by AdvisorAnalyst.com Editorial Staff
Charlie Ellis is 88 years old, still working full tilt, and still making the case that the most important move any investor can make is to do nothing. On a recent episode of The Meb Faber Show1 — part of Faber's special series tied to his new coffee table book, Investing in America: The Rise of a 250-Year Bull Market — Ellis joined the conversation to discuss his own new book, Great American Investments: A History of the Bold Initiatives That Shaped a Nation, along with five decades of thinking about markets, compounding, behavioural bias, and the quiet genius of leaving money alone. The result is one of the most densely substantive conversations in recent memory: part economic history, part investment philosophy, part civic meditation.
Buybacks Before Buybacks Were Cool
Faber opens with a curveball — not The Loser's Game, Ellis's landmark treatise on active management, but a far earlier work: The Repurchase of Common Stock, published roughly 50 years ago. Ellis recalls the thesis with characteristic precision.
"American companies during the Second World War could not raise capital with equity offerings easily. So they borrowed money and they borrowed money and they borrowed money because a lot of their business was government contracts." By 1965, he argues, the pendulum had swung too far in the other direction — balance sheets were under-leveraged, inappropriate for equity investors. His pitch: borrow and repurchase. "Nobody'd done anything like that for so long. It was considered groundbreaking at the time and a real innovation."
Goldman Sachs, Ellis notes, used the book as a calling card — sending copies to 1,000 corporations as a legitimizer for their share-repurchase trading desk. The book itself sold poorly. The idea did not. "Share repurchasing goes over a trillion dollars today," Ellis says, with evident satisfaction. "And it's accepted as being a normal part of sensible management, which I find thrilling."
Faber points out the irony that politicians and commentators still treat buybacks as a modern and suspect invention: "I have a book. So maybe there was a time machine or something, but I'm pretty sure someone wrote this about 50 years ago."
The Loser's Game, Still Being Played
Moving to indexing — the philosophy most associated with Ellis — Faber asks for a temperature check in 2026. Ellis's answer is a behavioural economics lecture compressed to three minutes.
"Individuals make lots of mistakes over and over and over again." He invokes Daniel Kahneman's Thinking Fast and Slow as "the best book for investors ever written," citing the overconfidence data: self-assessments of above-average ability routinely cluster around 80 to 90 percent of respondents. "Such as young males at trading stocks," Ellis adds. The arithmetic of self-delusion is brutal.
His prescription is arithmetic too. Start with a 7% nominal return. Subtract 3% for inflation. You're at 4%. Lose another 2% to behavioural mistakes — buying high, selling low, trading too often. You're at 2%. "Then jeepers, if I pay an active manager to run my portfolio, that's going to be another percent. I'm coming up with damn near nothing."
The solution is structural, not motivational. "Avoiding temptation to help and improve and make things work out better is the first and biggest secret about long term investing success. The second thing is to avoid taxes and fees to the extent you can on a realistic basis. Then the third is to leave it alone. Leave it alone. Leave it alone."
For young investors — Ellis frames the investment horizon for a 25-year-old as 60 years of compounding — the case for indexing becomes compounding arithmetic. "1, 2, 4, 8, 16, 32, 64, 128. Hey, I want that latter part. That's 64 to 128 in one round." The only prerequisite: start early, stay in, don't trade.
The Book That Started With a Pandemic and a Spouse
Ellis's new book, Great American Investments, originated not in a library but in a marital negotiation during COVID lockdown. "My wife turned to me and said one day, do you know Covid is really serious. You're going to be stir crazy in no time because you're a guy with a lot of energy." The assignment: find something to do with your time. The result: a catalogue of 14 audacious public investments — from the Louisiana Purchase to the Marshall Plan — that Ellis argues built modern America more than any private enterprise.
"Over the years, the American people have made investments that have really made our country a wonderful place to live," Ellis says. "It's wonderful for us that we have Social Security. It's a wonderful thing for us that we bought the Louisiana Purchase and Alaska. It's a wonderful thing for us that we have more national parks than the rest of the world added together."
The structure of the book is deliberately historical and connective. Each chapter, Ellis explains, is "basically the same story. One or two, maybe three people got excited about an idea, a dream that they sure believed could come true, and worked their way through the democratic decision making process, got government approval, made it happen."
Frances Perkins and the Architecture of Social Security
The Social Security chapter receives the most detailed treatment in the conversation. Its architect, Frances Perkins — referred to fondly by Faber as "Fanny" — is presented by Ellis not as a bureaucrat but as a strategic operator of the highest order.
"She wore dark blue or black dresses with a white collar most of the time. Why? Because she thought in a man's world, men would see somehow subliminally their mother and grandmother as advisors." She kept her last will and testament in her pocketbook while traveling. She managed Roosevelt's well-known tendency toward indecision by meeting with him weekly, presenting written memoranda of one or two pages, and confirming his commitment point by point. "Are you sure about this? Are you still comfortable with this? Does this work for you?"
