Consuelo Mack is a long time fan of Professor Burton Malkiel and Dr. Charles Ellis. In fact, she had both of them on her show several times. So naturally, she was intrigued when Burt and Charley joined the Rebalance team and took a central role leading the firm’s Investment Committee and helping to design and monitor the firm’s retirement portfolios. These two legendary financial thought leaders are very sought after by financial services companies, university endowments, and pension plans.
What is so special about Rebalance? Ms. Mack decided to dedicate a 30-minute episode to how the firm is part of a new generation of investment advisory companies that leverage technology and innovative business models to provide consumers with fundamentally more attractive and lower-cost retirement investing options.
In this segment, Professor Burton Malkiel and Mitch Tuchman discuss how to avoid costly investment mistakes:
Consuelo Mack: This week on Wealthtrack, putting your retirement portfolio on autopilot. Financial thought leader Burton Malkiel has teamed up with online investment advisory pioneer Mitch Tuchman to offer retirement portfolios of low-cost index funds that automatically rebalance. Why they believe the combination will lead to smooth retirement landings is next on Consuelo Mack Wealthtrack.
Consuelo Mack: One of the things that I’ve talked to Charley Ellis about, who’s also on your Investment Committee, is the fact that we’ve kind of got to really change our attitudes toward retirement. We’ve got to work longer, we’ve got to save more, we’ve got to spend less — all of the things that none of us really want to hear as well. But obviously at Rebalance you’re cognizant of those realities, too, and so it sounds to me as if a goal also is to, No. 1, avoid the permanent impairment of capital, which is to avoid losses. So, it’s almost more of a value tilt, right? If something goes up to much, you are going to pare it down?
Burt Malkiel: Right.
Consuelo Mack: So, there is a value tilt to the entire portfolio.
Burt Malkiel: Absolutely, absolutely. That’s what rebalancing does.
Consuelo Mack: Right, and so that’s where you can get the edge over the typical benchmark indexes, and it’s to prevent us from making stupid mistakes.
Mitch Tuchman: If you ask any investor, name the top 5 investment mistakes you’ve made, and then they will sheepishly name them, and then you say, if you had all that money back in your account how much would your net worth be? And they just shake their head: “Way higher.”
Consuelo Mack: Right.
Mitch Tuchman: Charley wrote a book called “Winning the Loser’s Game”. The loser’s game is playing to win and investing is about playing not to lose. If you work really hard not to lose money you end up ahead of 90% of the people.