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b20ae4f
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Never buy anything from someone who is out of breath.
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Burton G. Malkiel |
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a4334bf
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Predicting the stock market is really predicting how other investors will change estimates they are now making with all their best efforts. This means that, for a market forecaster to be right, the consensus of all others must be wrong and the forecaster must determine in which direction-up or down-the market will be moved by changes in the consensus of those same active investors.
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Burton G. Malkiel |
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53396af
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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.
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Burton G. Malkiel |
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f283ac8
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Tip of the Week 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.
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Burton G. Malkiel |
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6ff5f49
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I view investing as a method of purchasing assets to gain profit in the form of reasonably predictable income (dividends, interest, or rentals) and /or appreciation over the long term.
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personal-finance
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Burton G. Malkiel |
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40117af
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The greatest of all gifts is the power to estimate things at their true worth.
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Burton G. Malkiel |
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2674911
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Forecasts are difficult to make--particularly those about the future.
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Burton G. Malkiel |
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d5a7149
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Nobody knows more than the market.
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Burton G. Malkiel |
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39a6689
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A couple, both age seventy-eight, went to a sex therapist's office. The doctor asked, "What can I do for you?" The man said, "Will you watch us have sexual intercourse?" The doctor looked puzzled, but agreed. When the couple finished, the doctor said, "There's nothing wrong with the way you have intercourse," and charged them $50. The couple asked for another appointment and returned once a week for several weeks. They would have intercours..
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Burton G. Malkiel |
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72b596f
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Two-thirds of professionally managed funds are regularly outperformed by a broad capitalization-weighted index fund with equivalent risk, and those that do appear to produce excess returns in one period are not likely to do so in the next. The record of professionals does not suggest that sufficient predictability exists in the stock market to produce exploitable arbitrage opportunities.
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Burton G. Malkiel |
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023680a
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There is one investment truism that, if followed, can dependably increase your investment returns: Minimize your investment costs. We
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Burton G. Malkiel |
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bb24169
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In the 1990s, the ratio of buy to sell recommendations climbed to 100 to 1, particularly for brokerage firms with large investment banking businesses.
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Burton G. Malkiel |
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ee6ebbd
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Finding the next Warren Buffett is like looking for a needle in a haystack. We recommend that you buy the haystack instead, in the form of a low-cost index fund.
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Burton G. Malkiel |
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9cd8edd
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put time on your side. Start saving early and save regularly. Live modestly and don't touch the money that's been set aside.
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personal-finance
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Burton G. Malkiel |
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48e10db
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Protect yourself: Every investor should always diversify.
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Burton G. Malkiel |
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1888a27
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WHAT DOES IT ALL MEAN? The lessons of market history are clear. Styles and fashions in investors' evaluations of securities can and often do play a critical role in the pricing of securities. The stock market at times conforms well to the castle-in-the-air theory. For this reason, the game of investing can be extremely dangerous. Another lesson that cries out for attention is that investors should be very wary of purchasing today's hot "new..
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Burton G. Malkiel |
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a6425d7
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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
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Burton G. Malkiel |
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a4291f8
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The index performance is not mediocre--it exceeds the results achieved by the typical active manager.
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Burton G. Malkiel |
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f9fbad7
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Thus, purchasing a fund holding all the stocks in a broad-based index will produce a portfolio that can be expected to do as well as any managed by professional security analysts.
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Burton G. Malkiel |
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53f136c
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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 ..
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Burton G. Malkiel |
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09ada90
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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."
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Burton G. Malkiel |
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c5a068e
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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.
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Burton G. Malkiel |
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fa2013c
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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.
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Burton G. Malkiel |
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22144ae
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These very sad stories make all too clear the cardinal rule of investing: Broad diversification is essential.
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Burton G. Malkiel |
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05518ec
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there are four factors that create irrational market behavior: overconfidence, biased judgments, herd mentality, and loss aversion.
