The standard | A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth...

Whats New in the Random Walk | A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition | Burton G. Malkiel

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	• A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition Burton G. Malkiel W. W. Norton, 2007 - 416 pages average customer review:based on 53 reviews view larger image
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highly recommended

Excellent, must read for every investor

This is a classic book, first published in 1973. The 9th edition just came out this year. Every investor, whether you believe in market efficiency or not, should read this book at least once. This book does a very good job reconciling between market efficiency and perceived inefficiencies such as bubbles at different times. The author believes in a weak form of efficient market theory. Simply put, the market may not be perfectly efficient at all times, but it's efficient enough to make it very difficult and costly trying to beat it. In the end, an investor is better off holding a market index fund that invests in everything under the sun. It's not worth the cost and effort trying to find the undervalued stocks or high-growth mutual funds.

The book begins with two basic stock valuation models -- Firm Foundations and Castles in the Air. It goes on with a review of bubbles and manias throughout history, from more ancient history -- tulip craze in the Netherlands, the South Sea bubble in England, the 1929 Great Crash in the U.S. -- to the stock market anomalies from the 1960s, 1970s, all the way to the late 1990s dot com bubble. The book then introduces two basic camps of stock valuation analysis: Technical Analysis and Fundamental Analysis. It shows how both Technical Analysis and Fundamental Analysis fail to identify outstanding investment opportunities more than what an efficient market already provides. Not that you can't make money with Technical Analysis and/or Fundamental Analysis, but you can't make more money than what you already can with investing in a market index fund.

The chapter on behavioral finance is new for the 9th edition. It reviews how investors often become their own worst enemy when it comes to investing. The book "Why Smart People Make Big Money Mistakes And How To Correct Them" (ISBN 0684859386) covers this area in more details.

The final section of this book is the practical part. It gives practical advice on insurance, tax deferred accounts, saving for college, different vehicles for cash reserves, bonds, real estate, and stock mutual funds. Finally the book lists specific portfolio and fund recommendations for people in different stages of their lives.

Overall, this is a great book, a must read for every investor. It is however a little long and it requires some patience because it explains everything in details. If you want to cut to the chase and prefer a cookbook approach, I recommend the shorter book "The Random Walk Guide to Investing" (ISBN 039332639X) by the same author. The basic premise is the same in both books. The shorter "The Random Walk Guide to Investing" condenses everything into 3 basic points and 10 rules. It is about 200 pages long. The full book "A Random Walk Down Wall Street" is over 400 pages.

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The standard

This book is "the standard" as an introduction to anyone who is not well-versed in finance, as well as many students who think they are. While it relies on historical data and analysis as its driving force, Prof. Malkiel does a great job explaining what the numbers mean using simple terminology.

Whats New in the Random Walk

Dr. Malkiel continues his thesis that the market is efficient and it's hard to beat the indexes. Unfortunately the indexes themselves became the object of speculation in the 1990's . They were no longer the efficient or related to historic averages.
The major new addition is his excellent review of behavioral finance advances.
This continues to be a "must read" book. It is readable, understandable and a pleasure to read. Highly recommended.

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Wake Up Call

This was very enlightening and easy to read. Anyone who is invested in the stock market should read this, especially if you have experienced disappointing returns. A must read for the serious investor.

reviews: 1, 2, 3, 4, 5, 6, 7, 8, 9, page 10, 11

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