My Interview with Burton Malkiel (That You Will Never Hear)

Tyler Gardner (0:00)

The cost of being right early in markets is often indistinguishable from the cost of being wrong. This is the trap that catches even sophisticated investors.

Hello, friends. This is Tyler Gardner welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be.

Quick note before we get into it. May's pre-order incentive for my book, Real Wealth, is now live. When you pre-order this month, I'm sending you two chapters that didn't make the final cut. Chapters I genuinely love and wish I could have kept, delivered digitally in early June. Pre-ordering also locks you in for every monthly incentive between now and the December 1st release. Go to tylergardner.com/book, click the button that says claim my bonuses, upload your receipt, takes two minutes and you're in. Now on with the show.

I wanna tell you about the worst thing that happened to me last week. I know, great transition. Last Thursday, I had the opportunity to sit down on Zoom with one of the most influential and important figures in the history of personal finance. A man who, in 1973, wrote a book that changed the way ordinary people think about money. A man who has been right, almost maddeningly right, through Black Monday, the.com crash 2008, COVID, and every single moment in between when someone in an expensive suit on television was absolutely certain the old rules no longer applied.

I had an hour with Dr. Burton Malkiel, the author of A Random Walk Down Wall Street. We talked about fear and behavior and what retirement actually means when you're 93 years old, and still intellectually curious and still showing up. We talked about Jack Bogle. We talked about whether financial education even works. We talked about irrational exuberance and why acting on Alan Greenspan's 1996 speech would have cost you years of some of the best returns in stock market history. It was one of the best conversations I have ever had about money.

Then before hitting stop recording on Zoom, I ended the meeting and exited Zoom. Apparently, that means the recording is gone forever. Don't worry, I've already contacted Zoom support, it is gone.

So after sulking in a corner for seven days, I decided to pick my head up, reconstruct what I could from memory, and give you the best of the conversation. Because Burton Malkiel gave me an hour of his time, and I am not letting that disappear just because I am, apparently, a person who cannot operate basic software. But here's what I realized while I was sitting with the loss of that recording. The reason that conversation mattered so much to me, the reason I was nervous going into it in a way I almost never am before an interview, isn't just that Burton Malkiel is brilliant, or that A Random Walk Down Wall Street is now in its 13th edition, or even that we share a publisher, which still feels slightly unreal to me as a former high school English teacher from Vermont, it's that Malkiel is one of the central characters in one of the most important and underappreciated stories in the history of personal finance. A story about a dangerous idea, a story about the people who did the math first, the people who tried to build the thing and nearly failed, and the industry that spent decades trying to bury all of it. So that's what today's episode is. Deviating from my traditional form, I'm going to tell you a story. The full story. The economists, the academics, the traders, the fund that got called un-American. And as we go, I'm going to do my best to weave in the pieces I remember from my conversation with Malkiel to add firsthand credibility and depth of experience.

The things he said about fear and behavior and concentration and what it actually means to stay the course. They're going to land differently, I think, when you hear them inside the history they helped shape.

The story starts with a man named Jack Bogle, and an idea that Wall Street spent decades trying to kill. The idea that the average investor would be better off buying the entire market at the lowest possible cost and then doing absolutely nothing.

Buy everything, pay almost nothing, do nothing. The industry that tried to kill that idea now manages over $30 trillion in index funds.

As always, a familiar ask, if you found this podcast helpful in any way, please consider leaving a review on Apple or Spotify as it helps the show grow, and it helps me know that I'm not just telling stories about index funds to my sleeping bloodhounds.