Episode #483: Burton Malkiel – Applying ‘A Random Walk’ to the World Today
Guest: Dr. Burton G. Malkiel, the Chemical Bank Chairman’s Professor of Economics, Emeritus, and Senior Economist at Princeton University, is Wealthfront’s Chief Investment Officer. Dr. Malkiel is the author of the widely read investment book, A Random Walk Down Wall Street, which helped launch the low-cost investing revolution by encouraging institutional and individual investors to use index funds.
Date Recorded: 5/3/2023 | Run-Time: 49:41
Summary: In today’s episode, Dr. Malkiel shares what’s changed in the latest update of his book, touching on the role of bonds given higher yields today, the impact of inflation, and why it may be time to consider adding I Bonds to your portfolio.
Then we talk about some current investment trends. He pushes back on the ESG-craze, discusses the recent uunderperformance of risk parity, and suggests you look at your portfolio to be sure you aren’t overallocated to US stocks today.
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Links from the Episode:
- 0:39 – Sponsor: YCharts
- 1:38 – Intro
- 2:22 – Welcome to our guest, Burton Malkiel
- 2:39 – A Random Walk Down Wall Street – The Best Investment Guide That Money Can Buy
- 6:17 – High fee / low fee & active / passive
- 10:40 – The change in bonds and reasonable return rates currently in the market
- 11:18 – The impact of inflation on portfolios
- 14:34 – Current suspicions about ESG investing
- 20:24 – Risk parody and methods of portfolio selection
- 25:49 – His view on Bitcoin
- 28:16 – Advice on how to not get seduced by one investment strategy
- 35:47 – How investors should be thinking about foreign stocks
- 39:20 – Investment strategies his peers don’t believe in
- 40:55 – Burton’s most memorable investment
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Meb Faber is the co-founder and cheap investment officer at Cambria Investment Management. Due industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
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Welcome my friends, we got a really fun episode today. Our guest is Dr. Burton Malkiel, legendary economist, chief investing officer of Wealthfront and author of one of my favorite books and one of the most widely read investing books ever. A Random Walk Down Wall Street, which recently celebrated a 50 year anniversary. Today’s episode, Dr. Malkiel shares what’s changed in the latest update of the book, touching on the role of bonds given higher yields today, the impact of inflation and why it may be time to consider adding I bonds to your portfolio. Then we talk about some current investing trends he pushes back on the ESG craze, discusses the recent under performance of risk parity and suggests you look at your portfolio to be sure you aren’t over allocated to US stocks today. Please enjoy this episode with the legendary Burton Malkiel. Professor, welcome the show.
Thank you. Glad to be here.
Where do we find you today?
Well, I’m in Princeton, New Jersey. As you can sort of see from the screen behind me.
I’m really excited. I’ve been looking forward to talking to you. Your book, which just hit 50 year anniversary, my goodness, that’s amazing this year. What edition are we on by the way?
Well, we’re on the 13th edition and I would say there are probably more changes in this edition than in any of the editions in the past.
Let’s talk about it. What’s the big differences?
Well, let me start with what the message of the original edition was and what hasn’t changed, and that is that in the original edition that was first published in 1973, it recommended that people would be better off having as the core of their portfolio a very simple low cost, broad-based index fund. In fact, the thing that was said about the earlier edition is, yeah, that sounds fine, except you can’t buy the index. I indicated in that edition you couldn’t buy the index and I thought it was about time that you could. Well, three years later, the Vanguard Group started the first actual index fund and now you can buy the index.
The first index fund was not a great success. The market professionals thought this was absolutely silly. There’s no way that a professionally managed portfolio couldn’t beat a simple index fund. The evidence, and here we go to one of the new things that’s in the book, the evidence is just been accumulating and is very strong that in fact indexing is not a mediocre strategy. It’s in fact an optimal strategy. The Standard and [inaudible 00:04:41] Corporation does what they call a SPIVAM study and that stands for the Standard and [inaudible 00:04:48] Indexes Versus Active Managers. What these studies have consistently shown is that in any single year, something like two thirds of active managers are beaten by the index and the problem is the one third that win in one year aren’t the same as the one third that went in the next year.
That when you compound this over five years, over 10 years, over 20 years, it’s more like over 90% of active managers underperform an index and have underperformed the index by about a hundred basis points by about one percentage point a year. I’m not saying that it’s impossible to outperform. Sure it is, but when you go and try to be active, when you try to find that Warren Buffet of the future, you are much more likely to be in the 90% part of the distribution rather than the 10% part of the distribution. I say the core of every portfolio ought to consist of a broad-based index fund.
