as we look at the increasing consolidation of America the thing they teach you eh one and one is less and less and less true and so what's really going on. These corporations are trying to change the rules so that they get as far away away from ECON one. Oh one is possible and what they've also done is they if you're if I'm working for you and I'm somebody who's just I'm I'm a middle manager. I'm cleaning staff person. I'm whatever but I'm not associated with revenue you view me now which you know what you do with hits You keep the cost allstone you employ his few widgets at the lowest possible price. And you make sure you don't think about human beings as human beings their switches their cost if I'm associated with your revenue line. Okay now you think of me as someone who's affecting your compensation and the return to the shareholders. Now you're going to go like do you need a massage at lunch. But it's completely different attitude so this whole idea about efficient markets. Let me just say this comes for you really want to know this. I really do actually so. This is super interesting. Efficient markets. Come from a book written by gun in Burton Malcolm and that theory was no one can predict stock markets. And all he meant was he. He didn't mean they were efficient. He meant that they're completely unpredictable. So no one can put together a scheme to to show. They're going to go my understanding that was that he had meant that they absorb all the the information that is available. And if you're an individual there you're not going to be at which I deeply believe about myself if you're absolutely right and but my point is raise that doesn't mean that the way that markets work is just or produce the best product at the lowest prices which what people think it means. They're taking the word efficient out of context. What's really true about markets is? There's a whole bunch of stuff that goes on about people's ability to compete billy's ability to have competitive additive advantage and separate themselves and in the political context. There's a gigantic political aspect of these corporations are absolutely controlling. So when you look at a drug cost does that got to do with the ECON- one-to-one when you look at a private hospital buying up doctor's practices. What does the cut? That's out there trying to gain monopoly. Rents when you look at insurance companies. This is not econ one on one. It's not even close to it when people talk about. He's defense contractors in the government. You really think that's ECON one on one. That is a million miles from ECON. One of their a lot of businesses on primarily built on government. Contract Chris Amon and wanting nicely. I agree with you but let me make this. Let's choose one Walmart. Do you think there's no political nickel Aspect to the minimum wage. What they pay you when you sign up and I know that you are a longtime walmart employees your remember the reader?.
"burton malcolm" Discussed on The Meb Faber Show
"It's just like it's not expected but anyway. I'm bragging about starbucks but I did want to mention dollar general which I think is a really neat business this because you know they just remind me of Walmart they run these dollar stores actually the most of the things are ten dollars under inflation and all that and they run smaller stores you know like fifty thousand square feet or so so Walmart runs these behemoths stores with you know one hundred fifty thousand skews hundred fifty thousand items on the shelves and Dollar General runs a smaller store door in in mostly in a lot of rural and and kind of more depressed communities and they've got that market like that's town. Walmart started out that way you know Sam Walton was like I don't care I want. I want people in rural areas to get a good deal a good selection of merchandise in the big companies don't want to come out here. They don't think it's worth it so I'm going to do it and then of course Walmart became this giant thing and they had to go into everywhere. They could go. You know every market they could go. Oh and dollar general getting like they're getting big enough to be that way but I just I'm fascinated by the the way they thrive in these poor communities communities and the way they you know they have this like really bare bones real estate strategy where they you know you walk into one of these places. It's like wow you didn't spend any money on the on the building digital or the fixtures or anything and it kind of takes me back to against the early days of Walmart and I think it has a similar. I think it has a similar future out of it. If they continue to run it the way they do and they're growing it quickly which which they can do at this point in their in their history on. It seems like that business model. It's duopoly or like there's only two or three of those that seem to dominate the entire market market which usually ends up being a pretty good place. If you only have a few those few those companies really competing yeah that's right and when you get into some some of the places where there are some of these tiny little communities thousand people in them. There's not room for a second one interesting so look I. I got another two pages of questions but we've already kept you for an hour or so. I WANNA I WANNA definitely ask you about a few more things but listeners. If you WanNa hear Dan gone some of his famous rants or talk about Tesla or there's about ten other things that he loves to talk talk about definitely go check out his podcast stanbury investor our but began you talk a lot about historical books and so I know you're a big time reader part of that may be you're stuck in the woods of Oregon and Washington and you know there's nothing else to do but you. I love us into you talk about books because so many times it's very specific like you're like you need to read page twenty of this and chapter eight of this. I'll give you free rein to this question. You can take one of two ways I either would love to hear about some of the most influential books that have really made an impact on you and continue do so and or you can answer both these what are some of the greatest books over the past few years that you've thought have been a particularly great. I'll take on both of those map person is the influential chill books and then you know you told me like I refer to specific chapters and pages and things and certainly chapter twenty of the intelligent investor is is something that I have like a little alert on my phone to read it once a month and I admit that I don't like sometimes the alert comes up and I dismiss it and don't read it but but most of the time I do and it's called margin of safety as the central concept of investment and that idea look. I'm only human so what we do in in the in the markets. It's an unnatural act. It's like jumping out of an airplane parachute or not. It's an unnatural act. The people who seem to be naturally good at it aren't normal and it requires. It's like lifting weights. You gotTa work out and you gotTa have some discipline and that helps asked me have disciplined and focus on the right thing and there's like. Graham has his business like principles in there and it's simple stuff know your business and you know run your business yourself or have it run by somebody you trust and a couple others. I can't believe that I can't remember for off the top my head. It's amazing basic so that's a that's been a big influential book to me. Just because I keep going back to it you know the other big one for me as an investor and analyst list and stop it was Howard marks the most important thing and I just I always chuckle about the title because Mark said he was in. He says that he gets in these meetings with clients and he winds up saying the most important thing. Is You know cycles and then the next line he'll say the most important thing is value and the most important thing