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Chapter 1: What insights does Burton Malkiel share about market timing?
We hear from many experts trying to beat the market. Today, the man who's warned for half a century that it can't be done. I'm David Brancaccio in Los Angeles. First, we'll get a look today at how conflict in the Middle East, blocking oil shipments and raising energy prices, is shaping U.S. inflation. Marketplace's Nancy Marshall-Genzer is watching for the March Consumer Price Index.
The overall inflation rate will rise by 1 percent, according to Pantheon Macroeconomics, driven mostly by an expected 23 percent spike in gas prices. Goldman Sachs economists predict higher oil prices pushed up airfares by 4 percent.
They expect an overall inflation rate of almost 3.5 percent for March, and they think energy prices will shoot up again this month, bringing headline CPI inflation to about 4 percent for April. I'm Nancy Marshall-Genzer for Marketplace.
To be clear, the big route for oil, the Strait of Hormuz, is still closed, and oil is up slightly this morning, $97.86 a barrel.
Chapter 2: How is the current inflation rate influenced by global events?
It was $67 before the U.S. and Israel launched against Iran. Stock index futures are little changed ahead of that inflation data. Today's my last day hosting the Marketplace Morning Report here. But first, a last interview. I thought, why not catch up with the author of what is arguably the most influential book on personal finance and investing of all time.
First published in 1973, A Random Walk Down Wall Street argues that it's super hard to beat the stock market. Its author, Burton Malkiel, Princeton professor emeritus, is still at it at 93. He joins us from New Jersey. Dr. Malkiel, welcome. Delighted to be with you. 13 editions of Random Walk. I have my dog-eared copy. I gave a gift of your book to my kids when they were starting out.
But for those new to it, Professor, you make the case that what? It's pretty darn hard to beat the market averages by picking individual stocks?
This was my thesis over 50 years ago when the book first came out. It was not really accepted at that time. A lot of professionals thought this was nonsense. But the fact of the matter is that with over 50 years of experience, We know that a simple so-called index fund, by which we mean a fund that buys all of the stocks in the stock market, does actually better than professional money managers.
It's not that it's always right. but that the judgment of the market has been consistently shown to be better than the judgment of individual active managers.
Now, none of this means you shouldn't tend to your portfolio. Keep an eye on it. Rebalance it. Don't just set it and forget it.
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.
I'm thinking of somebody, though. I mean, you do acknowledge that some people are OK at this. Some people have figured it out, it seems, how to beat the market. You must have known the late Jim Simons, the mathematician at Stony Brook and hedge fund manager at Renaissance Technologies.
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