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moneysense.ca, 28/06/10
Burton Malkiel and Charles Ellis Talk Investing
In The Elements of Investing (read my review here), authors Burton Malkiel and Charles Ellis boil down everything they’ve learnt about investing into a mere 176 pages. You can read the book in a couple of hours or so. If that’s a bit too much of a time commitment, you might want to check out this 21-minute interview conducted by Vanguard with the authors. Prof. Malkiel and Dr. Ellis talk about the same subjects covered in their book:
- Save early and often
- Get your asset allocation right
- Diversify across and within asset classes
- Keep your investing costs low
- Avoid financial blunders
You can also find a transcript of the interview at the bottom of the page.
moneysense.ca, 28/06/10
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Lets see the data….”Get your asset allocation right”
-” Diversify across and within asset classes”…..just owning TIPS over the last 5.10.15.or20 years would have been way better.
@dj: Here are the RRB returns over 5, 10 & 15 years:
5 years: 5.5%
10 years: 8.9%
15 years: 9.0%
TSX Composite:
5 years: 7.6%
10 years: 5.6%
15 years: 9.26%
As you can see Canadian stocks didn’t fare all too badly. The asset class that has outstandingly poor returns is US stocks but even US stocks didn’t fare all too badly over a 15 year period.
S&P 500 (in C$):
5 years: -2.26%
10 years: -4.0%
15 years: 6.0%
I see lot of support for asset allocation and diversification in this data.
CC, when you quote these returns (or others for that matter), is the convention strictly to report capital appreciation rates, or are dividends included and assumed to have been reinvested?
Thanks.
@AKA: The return for one year is calculated as price change + income. The income is assumed to be reinvested at the end of the year when computing annualized returns for multiple years. If we assume that dividends are reinvested immediately and stocks on average have an upward trend, the annualized returns might understate returns when the distributions are made throughout the year (XIU, for instance, has one distribution per quarter) and reinvested immediately.
Great.. thanks. I suspect many struggle with limiting financial blunders. After all, people are optimistic when it comes to their money and hate to admit their mistakes… so they often hold on to bad choices, making it worse in the long run.
So, what exactly qualifies these two individuals to write an investing book? You mentioned that one of them is a fund manager… But what about their performance, especially in down markets?
When I glossed over your headline, I almost thought you said Tim Burton wrote a book about the market. Ironically, Tim Burton would have drawn my attention as I like to use the term “Nightmare Before Halloween” to describe the Income Trust fiasco as a nod to his brilliant movie “Nightmare Before Christmas”.
Both Malkiel and Ellis are authors of investment classics. Malkiel is the author of A Random Walk Down Wall Street and Ellis is the author of Winning the Loser’s Game. Here are two nice write ups of the authors:
http://en.wikipedia.org/wiki/Burton_Malkiel
and
http://www.rwjf.org/about/trusteebio.jsp?id=240