is risk. The most important thing is you know whatever the next thing is and and so he said he wound up with eighteen most important things so there's like eighteen things in this book and and it just underscores how complex the process really is and I I like it when people don't try to hide hide the complexity of something and yet marks has taken each of those pieces that together constitute a complex undertaking and he's got some really good simple principles and ideas about them that can help you. It's really quite a tour to force in my opinion. It's called the most important thing by Howard marks so those two like a really huge for me. Another one I'll mention real quick is a book called the elements of investing by Charlie Ellis and Dan Burton. Malcolm and I opened this book. Maybe six or eight years ago whenever it came out initially I forget but the first chapter it's a real simple book like anybody reince for beginning investors and it was the one book that started in the right place. The first chapter was about about saving money and I realized that the discipline of saving money it it gets into everything you'll ever do. There's an investor for the rest of your career as an investor amazing the way that discipline informs you and shapes you if you do it right and and that is like a muscle you just have to keep doing it and keep working out or you're going to get flabby. Well and I think the one of the best hacks as we've learned over the past few decades with all the behavioral evidence is it's almost like you have to automate it. You know people if you have the donut and the piece of pizza and the refrigerator like you're going and eat it so you know go ahead and throw it in the trash or whatever it may be You're probably not gonNA eat in so this. This concept of automating savings things I think is so important because if you have to go write a check or transfer money to your retirement account every month look. You may forget it. You may say oh well. You know this came up around. WanNa go down to the Caribbean. You know it's easy to get on that treadmill but but you know putting that stuff on autopilot I feel like it. It causes people to behave so much better and we often say this. You know we say look we spent so much time on this podcast so much time writing papers and books about the investment inside but I honestly believe the decision to save and invest in the first place trumps everything else down the line because you get at that time of compounding and bigger amounts of money so yeah. I think that's a Biggie yeah and what I do. I do definitely believe in the automation too. I do that but I also anytime I think of it. I will literally put like fifty or one hundred dollars. I'll transfer out from my checking checking account to wherever I want it in different accounts to constitute savings for me and I realized it's it's it's not about the amount it's it's about the constantly doing it. It's like practicing musical instrument. It really is that important just to do it and do it and do it and do it well. It's it's hard for people to think so far under the future but we were talking about this on an old podcast Paul Paul Mary men where we said look if you can compound for fifty years and and you know sorry for the the old no hairs in the audience but maybe you can t think about this in regards your children and grandchildren but fifty fifty years at ten percent which is obviously incredibly good returns but that's a that's a hundred x return so you know thinking about hey. I'M GONNA put a thousand Bucks Fox. You know go spend that on a a new TV this year or fifty years from now. That's worth a hundred grand. That's a really interesting contract on how to think about it but the challenge of course is avoiding the temptation of getting her claws on it and spending it in the meantime right all right so we got. We got three great classic books in pieces. Feel free to touch on any more that come to mind or anything particularly interesting. You've been reading lately yeah so lately lately. There's a couple books that are really interesting to me. One of them is by a guy named Immanuel German who is is a Wall Street quantities. A physicist who went to Wall Street made a career and he's got this book models behaving badly which just it's it's a really deep. The guy is a really deep thinker. It's got it's got stuff from the Bible in there and it's got his experience with being raised used in South Africa so his experience with apartheid and that's a model isn't it that's a model of for society and and he just discusses is models from a point of view that we can all understand and but he does treat the topic specifically financial models but he gives you a context that is just rich and beautiful in the book is only like two hundred pages and he just he bowled me over with what he packed into those two hundred pages and how much fun it was to read so that's definitely a good one but I think the one that really really got me. This year was it's called the formula by Albert Laszlo Bara Bossy and the subtitle is the universal laws of success so borrow Bossy is a network scientist. He actually started out as a physicist two two and he became a network scientist and basically he he studies the ways that human beings interact and he's got a a couple of other previous books. One of them is called links. You know how everything is linked and that's how everything is connected and that's sort of an obvious way to think about networks and another one is called bursts which it's all about hidden patterns basically amount to more more network science you know just in our daily he lives were but the formula is about these what he calls the universal laws of success and it sounds like cheesy self help book but I promise you it's not it's amazing. It's like I said Laszlo. Are you telling me that you know. This stuff is like the law of gravity because it gets it. Oh you know you're talking about the law of succeeding and he tells the story of various you know sports figures and artists and people who succeeded and and he says yeah. I genuinely believe that. This stuff is not..
"burton malcolm" Discussed on Masters in Business
"What I can say is that the dispersion between the pricing of value and growth stocks. Reached in the last year or two extremes that we almost never see not quite to the extreme of the tech bubble. But about as significant as we see, that's perhaps an indicator that the cycles about to turn. And then, of course, we've seen a lot of market turmoil suggestive of an inflection point. So I, I wouldn't confidently predict that the cycle has turned value is going to go on a along tear of outperformance. But the environment does seem to suggest that, that's a distinct possibility. And, and last smart beta question, some folks have said the advantage of smart beta, and fundamental indexing. Is that the outperformance comes from taking additional risk Burton, Malcolm, other folks like that of said that? What, what are your thoughts on that? I find the debate about whether factor returns, and of course, the most the largest, most persistent and longest discovered factor is value or. Generated by risk or generated by behavior and inefficiency the truth of the matter is, it's both. They're intertwined. There's feedback the a real world is much more interesting than these dry, theories and models. And I guess I would say there is a risk component, and we should be thankful that there's a risk component to the value factor returned because it means that it can't be in won't be arbitrage away. So let's talk a little bit about institutional and retail investors. You've worked with both. You've alluded that there are some differences, previously. What is the most consequential difference between how institutional investors operate and how mom and pop retail investors think institutional investors operate in a? A governance structure in.
