Active Quote by Paul Samuelson
“Still, I figure we shouldn't' discourage fans of actively managed funds. With all their buying and selling, active investors ensure the market is reasonably efficient. That makes it possible for the rest of us to do the sensible thing, which is to index. Want to join me in this parasitic behavior? To build a well-diversified portfolio, you might stash 70 percent of your stock portfolio into a Wilshire 5000-index fund and the remaining 30 percent in an international-index fund.”
About This Quote
Source Speech: Interview on Investment Strategies, 1990s
Active fund managers trade frequently, creating market efficiency that lets passive investors benefit by indexing.
In simple terms: Active trading helps markets; passive investors should index.
Key Takeaway
Use index funds for most of your portfolio.
Themes
investment
efficiency
passive investing
portfolio construction
Mood
analytical
pragmatic
Type
advice
financial.
When to use this quote
- personal finance
- retirement planning
- wealth building
Key Concepts
Market efficiency
indexing
diversification
Questions to Reflect On
- How do you balance active and passive strategies?
- What risks exist with heavy reliance on indexing?
A Different Perspective
Active management may not always outperform fees.
![“When the economy was going up, [Milton Friedman and I] both gave the same advice, and when the economy was going down, we gave the same advice. But in between he didn't change his advice at all.” quote by Paul Samuelson](https://sms4smile.com/quotes/img-quotes/0e0/paul-samuelson-9078_advice_when-the-economy-was-going-up-milton-fri_107897.jpg)
