A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing Author: Burton G. Malkiel | Language: English | ISBN:
B004KKXMZQ | Format: EPUB
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing Description
"Almost every list of must-read investment books . . . includes Malkiel's Random Walk." —Booklist
Especially in the wake of the financial meltdown, readers will hunger for Burton G. Malkiel’s reassuring, authoritative, gimmick-free, and perennially best-selling guide to investing. With 1.5 million copies sold, A Random Walk Down Wall Street has long been established as the first book to purchase when starting a portfolio. In addition to covering the full range of investment opportunities, the book features new material on the Great Recession and the global credit crisis as well as an increased focus on the long-term potential of emerging markets. With a new supplement that tackles the increasingly complex world of derivatives, along with the book’s classic life-cycle guide to investing, A Random Walk Down Wall Street remains the best investment guide money can buy.
- File Size: 2949 KB
- Print Length: 449 pages
- Page Numbers Source ISBN: 0393081435
- Publisher: W. W. Norton & Company; 10 edition (January 10, 2011)
- Sold by: Amazon Digital Services, Inc.
- Language: English
- ASIN: B004KKXMZQ
- Text-to-Speech: Enabled
X-Ray:
- Lending: Not Enabled
- Amazon Best Sellers Rank: #12,111 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
- #10
in Kindle Store > Kindle eBooks > Business & Money > Investing > Investing Basics - #40
in Books > Business & Money > Investing > Introduction
- #10
in Kindle Store > Kindle eBooks > Business & Money > Investing > Investing Basics - #40
in Books > Business & Money > Investing > Introduction
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.
Burton Malkiel's A Random Walk Down Wall Street is well known to be one of the modern classics on stock investing. I was already aware of the premise behind the book - the stock market is pretty efficient and most everyone is wasting their time trying to find inefficiencies to exploit - but I was interested in finding out what information inside could really help me as an individual, both as an investor and as a person interested in improving my personal finances. Here's what I found.
Chapter 1: Firm Foundations and Castles in the Air
The book starts off by defining two basic investment ideologies, the firm foundation theory and the "castle in the air" theory. The firm foundation theory basically says that you should invest based on the actual real value of what you're investing in; for example, if you buy a stock of Coke, it should be based on what the value of the Coca-Cola Corporation is. The "castle in the air" theory basically says that you should invest in response to what the crowds are doing and that you can make more money by riding the waves of people who are either following trends or trying to invest based on a firm foundation. Which one is right? The truth is that they both are, but at different times.
Chapter 2: The Madness of Crowds
This chapter is quite entertaining: it discusses financial "crazes" throughout history, including my personal favorite craze of all, tulipomania. In all three examples (tulipomania, the South Sea bubble, and the Wall Street crash of 1929), a market grew like gangbusters until everything was overvalued, then the values rapidly returned to normal.
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