"burton malcolm" Discussed on The Tim Ferriss Show
"He was a bachelor, and they sort of range things, so that he meets people when he comes back, and it passed around the community that this bachelor's coming back, and he ended up meeting my mom, they met by both families coming together in a living room and talking. And they met. Each other the families decided it was a good thing. Seven days later. They were married. My mom got on a plane and flew to the US for the first time, and they've been married for about forty years now amazing. We have so much to talk about, and so much to catch up on so many questions that I want to ask. But I thought we could we could start and certainly will will bounce all over the place. But you said before we started recording because you have a new edition of your book, I will teach you to be rich noticeably lacking. A photograph of you barefoot on the cover. And you have some incredible quotes testimonials should say, including from Burton, Malcolm, author of random, walk down Wall Street, but you said to me because I haven't read the introduction that you either should have started it or you did start with I was right. Could you explain? Please explain. Okay. So this book, I will teach originally came out in March two thousand nine and let's just dispense with the idea. The name sounds like a scam. We both know we write books that sound like scans. But they're not. I mean it's like a running and I've just learned to embrace it guys. It's the weird sounding book, but it's actually good advice. And in the first addition, I talked about long-term, investing, low cost investing thinking about really automating your money and using psychology against yourself for positive results. Now, if you had followed that advice it turns out that when the book came out in March two thousand nine that was the absolute bottom of the recession crazy enough. Now, I don't believe in market, timing. But if you had used the advice in the book, this ten dollar book, you would be set for life, so I started off by saying, well, I was right. Let me tell you all the things that would have happened. If you'd use this book, I did get a couple of things wrong, I had to change one of. Man, the biggest mistake of my life was putting in interest rates in the book. Okay. Do you remember what was me putting doing market testing with magazines? Okay. So I put in back, then savings rates five percent. Remember, these banks were paying five percent. So I was like five percent. Here's the math, and then like the minute the book came out. They dropped to four three two and then point five percent. Now, the point of it is you don't make money on your savings account. Anyway, we're talking about twenty one dollars a year or a month versus four dollars like it's relevant. It's tiny details..
"burton malcolm" Discussed on The Blog of Author Tim Ferriss
"Optimal altitude, I can flat out for a half mile before hand starts shaking. No, it a student. I must have a knitting organism living Bishop over metal interest. Two. This upset is brought to you by linked in jobs. Hiring can be hard can be super super expensive and painful if you get it wrong, I've certainly had that experience multiple times. I'm not eager to repeat it. So I try to do as much vetting on the front end as possible, one of the Brahms's that the best talent very often already has a job. So what do you do? Well, it's not as easy as just posting job board. With more qualified candidates than ever, you need to solution helps you find the right people. Not just those who are desperate for jobs are searching for jobs and linked in jobs actually helps you to do that, with more than five hundred million active members Lincoln attracts, people everyday wanna make connections, other careers. And discover new job opportunities also ninety percent of Lincoln users are open to new opportunities, but not actively scanning job boards Lincoln jobs gives you access to an entirely different demographic, a different profile than anywhere else, and they use knowledge of both hard and soft skills to match you with. Who best fit the role that you post post a job today at Lincoln dot com slash Tim and get fifty dollars off your first job post again, that's Lincoln dot com slash Tim. Check it out terms and conditions. Do apply. Boy, and girls Tim Ferriss, welcome to another upset of the Tim Ferriss show it, my job to interviewing dissect world class performers and all around funny, people, lack my guest today, and I'm going, butchers name, even though I've known him for thousand years, Romy satie. That's our MIT SETI, author of the New York Times bestseller. I will teach you to be rich has become a financial grew to millions of readers in their twenties, thirties, and forties, gonna make sure, I don't disqualify myself soon. He started his website. I will teach you to be rich dot com as a Stanford undergrad in two thousand four any now hosts more than a million readers per month on his blog newsletter and social media remote and his team of dozens of employee's build premium digital products about personal finance, Auburn ship psychology careers and personal development for top performers. The I w t community includes one million monthly readers four hundred thousand plus news letter subscribers and thirty five. Thousand premium customers. He is written about personal finance for the Wall Street Journal, the near times and has been interviewed on dozens of media outlets, including NPR, ABC news, CNBC, and the Tim Ferriss show. Welcome back to the show. Thanks a lot. It's great to be here, and you can find remain if you want to say Hello. Ask a question or yell at him on Twitter at Ramiz are a MIT and Instagram at remained. So I thought we could start with the floor, mats maybe tell me about your dad and the floor mats. You wanna start there? Yeah. All right. So you know how you grow up and you discover that your parents did things a little differently, and you just it was normal, I thought it was normal to take five days to buy a car. Because that's what my dad would do my mom would stay home. My dad would take us. He would take a couple of the kids in my family, including me. And we would go to the dealer. It was always Honda or Toyota, you know, that, and we would start looking around and my dad would play very innocent. Like he didn't know anything about cars, my dad knew everything he knew how much the dealer was paying how much the hold back was everything. So we'd go we'd test drive it, he wouldn't be sure that it up, and then we'd stay there. Four five hours and he'd say, okay, I'm going to think about it the car dealer spent like five hours with my dad. He goes, no, thanks prices and good. I'm going to go there like what? So we literally left, then we go back the next day, like we're basically having breakfast at the dealership, and I remember one time we were buying a car for our family, and it was like the fourth day. Okay. I thought this was normal, and we're down to the last bit. We're the part where the dealers drawing the numbers, you know, and telling you. Well, it's actually a really good deal and my dad, he knows the math. He's an engineer, of course. And, and finally, we've closed the deal and my dad goes you're gonna throw in free floor mats, right? Fifty bucks and the guys like sir. We're losing money on this car. How can we throw these floor at my dad says, I'm out of here, and we just walked up and left, and I was like a Vietnam vet. I'm just shell shocked walking out my eyes glazed over. And I'm like, we just spent a week buying this car. And we walked out of here over fifty dollar floor mats. So that's where I learnt negotiate in the most elite negotiation of all know where where are your parents from there from India and are they, I mean they immigrated to the US. They came here in the seventies, my dad came here actually, to study. He went back to India and it was known that he was coming back. He was a bachelor, and they sort of range things, so that he meets people when he comes back, and it passed around the community that this bachelor's coming back, and he ended up meeting my mom, they met by both families