Quotes from Burton G. Malkiel

as the public realized that an excess of paper currency creates no real wealth, only inflation.

Winning the Loser's Game

Here's why: Past performance is not a good predictor of future returns. What does predict investment performance are the fees charged by the investment manager. The higher the fees you pay for investment advice, the lower your investment return. As our friend Jack Bogle likes to say: In the investment business, "You get what you don't pay for.

With no-load index funds, no transaction fees are levied on contributions. Moreover, mutual funds will automatically reinvest all dividends back into the fund whereas additional transactions could be required to reinvest ETF dividends. We recommend that individuals making periodic contributions to a retirement plan use low-cost indexed mutual funds rather than ETFs.

Human nature likes order; people find it hard to accept the notion of randomness. No matter what the laws of chance might tell us, we search for patterns among random events wherever they might occur—not only in the stock market but even in interpreting sporting phenomena.

The history of stock price movements contains no useful information that will enable an investor consistently to outperform a buy-and-hold strategy in managing a portfolio.

A successful investor is generally a well-rounded individual who puts a natural curiosity and an intellectual interest to work.

your investments have to produce a rate of return equal to inflation.

has become increasingly clear to me that one's capacity for risk-bearing depends importantly upon one's age and ability to earn income from noninvestment sources. It

In fact, the most profitable investments you will ever make are precisely at the times when pessimism is the most rampant.

Investment advisory services, earnings forecasts, and chart patterns are useless.

In one celebrated incident, an analyst who had the chutzpah to recommend that Trump's Taj Mahal bonds be sold because they were unlikely to pay their interest was summarily fired by his firm after threats of legal retaliation from "The Donald" himself. (Later, the bonds did default.)

When market prices fall below (rise above) this firm foundation of intrinsic value, a buying (selling) opportunity arises, because this fluctuation will eventually be corrected—or so the theory goes. Investing then becomes a dull but straightforward matter of comparing something's actual price with its firm foundation of value.

Tax-Exempt Money-Market Funds

a blindfolded chimpanzee throwing darts at the stock listings can select a portfolio that performs as well as those managed by the experts.

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.

Two behavioral economists, Terrance Odean and Brad Barber, examined the individual accounts at a large discount broker over a substantial period of time. They found that the more individual investors traded, the worse they did. And male investors traded much more than women, with correspondingly poorer results.

the public realized that an excess of paper currency creates no real wealth, only inflation.

Invariably, the hottest stocks or funds in one period are the worst performers in the next.

Any investment that has become a topic of widespread conversation is likely to be hazardous to your wealth. It was true of gold in the early 1980s and Japanese real estate and stocks in the late 1980s. It was true of Internet-related stocks in the late 1990s and condominiums in California, Nevada, and Florida in the first decade of the 2000s, as well as bitcoin in 2017.

Percentage of Actively Managed Mutual Funds Outperformed by the S&P 500 Index (Periods through June 30, 2012) Sources: Lipper and The Vanguard Group.

Average Annual Returns of Actively Managed Mutual Funds Compared with S&P 500 20 years, Ending June 30, 2012 Sources: Lipper, Wilshire, and The Vanguard Group. S&P 500 Index Fund 8.34% Average Active Equity Mutual Funda 7.00% Shortfall +1.34%

It turns out that the portfolio with the least risk had 18 percent foreign securities and 82 percent U.S. securities. Moreover, adding 18 percent EAFE stocks to a domestic portfolio also tended to increase the portfolio return.

Only liars manage always to be out of the market during bad times and in during good times.