Malkiel: Cheap Money Advice For The Wired

December 10, 2012


Malkiel (cont'd.): Let’s look at their fiscal balances as of today; let’s look at their debt-to-GDP ratios today, and then maybe what we ought to say is that it’s not the history of some of the Latin American countries that have defaulted that matters, but rather, where they are now. So maybe holding Spanish debt is maybe riskier than holding Brazilian debt.

I’m trying to give you a flavor of the kind of things we’re talking about, and those are exactly the kinds of discussions we’ve been having.

Ludwig: What you’re describing sounds like contemporary tools plugged into the timeless verities of index investing, no?

Malkiel: I think that’s fair, yes.

Ludwig: Does what you’re doing at Wealthfront at all affect what you’re doing at AlphaShares; or, looked at from another angle, might you integrate some of the AlphaShares products into what you’re doing at Wealthfront?

Malkiel: What I’m doing with AlphaShares creating China products would in no way affect this, and if we did have some China allocation to think about, I’d be happy to point out that YAO is a much better China product than FXI.

But I would point out that the people at Wealthfront should be well aware that that’s a conflict of interest from my standpoint. And that’s so important, because Wall Street is so full of conflicts of interest, and if there’s one thing I would always want to do is that if there was even a suggestion of a conflict of interest, I want to make sure that everyone knows it.



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