coming together in a living room and talking. And they met. Each other the families decided it was a good thing. Seven days later. They were married. My mom got on a plane and flew to the US for the first time, and they've been married for about forty years now amazing. We have so much to talk about, and so much to catch up on so many questions that I want to ask. But I thought we could we could start and certainly will will bounce all over the place. But you said before we started recording because you have a new edition of your book, I will teach you to be rich noticeably lacking. A photograph of you barefoot on the cover. And you have some incredible quotes testimonials should say, including from Burton, Malcolm, author of random, walk down Wall Street, but you said to me because I haven't read the introduction that you either should have started it or you did start with I was right. Could you explain? Please explain. Okay. So this book, I will teach originally came out in March two thousand nine and let's just dispense with the idea. The name sounds like a scam. We both know we write books that sound like scans. But they're not. I mean it's like a running and I've just learned to embrace it guys. It's the weird sounding book, but it's actually good advice. And in the first addition, I talked about long-term, investing, low cost investing thinking about really automating your money and using psychology against yourself for positive results. Now, if you had followed that advice it turns out that when the book came out in March two thousand nine that was the absolute bottom of the recession crazy enough. Now, I don't believe in market, timing. But if you had used the advice in the book, this ten dollar book, you would be set for life, so I started off by saying, well, I was right. Let me tell you all the things that would have happened. If you'd use this book, I did get a couple of things wrong, I had to change one of. Man, the biggest mistake of my life was putting in interest rates in the book. Okay. Do you remember what was me putting doing market testing with magazines? Okay. So I put in back, then savings rates five percent. Remember, these banks were paying five percent. So I was like five percent. Here's the math, and then like the minute the book came out. They dropped to four three two and then point five percent. Now, the point of it is you don't make money on your savings account. Anyway, we're talking about twenty one dollars a year or a month versus four dollars like it's relevant. It's tiny details. Every day for the last decade I've gotten like ten emails, a day that are like Thuc, you whereas to five percent you talked about, you liar. And so I'm like, never again. I'm never putting interest rates in his book again. So I took him out I clarified it. I corrected a couple of things that I wanted to update and I added like eighty new pages of material. So things have changed a bit. But good advice really shouldn't change that much. Now I have I've had a chance to observe you as sort of an animal in the wild for ten plus years. And part of the reason I enjoy having our. Conversations, but also sharing your tactics and scripts, and so on is that I've seen you use them and walk the walk, which is more than I can say for a lot of financial pundits or commentators out there in the world. And I wanted to to perhaps just mention a. Not really an upsell maybe side cell, which is if somebody wants to be either greatly informed on the arts of negotiating or if you're just looking for outrage porn to get really angry. If, if that's your current sport of choice, you can find guest post that you foot on my blog quite a few years ago called how to negotiate like an Indian. Which, which I can only imagine the response to that title if I were to publish it. But it's staying staying away this folks. There you have it. If you want to go that on Tim's blog, you can find it. But let's talk about some of the perhaps counterintuitive. Things that you do because we talk about all sorts of aspects of finance and investing in life in general on the phone, just the two of us. But I'm looking at a number of different bullets that I was hoping to explore and one is you've mentioned that you've lived in the same apartment for ten years. Why do you still rent? Yeah, I get this question a lot because in America real estate is religion. And if you're successful than you're supposed to buy, right and the old tax deduction, and they're not making any more land and all these things that we say that we don't really understand. I rent intentionally I could go buy a place in Manhattan tomorrow with cash, but I don't want to it doesn't make sense for me financially, and also I enjoy the flexibility just to give you an example. I love that the building that I live in has awesome services. I love anything that goes wrong. I make a phone call somebody. There was a it started raining last winter and water started coming through my window sill. So I made a phone call, and they came up and they took a look and they were like we actually have to replace this part of the roof because it connects and we have to send someone to outside of the building. Said sounds good to me. It doesn't matter to me. I'm going to be at a time for the next few days. So have a blast I would estimate that, that repair probably cost in Manhattan on a weekend probably twenty five thousand maybe thirty five thousand dollars. I didn't pay it. So that's financial also flexibility issue, which is I don't know where I'm going to be five years from now. And if you're going to buy, and you run the numbers, it makes sense to plan on being there, at least seven to ten years minimum, so that you can sort of eat the cost of the transaction fees by think the biggest thing that really surprises people. Is that in America, we have been told? So many times real estate is the best investment, and in my opinion. That's just not true. A lot of the time now, I don't think it's a bad investment, always, but I always say you should run the numbers. And when I run the numbers in Manhattan, it just makes no sense. I would rather take that money, and I would put it in the stock market, and I know consistently, what that outcome is going to be over the long term. I don't have to do any repairs as we may talk about. I really hate anything that affects my convenience. So I think for a lot of people, I want people to think, like, hey, is it really true? That real estate is the best investment for me. It's not it's a cost and I'm happy to pay the cautious like I'm happy to pay the cost of a basket strawberries that I'm going to eat. I don't think I'm throwing money away, on strawberries. I don't think I'm throwing money away on rent. Z said real estate is, is religion or can be. And this is rigging into for second because there are a lot of statements that in certain circumstances can be. Additionally true. Right. Like real estate is the best investment asterisk fine print if. Yes. ABCD. And, and there are then they're things that are just patently. I think untrue, right. Like you need money to make money false. It's who you know, not what, you know, the false dichotomy not mutually exclusive investing his only for the rich ironically, the way you get rich is by investing. And there are a lot of different ways to invest, so one, perhaps undertone or. Portion of context that I think is worth talking about seven thinking a lot about this myself in the last ten years, is that there are, there are investments that you make to optimize for financial ROI. And then there are investments that you make. Which are decisions about allocating resources for uprising other things right? So I'll give just a perfect, a perfectly seemingly opposite example, which is I have bought real estate. I've also had my ass handed to me a year and a half before your book out. In fact. Hello just about rate mortgage. First home buyer. Yeah. That was that was likely, but I have I have bought real estate, typically I have used mortgages of various types, and I had a friend of mine a different Indian who is also who first generation who is this guy, we all know, each navene Takhar?