It’s timely that we’re talking about that as you mentioned Buffet because he’s got his big Omaha shindig this weekend that I know a lot of friends are going to. One of the things that you know touched on and we talk about your book Bogle, the indexing revolution has done more particularly for American investors than just about any other concept. How much of it do you think of it, as I look at markets here in 2023, the phrase index has always meant to me sort of market cap waiting, broad exposure and how much of it is kind of what it enabled, meaning the ability to offer strategies at low fees versus the one and a half or whatever the average fee was back then or more. I think the average mutual fund today, not dollar weighted because of Vanguard, but average median is still like 1.25. How much of it is the high fee, low fee versus the active versus index?
Clearly a big part of it is the expenses and difference in expenses. In fact, the general difference between the typical broad-based index fund and the typical active manager, that difference is largely explained by the difference in funds. There’s something more to it. If in fact the market was so inefficient that active managers would be able to pick up things that in fact the rest of the market doesn’t see despite the difference in fees, you would expect active managers to do better. The problem is take away the fees, pre-fees, the typical active manager does not do better than a broad based index, which as you correctly pointed out is capitalization weighted.
Yeah, I get to thinking a little bit about Vanguard is a fun example because you know spent many years there so better than I do, but I always like to poke some of my Bogle head friends and I say last time I checked, technically Vanguard had a whole slug of active funds right now they were run very low cost and on and on, but they’re actually quote one of the largest active fund managers in the world. Now that’s anytime you put a T after your name and have trillions rather than just billions, you have that scale and size. Part of it to me always comes back to this idea in the first place, which is such a massive idea of thinking about all your costs. So not just management fee or expense ratio, but also costs and transacting. So index is one of their brilliant innovations. They don’t do anything. A lot of them, they do a little bit, they rebel, but it’s not 50%-90% turnover usually. But thinking about costs and then the newer iteration, that being taxes being hugely important too.
Well look, let me just say on your point about Vanguard has plenty of active funds. Remember that Vanguard started as an active manager. Before the index funds started, Vanguard had a whole set of actively managed funds. A lot of them had a kind of value bias, but typically the growth and the reason that Vanguard has that T before , the number of how much in assets do you have, it’s largely because of the growth of index funds. While they still definitely do have active funds, that was how they started, but their growth has largely been because of their ability to do index funds both as mutual funds and as exchange traded funds.
We started out with that as the basics, the foundation really for an allocation. Hey, you got these low cost rules-based exposures. What are some of the other changes now? You said there’s been a lot of updates this year. What are some of the items we can dig in?
One of the new things relative to the addition that happened just before as markets changed and you went from essentially zero interest rates throughout the yield curve, bonds actually, as I said, an addition before this were a very risky thing, whereas today one of the differences is that for the first time in really a long time you can get a reasonable rate of return from bonds.
The other thing that I think is important of what’s different today is a massive change has taken place in the inflation outlook we went through after really following Paul Volker’s Slaying the Inflation Dragon, we went through a generation of falling inflation and the Federal Reserve was complaining, “Oh my god, we’ve got a 2% percent target for inflation and we can’t seem to get anywhere near it. We’re in open market operations, we’re buying up securities, we’ve got a portfolio, a government bond portfolio that is growing all the time. We still can’t get inflation up to 2%.” Today, interest rates now will actually give you a yield and give you a yield that is absolutely much better than we have seen and that most people have seen throughout their investing history.
It’s funny, we like to talk to investors about regimes where the vast majority were professionally managing money are caught off-footed. Meaning most people who’ve been managing money currently have been doing it during the 80s, 90s, 2000s, 2010s, right? One very similar period of interest rate declining environment. All of a sudden you’ve had this shift where interest rates have not only come up to normal levels, but you had this big inflation pop. Now it looks like it’s coming down but it’s still quite a bit higher than most people are used to. So it’s an unfamiliar environment and it’s one of the reasons you had one of the worst years ever for 60-40 last year. That’s the bad news. The good news is like you mentioned, you now got 5% T-bill yields. It’s sort of reset in a way. So talk to me a little more what else is different? We’ve had this environment kind of shift inflation is back. You can get a decent bank account yield as long as you don’t bank somewhere that gives you still one basis point. What else is in the new one?
