Question: What advice would you give to a new investor? Michael
: The first thing is to really think about your own
situation to the best of your ability. So, you know, how old are you?
How long are you going to be investing? What is your risk tolerance? And
just try to be as honest as you can. So that’s the first thing.
second thing is to constantly save and invest. It sounds very simple
and trite, but people that consistently save, set aside part of their
compensation and invest it, over long periods of time, do very well
because of the power of compounding.
The third thing is that,
notwithstanding our recent difficult ten year period for equities, and
by the way, we’ve had three such episodes over the last hundred years or
so, so this is actually pretty unusual in a longer-term context; is
it’s very likely that stocks equities will do better than bonds over
time and I think that’s probably particularly true today. So if you’re
young and you have a long future and you’re going to be setting aside
money, equities probably does make more sense than bonds. And the last
thing is to recognize it is a big world out there. The United States is
obviously really important in the big world; but it’s becoming less and
less relevant. So it’s important to spread and diversify your
investments across the globe and to make sure that you’re participating
in that ultimate economic growth, demographics and so forth.
Recorded on May 14, 2010
Interviewed by Jessica Liebman