No Investor Is Fully Passive
Five active decisions that cannot be avoided.
James Stewart recently wrote that longtime index fund proponent Burton Malkiel had switched sides. Joining robo-advisor Wealthfront, claimed Stewart, made Malkiel an active investor. (The article's headline went one step further, accusing Malkiel of "straying from his gospel.") Yes, Wealthfront praises the merits of passive investing, but let's not kid ourselves--in Stewart's words, "the strategy aims to exploit market inefficiencies and beat the passive approach."
I agree with Stewart that Malkiel has switched--or at least modified--his position on security selection. He once advocated investing solely according to the investment's size, that is according to its market capitalization. Today, he suggests improvement on that.