‘You’re fooling yourself.’ Burton Malkiel on ESG investing

Episode Summary

Hosts Jeff Benjamin and Bruce Kelly dedicate this week’s show to a candid conversation with Dr. Burton Malkiel, legendary author of “A Random Walk Down Wall Street” and a renowned investor and economist who spent most of his career ruffling the feathers of the Wall Street establishment. They discuss Malkiel’s views that the current trend of ESG investing may not be the best method for reaching either of the oft-stated goals of ESG: doing well while doing good. Bruce and Jeff also dive into the bond market and active management during the interview.

Episode Notes

  • 2:00 – The increased appetite for ESG investing and why it’s misguided
  • 6:15  – What about ESG outperformance
  • 10:00 – ESG core values
  • 14:00 – Alternatives to ESG funds
  • 18:00 – The Pros of ESG investing
  • 20:00 – ESG as part of standard fundamental analysis
  • 23:00 – ESG fixed income investing
  • 24:30 – ESG and Retirement plans
  • 26:00 – The 60/40 portfolio’s waning relevance
  • 29:30 – The future of active management
  • 33:30 – The future of financial advice
  • 36:00 – Most important thing to watch

Dr. Burton Malkiel is a professor of economics, emeritus, and senior economist at Princeton University, perhaps most famous for his classic finance book A Random Walk Down Wall Street (first published 1973, in its 12th edition as of 2019). He is a leading proponent of the efficient-market hypothesis, which contends that prices of publicly traded assets reflect all publicly available information, although he has pointed out that some markets are inefficient

Dr. Malkiel served as a member of the Council of Economic Advisers (1975–1977), president of the American Finance Association (1978) and dean of the Yale School of Management (1981–1988).

He also spent 28 years as a director of the Vanguard Group. He currently serves as chief investment officer at WealthFront and as a member of the Investment Advisory Board for Rebalance.