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A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Ninth Edition) Paperback – December 17, 2007
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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.Read more ›
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.
Most Recent Customer Reviews
This is a classic. However, you need update info for today's stock market. Try out my book Complete the Art of Investing. Read morePublished 1 month ago by Tony W. Pow
The book talks about how improbable it is to beat the market; even if you do achieve this, it was probably because of sheer luck. This is a must read for everyone.Published 1 month ago by rparadav
This is an amazing read that has forever changed my attitude towards investing and investing strategy — I would highly recommend it for beginnings or people trying to understand... Read morePublished 2 months ago by Zorayr Khalapyan
Excellent book. Every investor should read it at least once. Lot of supporting documentation for indexing but there is room for the gambler as long as he is just supplementing a... Read morePublished 2 months ago by frankfish
Excellent history review of stock market investor happenings. Starts with the tulip crazyness of Holland around 1600 and brings the reader up to the current madness of the crowds.Published 2 months ago by Amazon Customer
About as complete a description of the financial markets that one could get written in a very understandable way.
Loved it and go back to it often. Read more
Excellent primer on investing. Basic information everyone should understand.Published 2 months ago by rkd