Well, for example, there are new instruments and one of them that I talk about in this edition, and this is wonderful for the individual investor, there is something called IBANs from the treasury and what the I bond does on the recent pricing of the I bonds, you get a base rate of approximately 1% and you add to that the inflation rate, they are basically the safest securities that you can buy and is the most perfect inflation hedge that you can imagine. Again, that would be an example of one of the things that is new. Now the other thing that the new addition does is it talks about a lot of the things that are new that I have much more suspicion about. Let me give you an example of what the hottest thing now is in active management and that is so-called ESG investing that we will invest so that our holdings are environmentally sound in companies that are socially wonderful and that are governed perfectly. These are heavily marketed.
I have in the new edition a lot of the results very clear. First of all, when you look at what these funds hold, it’s not at all clear that in fact they do what they say. There are services that rank countries, rank companies, excuse me, in terms of ESG and the ranking services are completely different. Give you an example, in one rank Apple has the best governance in its industry in another ranking it has the worst in its industry. What do you do about a utility? Here’s another great example, a utility that is still burning some coal. Clearly it burns coal can’t possibly be in an ESG portfolio. Again you look at it and it’s the only utility that has promised by a date certain to be carbon neutral and who is investing more than any other utility in solar power, in wind power. Are they good because of what they’re investing in or are they bad and can’t be invested in because they still are burning a little coal?
When you look at it, it really isn’t clear that these companies that are in these portfolios are ones that are going to make you feel good. What do these funds buy? What are their big holdings? Their big holdings are Facebook or Meta as it’s called now. Should I feel good about investing in the social media stock that a lot of people think has very deleterious effects on teenagers? Should I feel good because one of my big holdings is Visa, that charges exorbitant interest rates to poor people?
When you kind of look at it, you find, hey, they may not be as pure as they should be. In fact there’s a lot of so-called greenwashing. You take a regular fund and you advertise it as being a socially wonderful fund. It’s not clear that they are actually doing what they say they do and they have even higher expense ratios. When you look at the results, they are doing a lot worse than a simple index fund. So you made neither do well nor should you feel that, oh boy, I’ve been investing for the greater good because you may neither get higher returns nor be investing in great companies.
We have a tweet some point in the last year or two where I said something along the lines of said, how many investing products, or more specifically I was talking about VC funded fintechs. I go, “How many of these are just Vanguard with higher fees?” Meaning like ESG is a good excuse to charge more. And I was laughing as you were talking this because I know somebody who runs a, it’s an ETF called ETF orphans, meaning he’s like targeting industries and areas that are outside of ESG, but he runs the holdings through ESG and it gave him a rating of A.
It just makes the whole thing like you mentioned, doesn’t really make a lot of sense. The one part I do sympathize with, which is the same you do my belief it’s not going to help your returns. If anything, it’s probably going to hurt them to as a quant reduce your breadth or universe. Right? Anytime you go from a thousand choices to a hundred, you have less chances. I do sympathize with people that just say, “Look, hey, I realize that. I just don’t want to profit from whatever it may be, cigarettes, guns, whatever.” I say, look, God bless you. That’s your thing. Particularly the broad-based ESG ones. It’s very messy, right? Like you mentioned you could have a utility that yes it does coal, but hey it may be one of the biggest green energy research companies in the world. Then Meta, my god, we could spend a whole podcast talking about that. I don’t know if history’s going to judge that company kindly.
Then the one that I think that people overlook the most that a lot of companies depending on your criteria would fail is the governance side, which we’ve seen kind of over the years a lot of governance failings that I think nothing like a bear market to come and clean that out. All right, so what else is in the book? Listeners, you got to go buy the book anyway. It’s well worth your money. I have a couple different editions at least back on this bookcase. What else is on your mind in the book? What are you thinking about?
Well again, I’ve looked at all the new methods of portfolio selection and one of them that became very popular is something called risk parity. The idea of this is that safe assets often sell for higher prices or give lower yields than they should and very risky assets often are overpriced. I’d like to give the example because I’ve done some work on racetrack betting. I’m someone who believes the market is pretty good and pretty hard to be. And in fact, if you look at a horse race, we’ve got the Kentucky Derby coming up. If you look at the ranking of the odds that are from the betting on the horse race, the odds actually do a reasonable job in selecting the winners. And in fact, the long shots generally finish at the back of the pack and the favorites are generally in the front of the pack, but there’s a systematic bias in that the long shots go off at much lower odds than they should, given their probability of winning. The favorites are also quite mis-priced.
