The best 50-year-old investing advice money can buy

INVESTING in broad-based index funds seems unambitious – a fallback for people who lack the confidence to pick stocks that will outperform the market.

Nearly 50 years ago, the economist Burton Malkiel came out with a book that said, in effect, that all of us should be in index funds. The stock and bond markets incorporate new information into prices almost instantly, so trying to beat them is a fool’s errand, Malkiel wrote. Instead of trying to winnow winners from losers, you’re better off saving on brokerage commissions and headaches by spreading your investment dollars across the entire market.

While this has come to be conventional wisdom, it was crazy talk in 1973. A blindfolded chimp throwing darts at the stocks page is as good as a stockbroker? Insulting and ridiculous! BusinessWeek (my former employer) gave the book, A Random Walk Down Wall Street, a scathing review.