Burton Malkiel

but that the judgment of the market has been consistently shown to be better than the judgment of individual active managers.

About a year ago, we had the president announce Liberation Day, huge tariffs on all foreign countries.

The market collapsed that day.

And a lot of active managers said, oh, my God, it's the end of the world.

We've got to go and sell all of our stocks.

And then a week later, the president reversed himself and the market went back up.

This is the problem.

Nobody can time the market.

And so, yes, you ought to look at your investments.

You absolutely ought to care for them.

But never, never, never think that you will be able to time the market and get in and out of stocks at the right time.

To the extent that an inefficiency arises.

and someone can take advantage of it temporarily, it will eventually disappear.

For example, over time, people determined that there was a so-called Christmas rally in the stock market.

That is that the stock market would go up between Christmas and New Year's.

Well, if that's true, what do I do?

as an active manager, what I do is I buy the day before Christmas and I sell the day before New Year's.

But then I realized because other people are doing this, I have to go and buy two days before Christmas and sell two days before New Year's.

And eventually that, quote, inefficiency will disappear.

It is true that some active managers have taken a lot of risk and have been right.