Burton Malkiel

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Burton Malkiel. Photo by J.D. Levine (c) Yale University

Burton Gordon Malkiel (born August 28, 1932) is an American economist and writer, most famous for his classic finance book A Random Walk Down Wall Street (now in its 9th edition, 2007). He is a leading proponent of the Efficient market hypothesis, which contends that prices of publicly traded assets reflect all publicly available information.

He is a professor of economics at Princeton University, and is a two-time chairman of the economics department there. He served as a member of the Council of Economic Advisers (1975-1977), president of the American Finance Association (1978), and dean of the Yale School of Management (1981-1988).

He has also written influential articles, including "The Valuation of Closed-End Investment Company Shares," Journal of Finance (1977). This article discussed the puzzle of why closed-end fund companies typically trade at market valuations lower than the net value of their assets. If net asset value and market capitalization are only two ways of measuring the same thing, then why is there a consistent difference between them?

Malkiel discussed, and discarded, the hypothesis that the discount is due to the management fees. The argument of the paper is that since management fees are generally constant, this view wouldn't explain changes in the size of the discount during the life-cycle of a fund. Furthermore, if the discount resulted from management fees, it should be related (Malkiel contended) to interest rates, yet the data doesn't support any such tie.

Malkiel is closely affiliated with The Vanguard Group due to Vanguard's similar investment philosophies. Astute readers of A Random Walk Down Wall Street will observe Malkiel frequently references Vanguard.

Malkiel received his bachelor's degree (1953) and his MBA (1955) from Harvard University, and his doctorate (1964) from Princeton. He married his first wife, Judith Atherton Malkiel, in 1954; they had one son, Jonathan. After Judith Malkiel's death in 1987, Burton Malkiel married his second wife, Nancy Weiss in 1988. He served as a first lieutenant in the United States Army from 1955 to 1958.