From Greg Mankiw:
OVER the last few weeks, as the stock market has reached new highs, my thoughts have turned to my 85-year-old mother.
“O.K. Mr. Smarty-Pants,” she often asks me, “what stock should I buy now?”
She first asked me this question when I was an undergraduate at Princeton, majoring in economics. She asked again when I was a graduate student at M.I.T., earning a Ph.D. in economics. And she has asked it regularly during the last three decades when I have been an economics professor at Harvard.
Unfortunately, she has never been happy with my answers, which are usually evasive. Nothing in the toolbox of economists makes us good stock pickers...
Which brings me back to my mother’s question: If I could pick just one stock for someone to buy, what would it be?
I would now suggest something like the Vanguard Total World Stock exchange-traded fund, which started trading in 2008. In one package, you can get low cost and maximal diversification. It may not be as exciting as trying to pick the next Apple or Google, but you’ll sleep better at night.
[NOTE: Click link near top at left for Vanguard ETFs]
N. Gregory Mankiw is a professor of economics at Harvard.
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Link: http://www.nytimes.com/2013/05/19/business/for-stock-picking-advice-dont-ask-an-economist
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