"burton malcolm" Discussed on SuperTalk WTN 99.7
"Market veteran of investment manager actually runs a big investment advisory firm. And you know, the thing is is that I am for twenty years. I've been talking about this that, you know, trying to pick stocks time the market figure out where things are going to go next is pretty much waste time. Ninety four percent mid mid cap managers failed to match market returns. Ninety two percent large-cap manager is ninety six percent of small company managers failed to match market returns. Very very very very challenging. And the reality of it is that the the amount of people that actually beat the market over the past fifteen years. That's that data came from speed at that. I just gave you the number of people that do it is pretty much what you'd expect through blind random block. But you know, the problem is is that people still try to do you got guys like John Stott so used to throw darts and still does from time to time throws darts at the stock tables and beats the pros why. And you know, you talked to Burton, Malcolm. From Princeton about then he says, well, you know, it's like giving up belief in yourself, you you've studied the stock market. You've studied market returns, you studied, you know, areas of the market for years. And for you to just basically, I say, I can't do this as a manager that has been doing it and watching markets for years that is really a tough pill to swallow. So it's one of those things that I just I walk away from going. You know, what they can't do it? I'm probably not going to be. I'm not gonna be able to do it either. But you know, sometimes active managers do have some interesting things to say about markets that I wanted to share with you simply because so often what happens is we get so nervous about stock markets, especially aftermarket upturns have occurred for years on end, like large US, stocks S and P five hundred for two thousand nine ten eleven twelve thirteen fourteen fifteen sixteen seventeen. Up every single year eighteen not so hot. Yeah. But down not down much not down as much as as other things. So you you look at it and go that's it bowl. Mark has got to be over. And the point that he made was well, they don't have biological senescence. They're not age doesn't kill a bull market. In other words. No, nothing. He says here is says what's your outlook for they asked him? What's your outlook for the market for the rest of their? Well, I think it's just funny that a financial planning publication. Then knows this academic stuff that I talk about even ask that question. But that is just shows you the industry they want to know the future. They're just like you and reality of it is we all want to know, if we could know the future, it would be great because then we can relax, and we I'm just going to invest not gonna worry about it. But he, you know, being a guy that's more inclined to market time. He does he does answer the question. He says an imminent recession is crazy fruitcake talk. Tell it's crazy fruitcake talk historically, the third year of a prudential. Presidential term is bullish. She says, well, that's what we do is. We look at for past history. And we look for patterns, and we think that they're going to repeat. Now, if markets always go up in the third year of a presidential term, maybe DEA think possibly that investors may over by it previous periods of time. You know, and and that that may be it will last year they actually sold though. 'cause it's been got a little bit of a a little bit of pessimism was going on toward the end of last year. But you know, and it's very possible. I think historically you look at it. And he goes got three or four chance out of three out of four chance of being right that the market will go up this year. But anyway, I think the his reasoning is interesting. He says I expect this year to continue to have appreciation partly fuelled by the European parliamentary elections coming up. Yes, he me. That's really interesting stuff right now because where have we been dealing with some issues now earlier in the show, I said that there are more public companies outside the US by far than there are inside the US. There is actually a growing number of public companies that you can invest in outside the US. So hence, there's a lot of research out there showing that we probably ought to be diversifying overseas. More than than typical American investor does most Americans put way too much their money in my humble opinion in US stocks and historically even it's hurt them in the seventies. That was was really bad in the seventies eighties. It was really bad and nineties. It was just fine in the two thousands of was terrible to be overly diversified in just the US. So you go for long periods of time where you. This is just pummeled by international markets. And if you're only focused on US companies, you could really be hurt by that. But what's going on? Right now is the voters are coming forward. They're gone. You know, what we want a little change in the leadership? And it'll be interesting to see how that comes what what comes to fruition as a result of that. But hit, but he's basically saying that you know, this could ripple over into America. And here's the other thing is third year typically slows down in the back part. Is you begin to get an increase fear about the election? What it might look like now, here's the thing. Any kind of recession doesn't necessarily mean that markets will go down. But that doesn't. Let's see a recession happens doesn't mean that markets won't go up. Why will because it's how bad is the recession that matters more than anything, you know, back in nineteen Ninety-one. You know, we literally entered a recession, and it was predicted back in late nineteen ninety that we were going into a recession. What that's all. They could talk about in the presidential election. We're going into recession. It's going be a recession is going to be bad. Oh, watch out. And yes, we did enter a recession. But here's what happened. It wasn't as bad as they thought. It was going to be in the stock market went up significantly in one thousand nine hundred one remember one fund that was you know, I didn't do too much hawking mutual funds 'cause I didn't really feel like I know is doing, but I remember this one fund that they were trying to get us to sell. It had like a sixty three percent return in nineteen Ninety-one. And they were trying to get us to push this fund. I was sitting there gone. I really don't know what I'm doing. But you know, the reality of it was at nineteen Ninety-one was a really good year. Now, what happens is election results or likely results? Now, if we're sitting there looking at what's going to happen in the next election twenty twenty election. We got to realize that what's likely to happen gets baked in to stock prices as time progresses. Let's say that there is a party that is going to be a negative on the election definitely going to be a negative. If it starts to look like they're gonna win. Then that information will get big baked into stock prices. As stock markets will go down ahead of time. So I wouldn't worry about it says now later on in the article says, do you therefore think something needs to be remedied when it comes to variable annuity sales? Now, this guy is you know, he is constantly. You think I'm bad about variable annuities wears them out. But he makes a good point. That I like to make if you had a fiduciary standard most of the bad annuities would go away. And you know, there are a new ities that are okay out there. And seems that he agrees with that which is no load annuities in the vast vast vast majority of annuities that are sold are load annuities. In other words, there commissions involved and those things would go away if there weren't commissions anymore. Most people they stopped selling them because no incentive to sell them. And they win a lot of times. What happens is people try to figure out. Okay. How can I get you know? How can I get myself to believe that this is actually good for the customer? And you know, they'll go every which way from Sunday to try to do the math in a way that it makes it look good. And you know, the insurance companies are putting out illustrations showing how great these things would have worked during certain periods of time. And and what happens is for. Yeah. Yeah. This would have been really really really great over the past five years, and then they go. Yeah. You should buy this. Well problem is what happened in the last five years probably isn't gonna repeat in the next five. Markets. Don't have a way of not repeating history. Now, the the thing that you've got to watch out for the noodles in general folks, is that I wouldn't use them in IRA's almost ever almost ever in IRA's are qualified plans retirement plans, but they're used all the time in retirement plans. I may may use them in a non-qualified type of a setting. In other words, I got money that I've got that's taxable money. And I'm looking into put it someplace you may use a variable annuity for that particular purpose, but only one with extremely load, low mortality and expense charges. You know, lower the better one I'll use with our clients. It's like twenty five point two five percent. The typical product out there. A lot of them are one point six to one point eight percent, ridiculously high. That's because they got to pay the Commission's. Now, if you keep it extremely low, and we don't receive commissions. We don't do. We don't work that way. I might use a no load why well because you can get pre- creditor protection with annuities. And if you've got somebody that's in a high risk occupation. That may be a good idea. The other reason is that you have some tax deferral on the games in it. Now, you can have tax deferral if you tax manager an investment portfolio, you can get some benefit from tax managing a portfolio properly from from a standpoint of how it's managed tax wise because when you own stocks, and they go up in price. They're not taxed unless they're sold. And if you're in ten or fifteen percent tax bracket, there may be no taxes at all on a long term capital gains basis, but for. Some people there's no way to avoid some taxes. And they may actually maybe something that they can benefit from. But the problem is they stink as a distribution vehicle because their life. Oh, in other words, if you put one hundred thousand dollars in an annuity, and it grows one hundred fifty you gotta burn through the fifty thousand dollars in gain and pay taxes on all of it before you get your principle back. So that can be the problem..