Just to give you an example, suppose you were at a track and you bought tickets on every horse in the race. You would have a winning ticket, but you would lose about 20% of your money each race because that’s the track take for their profits, for taxes, and for running the operation. Suppose you bought every tickets on every favorite, you don’t lose 20%, you only lose 5% because the favorites were mis-priced. If you bought every long shot, you don’t lose 20%, you lose 40% or 50%. This is the general idea that markets typically mis-price things. What you ought to do is buy very safe securities and lever them up so that you increase their risk and rate of return. That’s the idea of risk parity and it worked for a long period of time. There are risk parity funds out there and everything else when something gets very popular, it no longer works. Boy did it fail in recent years because people were holding very safe bonds on margin just when the Federal Reserve was increasing interest rates by 400, 450 basis points and it was a disastrous strategy.
That’s another example and it continues to drive me back to believe that some of these ideas may be great, some of them may work for a while, but look, in some sense the simplest thing that you can do may be the best thing that you can do and certainly ought to be some part of your portfolio, I say the core of your portfolio, you want to go out and speculate on individual stocks. It’s fun. Listen, the stock market is a lot of fun and at least relative to going to Las Vegas had gone to the casino where the odds are stacked against you.
In general, if you believe in this country as I do and as Warren Buffet does, this is a way of benefiting from the growth of America. This is another thing that I’m very much aware of, and that’s the history of markets. When the internet first started, we had internet companies sell for over a hundred times earnings. We had companies that put.com after their name that would double and then double again, be very, very careful about these things. Since we’re talking about things to be careful of, let’s mention Bitcoin, which I have put a lot of information about in the new edition. This is something that I think you want to go and play with it, fine, but I don’t think it belongs in a retirement portfolio and I think it will lead a lot of people and has led a lot of people to disaster.
Man, there’s a lot in there, professor. I was laughing because we went and saw another Professor, Sharp, last year here in LA and I asked him, I said, talking about the global market portfolio, you’re talking about buying everything. So buying all the stocks in the world, all the bonds, splicing, all the other publicly traded stuff. I said, “Does Bitcoin have a role in the global market portfolio?” He says “Yes, but unfortunately not a good one.” I was loving it. I was laughing at his answer. You’ve been a longtime proponent, I think, of broad diversification, low fees, kind of automating the main part of your portfolio, which is something we talk a lot about. One of the hard parts for individuals and advisors, a lot of us professionals love to look down at those crazy little individuals. Then I look at half my friends that are advisors and institutions and I see just as bad behavior.
It’s everyone. We’ve written a lot about globally diversified portfolios. Over the past decade, and some of them it’s the past 12 years, these portfolios on average have underperformed the S&P every year, and this is excluding 2022, but the 10 years prior, 10 years in a row, not 10 years overall, 10 years in a row of the S&P romping and stomping and just crushing a diversified portfolio. One of the challenges you see with people that’s as old as time is starting to gravitate and chase performance. So the younger cohort, we saw a lot of this in the meme stocks of 2020. I was laughing when you were talking about a hundred times earnings because that was my bubble. Right? The 2000 bubble. This last one in 2020-
It’s in the new edition, believe me.
It was like a hundred times revenue. It wasn’t a hundred times earnings, it was like a hundred times revenue. What is the advice you give to people on how to not get just seduced by whatever it is, one asset, one manager, and how to behave?
Well again, let me just say that another new thing is I have an entire chapter on so-called behavioral finance because I said that doing the right thing is actually quite easy and that’s what we’ve been talking about. There are two things that you need to do in investing. You need to do the right thing, but you also have to be very careful not to do the wrong thing. In terms of investment advisors, you probably think this is self-serving and it certainly is, but just as the index fund was a revolution in putting portfolios together, so the robo advisor is a revolution in giving investment advice and I am the chief investment officer of one of the robo advisories, although we call ourselves an automated investment advisor, and this is a company called Wealthfront that’s in Palo Alto.
What we do is we have an overall expense to manage and balance the portfolio of 25 basis points. What we also do, although we’re clearly mainly just broad-based indexers, we do something that I believe is the only sure way of getting an alpha and that is to do tax loss harvesting. In other words, let’s give you an example. Suppose that you wanted a portfolio and I’ll use the S&P 500, although in general I want a broader index than that, but just for the sake of argument, suppose instead of buying all 500 stocks, I had a computer program that chose 250 of those stocks and it was selected so that the stocks mirrored the size distribution in the S&P 500, it mirrored the industry distribution and was optimized to minimize the tracking error with the index. I only hold 250 stocks.
