FIN Alternatives is reporting that Burton Malkiel is starting a China based hedge fund. The author of A Random Walk Down Wall Street is famous for blasting active portfolio management and equating it to little more than gambling. In addition, Malkiel has been a critic of the hedge fund industry for decades.
Regular readers know I am a harsh critic of the efficient market hypothesis. I disagree with just about everything Malkiel stands for and EMH has taken a serious blow on the back of the financial crisis and market collapse. His foray into the hedge fund business appears to be an admission of failure of an entire life’s work. Even worse, this begs the question – is Malkiel just another case of the greedy Wall Street executive who honestly believes his clients can achieve market equivalent returns with low fee index funds, but nonetheless is attempting to use his fame and influence to charge 2 and 20?
Either way, it’s a near vomit inducing business move and in my opinion nothing more than more of the greed based hypocrisy we see on Wall Street every day.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.