"burton malcolm" Discussed on Biz Talk Radio
"At all this all tossing and turning. I was indeed I couldn't wait to get up early this morning and start playing with numbers because as we were discussing yesterday the last twenty years have been pretty dismal from a market performance standpoint. Even though the last ten have been unbelievable. So what we suggested yesterday is the twenty year performance numbers are about five point six percent. And I have quoted probably at least a thousand times, maybe more if you take into account the show and my seminars and all that stuff that since nineteen fifty the worst twenty five year period for socks was according to Burton, Malcolm seven point nine four percent rate of return. And I'm looking at the last twenty years. Go and five point six. I got five years to get the seven point nine. I don't think that's gonna happen. It could it could. But our job isn't to make an assumption that the markets are gonna keep producing double digit returns. So that my math works out. I had to say to myself what if I am Burton Malki auto in forecasting the future by the past. We're wrong. What if we're wrong, and it doesn't work out that way? So I started thinking, well, what do I know about thirty year returns because that's the average life expectancy that most financial advisers are dealing with today. Even though I might argue forty for many healthy people like you, John boy, I think you or your wife, we're gonna make it beyond age one hundred because you guys jog and you eat, right. And you do all the right stuff, and you're healthier and wealthier than the average folk. And so you beat the system. Now, the the reason I did the annuity calculation for you is I wanted to make it simple. It's not what I would do personally. And I'll get to that. Because I know you're gonna ask me. But but the keep it simple. I took a million dollar portfolio with a four percent inflation adjusted distribution more commonly known as the Benjamin four percent rule, and I determined that. If you use the two percent inflation adjusted joint annuity contract, the two of you John would get at age sixty five approximately forty thousand dollars per year plus inflation all the way out and I used a thirty year time horizon, your guys age ninety five four my comparison. And it took seven hundred thirty five thousand of my million or your million to do that. Which left two hundred sixty five thousand. Yes. So then I took that tune of sixty five thousand and I put it in the regular old standard enforce five hundred which we know has averaged close to ten percent per year for the last hundred years, you weren't figuring ten no. I went back and looked at rolling thirty year periods. And I found that virtually since nineteen thirty two every rolling thirty year period produced a return that exceeded eight percent, but you took the worst. I took the worst case of eight percent. So the two hundred and sixty five thousand is your equity money, you put it all in the S and P five hundred for the purposes of this example, the seven hundred thirty five thousand produce the four percent income for you. And Chris thirty years go by you guys are ninety five you get hit by a bus. You're dead. You leave your kids? The two hundred and sixty five thousand that grew at eight percent per year, which means you left them two point six six million dollars. Which after accounting for a three percent inflation means they got exactly a million dollars. But we only have soom inflation's gonna be two percent. That's the Federal Reserve target for inflation. So then before the break, I said well in doing a lot of other research going back to the kids. This fifteen years cycle research member you've heard me talk. We've talked about that where you have one fifteen year cycle. That's bad usually followed by one fifteen year cycle. That's good and vice versa. And depending on where you fall in the thirty year performance return. You might be one percent more or one percent less than the average. Right. It doesn't vary by more than one percent. So in that example, I said, well what if John only earned seven percent over thirty? Two years over thirty years on the two hundred and sixty five thousand that was put into the standard and Poor's five hundred I'm gonna wind up with less than two point six six six million. You're gonna wind up with almost exactly two million dollars, which ironically is a two point three percent inflation adjustment. Meaning you would then leave your kids in about the same financial shape on a purchasing power basis. As you are today. And when I when I finished that this morning, I looked at my watch and said, I don't think the studio I was out you were you were out. And it's very very exciting to me that using just a basic inflation-adjusted annuity for three quarters of the money and leaving one quarter in the market, which as I mentioned, I would not do still hand out to produce the four percent rule, plus and amount more than inflation for your kids. Yeah. Now use said, I mean this. This looks fine to me. This looks good seven hundred thirty five thousand a lot of money of a million to put into one thing. But it got me the income I needed plus the inflation. So I got a raise every so often every year. So I got to spend more you said, you wouldn't do that? No. I wouldn't do that. I would do something similar to that. I'm not sure I would either although it would work it works. Great and force simplistic purposes. That's why I looked at the annuity. I mean as you can see my numbers here. I've got all kinds of numbers on this piece of paper. Yes, now now, it's too complicated to get into what you would do because you would add elements of real estate and other stuff but doing it the way that you would figure to do it better off or am I about the same as this example center valley about the same under the worst case scenario, but you could be substantially better off if so if the other asset classes produce at the same level that I man an example, I would use I would not use a seven hundred thirty five thousand dollars annuity use it to hundred and fifty thousand dollar annuity. And I may or may not use an inflation adjusted when probably would not use an inflation adjusted one. So, but I still probably use the joint. But then when you start looking at fund. Being the deficit if you will or the delta I would use a combination of other asset classes, for example in lieu of an annuity. I might use some kind of income fund real estate fund or just flat out non publicly traded real estate to produce. Maybe a six percent Capri not well, you said instead of nudity. Not that big jumbo new any cut it in half. And write and do fifty fifty. I wouldn't even do fifty. I've probably do about a third light. Whatever I do maybe an equal amount in real estate or some reasonable facsimile. Then the rest would the super-safe stuff leaving me about three hundred and thirty five thousand four hundred thousand in equities that.