Then let’s say that the stock market, maybe even a year when it went up, but auto stocks were down, since I don’t own all the auto stocks, maybe then I’ll sell Ford that went down and buy General Motors that also went down and I realize the loss from Ford and let’s say the drug stocks were down, then say I’ll sell Johnson and Johnson and buy Merck. In a year like 2022, when as you know the market was down 20%, there were many opportunities to do this. Instead of what happens with an actively managed fund where, I mean so many people have told me this, I don’t understand what happened. My fund went down 20% this year and I got a 10-99 at the end of the year. And it said, you realize these short-term capital gains and long-term capital gains and you’ve got a tax liability, how could I have a tax liability when I lost money? Well, because there was trading and people realized some capital gains and you get your share of it at the end of the year.
Instead of that 10-99 giving you a tax liability, this gives you a tax loss that you can use to offset other gains and that up to $3,000 can be deducted from your income taxes.
This has always been available for wealthy investors. There are companies like Appirio which do the tax loss harvesting, but Wealth Front since it’s automated is able to do this even if you’ve got a portfolio that’s only a hundred thousand dollars. Again, this is one of the things that is so important. It’s the only sure way I know of getting an alpha. You don’t get pre-tax out performance, but you get after tax out performance and it works well. Having an automated service that can search for these things every day is a very effective thing to do.
Yeah, taxes, fees are obvious because people can see them. Taxes, to me, I feel like investors often overlook, they moan about them come April. We were talking a lot last year saying, man, there’s going to be some monster capital gains distributions. Talk about a double just slap to the face. Not only is your fund down 20, 20, 30% by the way, some of these had 10%, 20% capital gains distributions. The good news is I think if you look at the flows chart over the years, it’s like a big alligator jaws, right? It’s going towards lower fee funds and that’s a trend that’s just a one-way street. That’s great. A lot of these bad behavior, the old sort of Wall Street of decades past of conflict of interest, I think they’re eventually dying. I hope they’re dying out.
You don’t go back to those funds, or at least I hope not listeners, if you had a 20% capital gains distribution on these inefficient mutual funds. I love the automated services, I have been a huge proponent, but A, the automated side, B, the systematic it kind of whirs in the background, but in today’s environment it’s really interesting because of the cash accounts as well. Often they’ll have a side savings account and as opposed to it being a Bank of America and getting one basis point, you’re getting 4%, 4.5%, 5% FDI insured. To me that’s actually a big reason to be considering the automated.
Wealth Front just announced 4.55% in the cash account that they offer.
Well, I think once people automate things, and again, I’m a quant, so they think about it in a different bucket, people think about their savings in a different bucket than they do in their investments, but the people that do either automated or the target date funds style where it just gets clipped off your paycheck, it goes in there. I think they behave a lot better in general. A couple other topics I wanted to hit on. Another part of the challenge of the past decade is particularly my younger friends, but a lot of people as investors, the US has stomped everything, not just commodities, +real estate, gold bonds on and on, but particularly foreign stocks.
Historically foreign stocks in the US have been kind of a coin flip in any given year and there’s periods where one does better than the other. You’ve talked about valuations before. I know you talked about CAPE Ratio and others. How should investors be thinking about that today we look at kind of percentage of portfolios that investors in the US have, and it’s darn near 80%, 90% usually in the us, which is nowhere even close to the market cap waiting. What do you say to people?
Well, I do think that today in particular, I worry that most portfolios are under weighted with foreign drugs. One, as you say, most people are 90% to a 100% in the US and the valuations are quite different. The CAPE ratio is the so-called cyclically adjusted price earnings multiple. You don’t take any one year, but you sort of average the earnings to get what the old Graham and Dodd used to call the earning power of the corporation. These CAPE ratios in the US today are actually quite high. The CAPE ratio does a reasonable job, not a predicting short run returns. Nobody can predict short run returns, but returns over the next decade have had a pretty good correlation with this so-called CAPE ratio. When CAPE ratios, cyclically adjusted price earnings ratios are high, the 10 year rates of return tend to be lower than average. When CAPE ratios are low, the 10 year rates of return have tended to be somewhat higher than average.
Today, CAPE ratios in the United States are well above average and Cape ratios in Europe and Japan tend to be below average. CAPE ratios in emerging markets also are below average. On a valuation basis also what I say to people is, look at your international diversification and if you are 80$, 90%, 95% US, think about adding some international diversification, I think you’re likely to both increase return and reduce risk by doing so.
