Burton Malkiel — professor of economics at Princeton, author of A Random Walk Down Wall Street, and perhaps the most intelligent person in the world regarding investments — published an article in the Wall Street Journal reminding investors that nothing is more important than putting together a well-diversified portfolio, rebalancing it appropriately, and letting it grow through good times and bad. The 10th edition of his classic book will be published on January 10, and without even having seen it yet I’m ready to recommend it enthusiastically to every investor.
Malkiel’s two most forceful points are the importance of diversification (“Diversification has not lost its effectiveness”) and the importance of reducing fees and expenses (“The one investment principle about which I am absolutely sure is that the less I pay to the purveyor of an investment service, the more there will be for me”). He quotes Jack Bogle of Vanguard Group: “In the investment fund business, you get what you don’t pay for.”