"burton malcolm" Discussed on KLIF 570 AM
"Mcgowan group asset management a, sir. John award is after sir. John Templeton, one of the leaders in the industry that I met in the early nineteen nineties, by the way, Alex. He he took us down to the Bahamas where he didn't have pay any taxes. And you'd move he sold Templeton funds to Franklin. I guess two names that now living in famous status forever. Now. It's Franklin Templeton good manager great manager. But the other the other great manager John Bogel passing away at eighty nine. He was really a commotion. And a little bit tight there. He was proud that. He wasn't a billionaire even the vanguard manages five trillion now. Yeah. And so we use vanguard when it when it when it's the best choice, then we'll be there. Right. But anyway, Burton Malcolm was his partner. I heard Burton Malki, I'll speak and. He he said, well, I'd like to say, oh, my money is in the S and P five hundred index, but I'm going to confess to you. And he actually piled into emerging markets before a big old route just saying even being an index guy. It's hard to get it sometimes hard to get it. Right. But anyway. The index funds. So it led revolution. Because when I started people had to pay extrordinary costs right transaction based industry, and they were still delivering certificates. When I started. That's that makes me old and you had to post your book every day for your trade. You had to post it by hand. And you weren't supposed to delegate that to an assistant. So anyway, they've since loosened the rules now that we have computers, but so cost keeps coming down because the technology that we. Yeah. When went to the word and certification one thing they pointed out as bond managers high yield bond managers actually add value above the index consistently. So the debate is still raging sometimes it's better to index and sometimes it's better not to to not to. And anyway, he led a revolution in the eighties and nineties, you know, it was like relentless like the -delity now. Fidelity had this campaign. Basically, it gets bad brokers who charged too much commission, and they were right, right? And now fidelity leads the way for the registered investment advisor revolution. Right. There you go. Yeah. No transaction costs and blow management little management cost. And we're paying our management fees eight times over with our current cash flow just to let you know. I mean, if you get it in cash that that may have to sell stuff. Yeah. Okay. This is good. So that was a, sir. John award a transforming figure in the industry. Benchmarking came from that. And we certainly use that here. Mcgowan group asset management now. Bozo award we got one bozo. Award this week. Edward lampert. And what does the little company called Sears holdings, which owns Sears KMart filed for bankruptcy protection this week? A few years ago stock hit a peak of one hundred and twenty one dollars per share this week trading at seventy seven cents. From one hundred twenty one and this came from the dean he nominated Eddie Lampert for bozo award. Now, we couldn't find the returns of his hedge fund. ESL? He's he's had a hedge fund for for many, many years and only manages for a few select families. Yep. Highly concentrates is positions. Lands his other big position. So he's like pretty much all retail. Yeah. Yeah. He must. He must hate peso's at Amazon, he must hate that guy. So. The book value of the company the negative thirty six dollars a share that sounds attract. Now, it also points out that burning two billion a year that's eighteen dollars per share per year. This Bobby dean does his lead does his homework. Yeah. This is not a recommendation for your portfolio right hand. He'd Eddie Lampert. Just bought is buying a company out of bankruptcy in bankruptcy court. So you did have an agreement that if he was bitter in bankruptcy, should it? Go bankrupt. That he gets to be the one that owns assets. Okay. So one of the one of the big, thanks stocks. I have some to point out. So Sears Sears is burn in two billion dollars a year. Okay. Right. Who else had burned two billion dollars a year? That's that's a thing. I don't know you tell me net flicks. Yeah. The burning over that. Anyway, just in great content just saying so his top three holdings are retail auto nation. Lands in Sears holdings, highly should make billions our nation highly cyclical. Okay. Drum roll, please. It is time for the research up. Do it. Okay. So each week will highlight research if you wanna be on the subscription lists. You'll automatically get twice a month. The best research from a team of ten now that Harrison Smith is joined us enjoys Chang, and we will scour the universe for the research that actually does good at making affective decisions alliance. Bernstein context is the title here bond strategies that balance interest rate and credit risks. And he talks about the the balance between traditional bond strategies and high yield very good. So it it it's there. It's there on the website at NetWorth radio dot com. Better yet on the free subscription lists to one four seven to forty four hundred and we will make sure that you get your update, including if there's fast breaking news in the markets. What we're doing about it? That sometimes helps to know. Hey, those guys with thirty years experience doing. Okay. Little trouble in Mexico. Okay. I mean, Mexico it it's a bigger mess than we thought. So tell us tell us the big story is in Mexico this week. So the headline is that El Chapo is. Pretty famous drug trafficker bribe, the former Mexican president with a hundred million dollars so opinion and taking office. That's the wow president-elect yet to. Explains part of the mess right where he wanted to hundred and fifty million in and they they negotiated. Wow. Hopefully, they didn't do it by like Email that got hacked. Okay. Okay. Superior returns. We'll get to that. Right. Superior returns. And then little 4._0._1._K note. Working on an allocation strategy for guy with some legacy accounts where you can only use the mutual fund choices. Let's cover that. And then we'll cover a huge uncoordinated investment for this past year. Alpha. Okay. So if you've got a 4._0._1._K, you got to decide what am I going to how am I going to allocate that thing, right? And the target funds. We've found don't really have much relation to what the target date is. Correct. He's just like half stocks bonds. And if you retire we'll so what if the stocks are down, right, which most people are not comforted by you know, if they if they got a target return for twenty twenty because you're gonna retire. Probably not the right allocation, the twenty twenty-five because it may just be half index stocks and half index bonds and stocks go down then. Well, here's your target. Here's less money, or here's less income than you were anticipating so. What you want to go through to recommendations here. An annual at least process where we look at all the choices in the 4._0._1._K look at where you are where you wanna be. And then we choose the best choices based upon current markets. Right. Along with where you want to be the other processes, the direct rollover conference call if you've got a 4._0._1._K or you've got a lump sum pension, which are huge huge because interest rates are still low long-term. If we look at the equivalent of takes fourteen fifteen years to collect as much money as your lump sum when you could be making interest. In the meantime. Anyway, we do that analysis customized to each sometimes the pensions better sometimes rollovers better, but the direct rollover conference. Call a vital part of the process to ensure that it's done in harmony with your CPA, and you and Andrew you told me last week. You guys are equally as good at doing director rollover conference calls. Yeah. We're gonna make a equally as good conference collar out of Harrison as well. Okay. So what is what is one of the top performing asset classes over the last few years goes Legos? Yeah. You buy your little LEGO barred for four bucks at the store, and you put it in your garage, or you're safe or whatever safe-keeping, and then several years later, you sell it for thirty bucks. I just it just doesn't feel like a reliable income strategy, Alex. Six hundred and thirteen percent game four year period. I wonder how many boxes? The Darth raven had anyway. Okay. So LEGO trader makes Bloomberg news this week. All right. We'll leave it at that that worth radio bringing you the best and financial news special. Thanks to Alex toluene Harrison Smith, Steven Norris and Andrew or the or Nater standing by to help you prepare.