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Burton G. Malkiel |
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c8deb21
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ETFs tend to have very low expense ratios, and they can be more tax efficient than mutual funds because they are able to sell holdings without generating a taxable event. This could be an advantage for taxable investors. However, brokerage commissions are charged on the purchase of ETFs, and for small and moderate purchases these commissions can overwhelm those other advantages. No-load indexed mutual funds typically have no purchase fees. ..
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Burton G. Malkiel |
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60e565e
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What is a cynic? A man who knows the price of everything, and the value of nothing. -- Oscar Wilde, Lady Windermere's Fan
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Burton G. Malkiel |
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d6e5c12
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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.
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Burton G. Malkiel |
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f5bfb0d
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In David Copperfield, Charles Dickens's character Wilkins Micawber pronounced a now-famous law: Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Burton G. Malkiel |
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cf65b32
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Avoiding serious trouble, particularly troubles that come from incurring unnecessary risks, is one of the great secrets to investment success. Investors all too often beat themselves by making serious--and completely unnecessary--investment mistakes. In
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Burton G. Malkiel |
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64fc7b6
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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.
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Burton G. Malkiel |
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1bb7ac4
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A stock selling at $100 per share with earnings of $10 per share would have the same P/E multiple (10) as a stock selling at $40 with earnings of $4 per share. It is the P/E multiple, not the price, that really tells you how a stock is valued in the market.
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Burton G. Malkiel |
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2ae8ac1
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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.
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Burton G. Malkiel |
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9e8fc5b
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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.
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Burton G. Malkiel |
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168d187
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As the economic historian Charles Kindleberger has stated, "There is nothing so disturbing to one's well-being and judgment as to see a friend get rich."
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Burton G. Malkiel |
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0394431
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You are also allowed to "Roth and Roll." You can roll the balance of your traditional IRA into a Roth, again if your income level qualifies.* You need to pay tax on the amount converted, but from then on neither the earnings nor the withdrawals in retirement are taxed. Moreover, you are not required to take the money out at retirement, and contributions can continue to be made into your seventies and eighties if you wish. Thus, significant ..
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Burton G. Malkiel |
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f77907b
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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."
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Burton G. Malkiel |
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8ff6b47
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As an investor, you have one powerful way to keep from getting distressed by devilish Mr. Market: Ignore him. Just buy and hold one of the broad-based index funds that
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Burton G. Malkiel |
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4bb827f
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Of all the professional money managers, Warren Buffett's record stands out as the most extraordinary. For over 40 years, Buffett's company, Berkshire Hathaway, has earned a rate of return for his stockholders twice as large as the stock market as a whole. But that record was not achieved only by his ability to purchase "undervalued" stocks, as it is often portrayed in the press. Buffett buys companies and holds them. (He has suggested that ..
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Burton G. Malkiel |
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c380f22
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A major advantage of indexing is that index funds are tax efficient. Actively managed funds can create large tax liabilities if you hold them outside your tax-advantaged retirement plans. To the extent that your funds generate capital gains from their portfolio turnover, this active trading creates taxable income for you. And short-term capital gains are taxed at ordinary income tax rates that can go well over 50 percent when state income t..
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Burton G. Malkiel |
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772400d
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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.
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Burton G. Malkiel |
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986f2e5
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The first concerns how an investor should choose among different types of broad-based index funds. The best-known of the broad stock market mutual funds and ETFs in the United States track the S&P 500 index of the largest stocks. We prefer using a broader index that includes more smaller-company stocks, such as the Russell 3000 index or the Dow-Wilshire 5000 index. Funds that track these broader indexes are often referred to as "total stock..
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Burton G. Malkiel |
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1069cd1
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October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August and February. --Mark Twain, Pudd'nhead Wilson
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Burton G. Malkiel |
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8a5fa3b
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Diversify across securities, across asset classes, across markets--and across time.
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Burton G. Malkiel |