Charles Ellis' Advice for Individual Investors

Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
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This week on Masters in Business we speak with Charles D. Ellis, chairman of the Yale Endowment, a Vanguard Group Inc. director, founder of Greenwich Associates and all-around finance-industry legend. This is our second conversation with Ellis.

Despite working with big institutions his entire career, Ellis explained that the best approach for most individual investors is a simple asset allocation composed mainly of low-cost index funds. But he also said that the term "passive" understates what that approach entails.

Ellis is the author of 16 books, including "Winning the Loser’s Game" (which we discuss extensively in the show), and a collection of investing writing, "The Investor’s Anthology: Original Ideas from the Industry’s Greatest Minds." His most recent book is titled, "Falling Short: The Coming Retirement Crisis and What to Do About It."

You can hear the full interview, including our podcast extras below, as well as at iTunesSoundcloud and Bloomberg. All of our earlier podcasts can be found iTunesSoundcloud and Bloomberg.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Barry Ritholtz at britholtz3@bloomberg.net

To contact the editor responsible for this story:
James Greiff at jgreiff@bloomberg.net