"burton malcolm" Discussed on Masters in Business
"So let me make the case for quote, unquote, passive indexing. I think Mark beta, let me caveat this betas wrong phrase. It should be fundamentally indexing passive investing as wrong phrase. It should be low-cost indexing, but here's the pro in next thing argument, and I want you to take this argument apart. This is the most cost-effective least expensive way to get exposure to equities. It has the lowest amount of turnover, the least amount of tax consequences and everybody seems to have the greatest difficulty. Outperforming the s and p five hundred. So we're going to keep using that as a benchmark going forward. Discuss. The Bill Sharpe wrote a piece in the nineteen nineties entitled, the arithmetic of active investing and I, it's very simple thesis. The market is capitalization weighted the index funds span almost all of the market and is capitalisation-weighted. You take that portfolio all of the indexes out and what's left is what active managers collectively own. Well, it's the same portfolio give or take some wiggle room. So if it's the same portfolio, active managers should have the same performances index funds minus costs and the costs are higher for active managers. That arithmetic is not just true. It's a truism that means that if you choosing active managers with absolutely no skill, you should expect to earn index returns minus. When you choose an act of manager, this doesn't mean choosing active managers waste of time. What it does mean is you'd better have a good answer to the question. If this active manager is a winner, there's a loser on the other side of their traits who's the loser and wire they willing loser for fundamental index. The answer to that is really simple. This is a strategy that contrary against the market's biggest and most extravagant bats. And so the loser on the other side of the trade is the performance chasing lemmings who are legion. Here's the Bill Miller pushback. Most active managers are as you've described with a very low active share and essentially their closet indexes. So why should anybody pay a high fi when you can pay a low Fien get ninety five percent of the same portfolio, fair, fair criticism. It's a fair criticism. There's a lot of active managers. In the bushes near the benchmark. Most active managers are constantly looking over their shoulder at the benchmark and worrying about beating it. The beauty of fundamental index and of smart beta as it was originally defined. Smart beta originally meant strategies that break the link with price that don't pay any attention to market. Capitalization are price in setting the weight of a stock. The term has been stretched to the point of meaninglessness, right? But under that definition, you do have the advantage that you're going to be contra trading against the market's biggest bats, whether you're equal weighting or fundamental index or minimum variants, you're going to be having an anchor target weight that isn't related to price. So was the price soars and tumbles you're gonna be selling and buying. It's built in structural, sell high Bilo, discipline fascinated. We were taught. Talking earlier about traditional passive investing or or low cost, indexing let's let's do a little bit of compare and contrast with. Fundamental indexing and we touched on this. I wanna give you a quote from Burton, Malcolm smart beta strategies or riskier than index funds and not right for individual investors. What is professor Malki l. getting wrong there. Molecule comes from the officiant markets community. He believes he, he wrote random, walk down Wall Street back in, I think the sixties. It's interesting to know that if you believe that the mo- the share prices equal a fair value that we cannot see plus or minus an error. Adding up to price. And if you believe the market is constantly hunting for those errors and trying to fix them so that the air is mean reverting, then contra trading against big price moves has a structural alpha that is, in fact the key driver of the value fact, if you look at value strategies, the alpha comes from the rebalancing, not from the cheapness of the stocks. Well, isn't that the same thing?.
"burton malcolm" Discussed on Bloomberg Radio New York
"Guest is professor burton malcolm he'll of princeton and van guard and the author of a random walked down wall street the paperback is now in its eleventh addition and it sold million and a half copies let's talk a little bit about index saying versus the active management there was a quote from the book that i've always enjoyed the number of quotes from the book but you had said back in nineteen seventy three fund spokesman are quick to point out that you can't by the market averages it's time the public could so explain your role in the development of the index fund well basically i said vanden nineteen seventy three and the first index fund was not started until nineteen seventy six now you know i wanna give jack ball go all the credit in the world because is one thing for an academic to say hey there ought to be index funds it's another thing for somebody to his company on starting in index fund and let me tell you it wasn't easy at the beginning they had an underwriting where they were hoping to do one hundred million or more in the end eggs fun and in fact the book wasn't over subscribe they sold eleven million and sometimes i used to joke because i then was on the van guard board that jack boggling i were about the only people i knew who actually on shares in the index fund it was very very slow to catch john but it dead cat john and in fact last year hundreds of millions of dollars moved from actively managed funds into index funds and index funds now have maybe somewhere between thirty and thirty five percent of the people's money visuals or institute more institutional then individual individuals are slower to catch on to this so with the institutions it's maybe thirty five or more with individuals it's probably a bit less than thirty but the point is the market is catching up to the idea and i am obviously simply delighted since i've basically been an evangelist for index funds all my life so van guard you you mentioned you were you you serve with jack vogel you on the board for twenty eight years they're now over three.