Princeton Economics Professor Discusses the Role of Real Estate in a Long-Term Investor’s Portfolio
November 8, 2019 | Clay Risher | Nareit
Princeton University economics professor Burton Malkiel is the author of “A Random Walk Down Wall Street,” an investment classic first published in 1973 that launched the movement toward passive index investing. Born in 1932, he graduated from Harvard College and Harvard Graduate School of Business and received his Ph.D. from Princeton. Malkiel says investors should proceed with caution in the current investment climate. He also argues that real estate is reasonably valued and deserves a significant allocation within a long-term investor’s portfolio.
Q: Given that it’s been a decade since the great recession, where do you see the U.S. economy at this time? Do you have any specific areas of concern?
As you know, one of the more reliable forecasts of a recession is an inverted yield curve, and that has been flashing red lately. In the past, this generally signals a recession is coming, but I’d be careful not to make too much of it because there have been times, including a few years ago, when a recession didn’t follow that signal. I always think of the economist Paul Samuelson’s famous quip that ‘the stock market has predicted nine of the past five recessions,’ which of course derides the power of the stock market to predict the economy.