"She put every ounce of energy she had into making this happen, and it did," Ellis says. "And the Social Security program has done more good for more people in America than any other government program in the history of the country."
On the program's ongoing fiscal vulnerabilities, Ellis is pragmatic: "You can't deal with anything in politics until it becomes a big problem or a big opportunity." But his practical advice is pointed. Claiming Social Security at 70½ versus 62 increases lifetime benefits by roughly two-thirds, with inflation protection. For those who can keep working — as Ellis himself models at 88 — the compounding of delayed claiming plus continued 401(k) contributions is material. "The addition of the 401k and its natural growth and the increase, 76% increase in Social Security combined would make a lot of people happy during their retirement."
The Louisiana Purchase Was a Leveraged Buyout
Ellis brings a financier's eye to history. The Louisiana Purchase, he argues, was structurally advantageous in ways that are under-appreciated. Napoleon's decision to abandon North American ambitions — driven by 20,000 soldiers lost to yellow fever in the Caribbean and a strategic pivot toward European conquest — created a highly motivated seller. Jefferson was a motivated buyer. "Basically it was like a long term margin loan. We didn't put up any money, we got credit and the credit didn't have to get cashed for a dozen years and then gradually got cashed."
Alaska, similarly, was acquired from a Tsar who feared the territory's cost, its remoteness, and its potential to provoke conflict with Britain or the United States. Ridiculed as "Seward's Icebox," it subsequently delivered gold, oil, and fisheries. "There are all kinds of really wonderful advantages that have come our way as a result of buying Alaska for a song."
The Internet chapter is perhaps the most striking reframe. A government investment of less than one million dollars — designed for potential defense applications — became the substrate of modern civilization. "Does anybody not use the Internet today? I don't think so. Then the number of people who use the Internet 50 times every day, that's an exciting reality."
The Best Investment He Ever Made
The conversation closes with Ellis's most memorable investment. After a lunch meeting with Sandy Gottesman — called to deliver the news that Gottesman's firm would not be using Greenwich Associates' services — Ellis found himself needing conversation material. He asked Gottesman, one of the best investors in America, for his favourite long-term holding. The answer: Berkshire Hathaway. Asked how long he planned to own it, Gottesman said: "Forever."
Ellis returned to his partners and proposed putting their small emergency reserve — a buffer against bad years — entirely into Berkshire. One partner balked at the $700 share price. Ellis explained the irrelevance of nominal price. They invested. "Then it went up, up and up and up and up. Then it's gone up, not quite, but almost a hundred times in the 50 years."
"Everything that I can imagine positive has happened at Berkshire Hathaway because of Warren Buffett and Charlie Munger and the discipline with which they followed investing and thinking about long term and compounding — all the great lessons of any investor's life."
5 Key Takeaways for Advisors and Investors
1 The arithmetic of inaction beats the arithmetic of activity. Ellis's framework is unambiguous: a 7% nominal return, reduced by inflation, behavioural mistakes, and management fees, can erode to near-zero real returns. The index-and-hold strategy is not passive by temperament — it requires active discipline against the impulse to intervene.
2 Compounding is a time-dependent phenomenon — start early and don't interrupt it. The 64-to-128 doubling that Ellis highlights only happens at the back end of a 60-year horizon. Every interruption — tax event, emotional trade, fee drag — moves the investor backward in the sequence. The single most powerful variable is time in the market, not timing.
3 Behavioural self-awareness is a prerequisite for investment competence. Ellis's endorsement of Kahneman's Thinking Fast and Slow is not casual. Overconfidence — particularly among younger male investors — systematically degrades returns. Advisors who help clients identify and interrupt their own behavioral patterns are providing alpha that no fund manager can replicate.
4 Social Security claiming strategy is one of the most undervalued retirement optimization levers. Delaying from 62 to 70½ produces a 76% increase in inflation-protected lifetime benefits. For clients who can remain employed and continue contributing to tax-deferred accounts in the interim, the compounding effect of that delay is a material retirement outcome differentiator.
5 The most important investments in history were made by obsessed individuals navigating imperfect systems. Ellis's book frames America's public investments not as bureaucratic inevitabilities but as the product of singular determination — Frances Perkins, Thomas Jefferson, Andrew Carnegie, David Swensen. The lesson for investors: conviction, patience, and the willingness to be wrong in public are the preconditions for transformational outcomes.
Charles Ellis is the founder of Greenwich Associates and author of Great American Investments: A History of the Bold Initiatives That Shaped a Nation. This article is based on his appearance on The Meb Faber Show, Episode 633.
Footnote:
1 "Charley Ellis on How America Actually Got Built (Investing in America Series) | #633 - The Meb Faber Show." Meb Faber Show, 11 June 2026.
