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A Devastating Conclusion

and the New York Telephone Company became its first major investor. In 1976, Sinquefield teamed up with Roger Ibbotson to co-author “Stocks, Bonds, Bills and Inflation,” an annually updated study that is widely recognized as the most comprehensive empirical study of stock market returns available36. Also in 1973, David Booth helped develop a marketcap-weighted S&P 500 index fund for Wells Fargo Bank. Sinquefield and Booth teamed up in 1981 to launch Dimensional Fund Advisors, a mutual fund company committed to the construction of asset class funds that efficiently capture the specific market risk factors identified by Fama and French. Sinquefield has been an eloquent and outspoken advocate for passive investing. At a 1995 Charles Schwab conference, Sinquefield shared his enlightening parallel between freedom and markets when he said, “It is well to consider, briefly, the connection between the socialists and the active managers. I believe they are cut from the same cloth. What links them is a disbelief or skepticism about the efficacy of market prices in gathering and conveying information… so who still believes markets don’t work? Apparently it is only the North Koreans, the Cubans and the active managers.”37

1973 – A Random Walk

Burton Malkiel

Economist, author and Princeton Professor of Economics Burton Malkiel is a leading proponent of Fama’s Efficient Market Hypothesis. In his 1973 book, A Random Walk Down Wall Street (now in its 10th edition),38 Malkiel challenged

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