This week on a special rebroadcast edition of our Masters in Business podcast, we speak with Burton Malkiel, chairman’s professor of economics at Princeton University, and is a two-time chairman of the economics department.[i] Malkiel is best known for A Random Walk Down Wall Street, with over 1.5 million copies sold.
Vanguard Group’s Chairman and CEO, Bill McNabb recently told a conference at the Wharton School at the University of Pennsylvania that the rise of Chartered Financial Analysts (CFAs) has “fueled the growth of low-fee passive funds over actively managed offerings.” The rise in CFAs may have created “an increasingly crowded space of professionals all trying to beat the market” – what Michael Mauboussin calls the “paradox of skill.” Perhaps the correlation between the number of CFAs and the popularity of indexing is a partial cause, or perhaps its entirely coincidental.
What is not a coincidence is that Malkiel and McNabb sharing a similar investing philosophy – Malkiel was a director at the Vanguard Group for 28 years. Our conversation covered many topics, including the creation of Malkiel’s “blindfolded monkey throwing darts at a newspaper’s financial pages.”
All of the books referenced are here.
Next week, the return of Ken Fisher of FI.
[i] Professor Malkiel also served as a member of the Council of Economic Advisers (1975–1977), president of the American Finance Association (1978), and Dean of the Yale School of Management (1981–1988).