The markets are in bear territory and panic has hit Wall Street and Main Street. I thought it was time to bring back this podcast from Charlie Ellis who is a voice of reason with a great historical understanding of the markets. Enjoy!

------------------

Released on June 1, 2018

Harvard Business School professor, founder of influential investment consultant Greenwich Associates, chair of Yale University investment committee (top performing endowment led by David Swenson), director at Vanguard Investments and one of the earliest proponents of index investing. Oh and he's written many best-selling books too. We obviously had a lot to talk about.  Still working 70 hour work weeks at 80+, Charley generously shares what he's learned over his lifetime as an investor and keen observer of the stock markets. From what he learned from competitive Monopoly games with his siblings to the latest investing trends, you will enjoy our wide-ranging conversation. I was truly honored to have this opportunity and I know you will enjoy it too!  

Details:

• 0:00–1:35 Introduction
• 1:36–5:21 How Monopoly and pinball offered early money lessons
• 5:22–10:11 The two levels of serendipity that led to his career
• 10:12–16:01 Charley’s lucky break in earning his PhD
• 16:02–22:06 Jeepers creepers, Charley, what do you mean passive is a good thing?
• 22:07–25:09 How index funds are akin to the Olympics
• 25:10–31:25 Can you beat your competitors if you all know the same information?
• 31:26–32:02 A word from NGPF
• 32:03–36:35 Boring is good for long-term investors
• 36:36–43:31 Vanguard, the “Steady Eddie” producer of very good investing services
• 43:32–49:01 Teaching the stock market to students
• 49:02–57:08 The secret to Social Security and 401(k)/IRA benefits
• 57:09–1:00:00 If you can, keep working while the going’s still great
• 1:00:01–1:02:44 Charley’s favorite books for teachers
• 1:02:45–1:04:28 Conclusion

 Resources mentioned during podcast:

• SPIVA Analysis graph
• Regulation FD (Fair Disclosure)
• Mike Bloomberg… Bloomberg terminals are everywhere

Charley's favorite books:

• Falling Short: The Coming Retirement Crisis and What to Do About It
• A Random Walk Down Wall Street by Burton G. Malkiel
• Elements of Investing by Charley Ellis & Burton G. Malkiel
• Winning the Loser’s Game
• The Index Revolution: Why Investors Should Join it Now 

 QUOTES:

• “... gradually, individuals and institution are shifting money towards indexing at an increasing rate.”
• “The results that you can achieve when you do index… over 80% of actively managed funds over a 10-year period fall short [of index fund performance].”
• “To keep up with the market, you’d have to do 30% better than your competitors when they all know exactly what you know as fast as you know it, they have all been to terrific schools, they all work hard, they are all diligent, and they’ve all got tremendous determination to do very, very well. It’s just not realistic to think you’re going to do better than 30% year after year after year…”
• “Stocks are like teenage children. They can just thrill you and then drive you crazy.”
• “If there’s anything I hope people would do coming off of this podcast is say [to themselves], “If I can assign the operations to indexing, it makes sense… to do so both for explanation and for logical reasons. Then, I can focus on other things… as an investor.”

About the Authors

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

More posts by Tim

Ren Makino

Ren started interning at NGPF in 2014, and worked part-time through high school and college. With his knowledge growing alongside NGPF, he joined the team to work full-time after graduating from college in 2020. He is also the producer of the NGPF podcast. During his free time, he likes to try out coffees from different roasters across the world.

More posts by Ren