Yeah, I catch a lot of flack, been tweeting about it, particularly some of these foreign exposures, emerging markets, and you see the sentiment responses from people particularly on emerging side. I was joking because Vanguard just recently put out their economic forecast and they said, “Of all the asset classes, the number one expected return over the next decade was foreign stocks.” I said, “You go give them a hard time. You guys quit bugging me on Twitter.” Two more questions for you and then we’ll let you out into the Princeton evening. What do you believe, I have a long list on Twitter for this, What do you believe the vast majority of your peers, so like 75%, so if you go to cocktail party with a bunch of friends in the investing world, what do you believe that the vast majority of your peers don’t believe? Kind of a non-consensus view that if you got into an argument with all your buddies, most would take the other side.
Well, I think most people really believe that they are excellent stock pickers. I think the evidence is very clear that they are wrong, that there are no excellent stock pickers. I think that the other thing that they believe if they have bought something that did well, if they will tell you, “I knew that Microsoft was going to be Microsoft. I bought it, I held on.” The idea that most people think that if there have been successes that they came from genius and forget that, in fact, I always say as opposed to being lucky or smart, I’ll chooses being lucky all the time.
What has been your most memorable investment? It doesn’t have to be good. It can be bad. It could be your first stock, it could be the most recent one. Doesn’t even have to be a stock. As you think back on it, does anything come to mind
When the first index fund came into being, I did what I’ve always recommended that people do of dollar cost averaging, of just putting a small amount of money into that every period. When I started out, I didn’t really have much in resources, but I was able to put a hundred dollars a month aside. The calculations started in 1978 because that was when the first index fund was available, a hundred dollars a month, keeping on putting it in, whether the market’s up or down, whether you’re scared or not, that was worth today almost a million and a half dollars. The fact that it really is so easy and that even people with limited resources as I’ve done actually getting a big retirement fund, even starting off with very, very little by forcing themselves to save and it’s very hard to do.
In some sense I’m saying this is so easy, it’s so simple to be a good investor. It’s not simple to save, I understand that, but if you did it, the potential results and actual results are just amazing. That a hundred dollars a month starting off when the first index fund was available is worth almost a million and a half dollars today. If you did this with a salary reduction from your employer and your employer matched it, then we’re talking about almost $3 million. So few people are facing retirement with enough money to have them have a comfortable retirement that I say this was the most striking investment in my life and it can be for everybody else.
Okay, let’s say President Biden or one of his people listens to this podcast and say, “All right, Burton, we hear ya. We’re going to drive you down from Princeton.” Tell us what can we implement, whether it’s financial education, whether it’s some sort of improvements to the retirement system, what’s like a one or two things we could be doing to really take advantage of this very simple concept in math you’re talking about, which is investing for the long term disciplined and low cost investments pays out enormous compounded results and dividends. What can we be doing?
Well, let me, that’s a wonderful question and let me give you my answer and my answer is the following. A lot of people think what you ought to do is privatize social security. Because of a lot of the things that you and I have talked about, I worry about that. I think that’s potentially just enormously risky. What if we did the following, we said, “Look, we’ve now got a little over 6% payroll tax that you pay on your salary.” What if we said, “Let’s increase that tax by 1%, but the 1% is not going to go to the government. It’s going to go for a private plan that you will have in addition to social security. That’s what I would like to see President Biden do. That’s one of the things, it’s a forced saving plan because I know darn well how hard it is to save. This is the thing I would really like to do, and I think 20, 30, 40 years from now, a lot of people in this country would be much better off and can look forward to a much happier and fulfilling retirement.
We talk about Australia and their retirement system and they have a pretty large forced saving. The funny thing is, if you talk to anyone from Australia, they love it. I’ve not talked to a single person from Australia who does not love their situation because you fast forward 10, 20, 30 years and all of a sudden you have this entire base of people who have large retirement savings. It’s funny because you look at some of these ideas and they’re so obvious and so simple and basic, you’re always wondering how the politicians don’t implement them. We’ll get Biden to get you on the phone and hopefully we can get this sorted out. Burton, this has been a blast, professor. I really been blessed to talk with you today.
Well, I’ve enjoyed it very, very, very much, and I really appreciate you taking the time.
Listeners, if you enjoyed this episode, check out the link in the show notes for our episode last year with another investing legend, Dr. Eugene Fama. Podcast listeners, we’ll post show notes to today’s conversation at mebfavor.com/podcast. If you love the show, if you hate it, shoot us feedback at firstname.lastname@example.org. We’d love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.