A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Completely Revised and Updated | 
 enlarge | Author: Burton G. Malkiel
Publisher: Norton
Category: EBooks
List Price: $20.95
Buy New: $9.99
You Save: $10.96 (52%)
Rating:  53 reviews
Sales Rank: 956
Format: Kindle Book
Media: Kindle Edition
Edition: 9
Pages: 480
Number Of Items: 1
Dewey Decimal Number: 332.6
Publication Date: December 19, 2006
Availability: Usually ships in 24 hours
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Product Description
"A classic explanation of the securities markets, A Random Walk has set thousands of investors on a straight path since it was first published in 1973. Even if you read the book then or more recently, a refresher course is probably in order. 'A lucid mix of the theoretical and the pragmatic.'" -- Chicago Tribune
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| Customer Reviews: Read 48 more reviews...
 Excellent, must read for every investor February 15, 2007
The Finance Buff (USA)
100 out of 105 found this review helpful
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.
Learn why investors do crazy stuff over and over again - and how to avoid those mistakes. August 6, 2007
Elizabeth Weinstein (San Jose, CA United States)
21 out of 22 found this review helpful
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, 9th ed., by Burton G. Malkiel, is a classic and brilliant explanation of how investors make the same mistakes over and over again, and how you can avoid those mistakes. If you want to understand how the stock market works, and decide for yourself if you should be investing in index mutual funds or picking stocks, this book is a must-read.
This book is not short, but that's because it goes through the history of investing (starting in 1592! through the dot-com era), explains how professionals invest and modern portfolio theory, and how you can apply all that to your investment portfolio.
I read this book before I was an investment advisor, have re-read it since, and recommend it to my clients who want to understand how the stock market, and how investors, work.
Pros: Love the stories of early investment bubbles, like the tulip bulb bubble (yes, actual tulip bulbs) and how the dot-com bubble was just history repeating itself. Great explaination of modern portfolio theory, that a non-financial-geek can understand.
Cons: Still is pretty technical for some people, and no one could say the book is short or quick reading. Modern portfolio theory may not work in all asset classes (like international investments, though that may be changing).
What I have learned: I love sharing stories of all of the bubbles throughout history, when I'm at a cocktail party or networking event. Helps me explain to clients and press why the dot-com bubble happened, why indexing works (in some asset classes), and how someone should evaluate the fundamentals of a stock.
The Only Investment Book You Will Ever Need July 18, 2007
RR2004 (Seattle, WA)
11 out of 11 found this review helpful
This book is excellent. It advocates maintaining an asset allocation of stocks, bonds, cash etc., that is appropriate for your age and risk tolerance. The stocks should be in a low fee total market stock index fund or in an exchange traded fund ETF. Read the book for the proper mix of stocks and bonds to maintain in your portfolio for your age.
I read a copy of this book about 23 years ago and did not follow its advice because I thought I could outsmart the market. I subscribed to many financial magazines and newspapers, thinking that knowledge is power. I found that you can get as many bad tips as good tips. It's basically a flip of the coin. With the advent of the internet, I searched the internet for the latest recommendations from the famous gurus of the day.
During the recent bear market of 2001, a very famous bond guru predicted that the Dow with go to 5000. It wasn't until the Dow turned up substantially before the bond guru admitted his mistake. There is also a famous Dow Theory interpreter, who writes a monthly newsletter. He hinted that the Dow would go to 3000 and the total stock market index of 5000 stocks would lose about half its value to 6000. He was very bearish when the market turned upwards in 2003 and stayed bearish until recently, as the Dow is at an all time high. Many of his subscribers are very angry at him because his bad call kept them out of the market for the bulk of the recovery. It appears that it is more profitable to sell advice than to take it.
Following the advice of gurus can be detrimental to your financial health.
I've learn that recommendations from gurus and financial publications have an equal chance of being a good or an asinine idea. Financial magazines and gurus have ZERO predictive value and they want to get you into a dependent relationship in which you are waiting for the latest hot tip month after month.
This book recommends that you cancel all subscriptions to financial publications and newsletters and just maintain the appropriate asset allocation. This is very good advice. It will save you countless hours of useless research. After 23 years, I'm back to square one and I will now follow the advice in this book.
Solid advice for funding your life April 2, 2008
Vincent Poirier (Tokyo, Japan)
6 out of 6 found this review helpful
In a nutshell Malkiel's advice is to own your own home, buy no-load index funds (equities and bonds), buy international index funds, and mix your investments according to your age. You should also have medical and plain term life insurance, and cash on hand for a few months in case of an emergency. This book is a complete course in how to manage your money effectively, whether you're a millionaire or a low-income earner. It also gently but firmly chastises proponents of get-rich-quick schemes such as day traders.
First, the book explains what is financial risk, and points out that everything is risky, even insured savings accounts since inflation can destroy the value of cash. Malkiel describes just how risky various investments are, and how the risk is one investment is often offset by the risk in another. Second, Malkiel describes a variety of specific investments (e.g. no load index funds, your own home, individual stocks) and suggests how individual investors should mix them, depending on their personal circumstances. For instance, an ambitious young woman in her twenties can consider aggressive high-risk high-growth funds. If they boom, she's rich, if they bust she's young enough to recover her losses through income. This would not be true of a middle-aged couple about to pay for their children's college years.
This edition is updated with a whole section on the internet bubble and other scandals. However, it maintains the same principle as all other editions; and Malkiel's advice remains that we should diversify broadly.
"A Random Walk Down Wall Street" should be in every family's library.
Vincent Poirier, Dublin
Must read- Common sense advice for Wall Street novices July 7, 2007
Nguyen Xuan Phuong (Mount Holyoke College, MA, USA)
5 out of 5 found this review helpful
This is the first book I read outside normal econ/finance textbooks. The 7th edition is updated with a chapter on behavioral finance, which explains thoroughly the irrationality of the market or the hype/bubble that is no longer rare today. The book is awesome and useful for novices desperate to become a real investor. In short, the Princeton professor Malkiel concludes that buy-and-hold is the one and only strategy and index fund is the way to go. Malkiel also cautions that since S&P 500 indexing technique has been exploited for a while, it is better to increase the number of small companies-other kind of stocks and funds i.e. index MORE. A comprehensive list and tables of different mutual funds are provided with a moderate preference for Vanguard. I particularly found the chapter on retirement fund exceptionally valuable. At 20, probably you don't think much of 401k or annuity. Read the book, you will think differently AND invest more wisely. Disclaimer: If you have a gambling bug and like to pick high risk-high return stocks, note that Lady Luck does not always stay with you. The future CANNOT (this is repeated several times in this book and in several other books as well) be predicted by the past. Your chart analyst may protest. But hey, we have bull and bear periods as well as big crashes in the US, UK and Asia. You name it...
In a nutshell, read the book but don't worship it like a bible. Any best selling guide is for the mass. You don't want to be part of the crowd. Keep your critical mind. I believe that once you are in Wall Street for a while, you will think differently from Malkiel in 2007.
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