Charles Ellis is an investing pioneer, having founded financial-consulting firm Greenwich Associates in 1972 and written an early defense of index investing, “Winning the Loser’s Game,” whose eighth edition was published recently.
He also served as chairman of the Yale Investment Committee.
In this interview, he discusses why passive investing is a better bet than ever and shares some thoughts on the legacy of his recently deceased friend, the great investor David Swensen of Yale University. It has been edited for length and clarity.
Howard Gold: “Winning the Loser’s Game” was first published in 1985. I interviewed Nobel Prize winner Eugene Fama, whose paper that established the efficient market theory had been published maybe 10 or 15 years before that. The late John Bogle was just getting under way at Vanguard. Thirty-six years later, has passive investing finally won the battle?
Charles Ellis: It certainly is winning the battle. Every investor should be an active investor in the sense of actively figuring out who they are, what their circumstances are, what they’re trying to accomplish, what they’re trying to avoid, what will work for them [as a] long-term investment even as markets go up and down.