From Wall Street to the Great Wall: How Investors Can Profit from China's Booming Economy [Paperback]

Burton G. Malkiel (Author), Patricia A. Taylor (Author), Jianping Mei (Contributor), Rui Yang (Contributor)

Book Description

Publication Date: December 17, 2008

From the million-copy-selling author of A Random Walk Down Wall Street, the perfect guide to investing in the next economic giant.

In From Wall Street to the Great Wall, Burton G. Malkiel and his coauthors show how average investors can tap into the opportunities this affords without losing their shirts. The authors present firsthand knowledge from their research trips to China on how Chinese firms and industries, as well as multinationals in the United States and elsewhere, are likely to benefit growth. They describe investment opportunities ranging from stocks to real estate to art and then set forth a grand strategy, including sample portfolios, for profiting from China's economic boom.

Editorial Reviews

About the Author

Burton G. Malkiel is the Chemical Bank Chairman's Professor of Economics at Princeton University. He is a former member of the Council of Economic Advisers and has served on the boards of several major corporations.

Product Details

• Paperback: 320 pages
• Publisher: W. W. Norton & Company; Reprint edition (December 17, 2008)
• Language: English
• ISBN-10: 0393333582
• ISBN-13: 978-0393333589
• Product Dimensions: 8 x 5.4 x 1 inches
• Shipping Weight: 9.6 ounces (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #818,081 in Books (See Top 100 in Books)

More About the Author

Burton G. Malkiel is the Chemical Bank Chairman's Professor of Economics at Princeton University. His books include "From Wall Street to the Great Wall," "Naked Economics," "The Random Walk Guide to Investing," and the mega-bestseller "A Random Walk Down Wall Street."

Customer Reviews

Most Helpful Customer Reviews

74 of 75 people found the following review helpful:

4.0 out of 5 stars Nothing Random About this Walk to China, December 18, 2007

By 

Sreeram Ramakrishnan (Lynnfield, MA) - See all my reviews
(VINE VOICE)    (TOP 1000 REVIEWER)    (REAL NAME)   

This review is from: From Wall Street to the Great Wall: How Investors Can Profit from China's Booming Economy (Hardcover)

In a very systematic and detailed manner (though sometimes with very 'old news'), the authors provide a thorough historical, macro-economical and political context for China's amazing growth. Considering that the book was released around the same time as Roger's book (A Bull in China: Investing Profitably in the World's Greatest Market, comparisons are inevitable and worthwhile.

So, first the comparison - Rogers' book takes a more conversational travelogue-like approach to providing a detailed analysis of key players in different sectors (each sector typically gets its own chapter). This book takes a more traditional descriptive mode of providing a wider context (historical and political) and discusses specific investing strategies for different risk profiles. While some concepts and themes are apparently common, luckily, the authors in these two books manage to provide information on different facets of the same theme....so, in a way, commonality of themes notwithstanding, the books are fairly complementary to each other. So, is it worth buying both? The answer is a tentative YES. If you are more interested in developing an excellent watch list of companies for each sector and understanding their landscape, you will find Roger's book more useful. If you want to understand different trading/investing strategies and asset allocation strategies for China component of your portfolio, based on stocks and ETFs, you will find book more useful and relevant. So, read both, but certainly prioritize according to the above comment.

Now, for the detailed review of this book. The authors present their ideas in three sections. The first one discusses the historical context, accomplishments, and an assessment of the inherent real and "perceived" risks of Chinese investments. It is not often that an investment themed-book talks in detail about the history of an country/economy/polity. The authors provide an excellent snapshot of the Chinese history through four periods - Confucianism, Colonialism, Communism, and Capitalism. As cute as the classifications sound, the discussion is worthwhile and informative (relevance to the modern day investor is not apparent, but then, no harm in knowing some history of one of the oldest civilizations from an economic perspective, right?). The authors then provide a catalog of old and recent achievements of the Chinese polity/economy using a wide assortment of well-cited statistics and interesting examples (of all things, mannequins for bra fitting is cited in a section highlighting adaptability). (For a more detailed and interesting discussion on different growth strategies of Chinese companies, the reader may benefit from Dragons at Your Door: How Chinese Cost Innovation Is Disrupting Global Competition). The third chapter in the section provides an excellent discussion on the risks of investing in China.

In the second section (4 chapters) focusing on 'investments', the authors discuss the stock market characteristics of China, a discussion on valuation of Chinese stocks and other asset classes. The discussion on market efficiency reads a bit like "old wine in new bottle" and may be of particular interest only to those who have not been exposed to market efficiency theories before. Those two chapters could have used more editing. For the reader interested in buying the book by Rogers cited earlier, these two chapters cover mostly the same ground, though with slightly different emphasis. The chapter on valuation of Chinese companies is a stand-out in this section.

The third section, in 5 chapters, provide the reader with specific strategy options for investing in China based on risk profiles. The authors provide detailed discussion on a varied set of investment strategies - investment in China-centric mutual funds, investment in companies which will benefit from China's growth, a riskier option of buying Chinese stocks directly, and a last option of what the authors call an "mixed strategy providing best balance" of risk/reward. The investment vehicles mentioned in the book in itself are familiar to any serious market observer or investor, but the discussion on diversification and specific asset allocation strategies using ETFs provide an interesting set of ideas. The book by Rogers provide a far more detailed look at specific sector/companies, while this book provides strategies primarily based on ETFs/funds. Some portion of this section, such as a discussion on dollar cost averaging, sound like a broken record, and could have used some careful editing. Nevertheless, a detailed and informative discussion on asset mix and allocation strategies. These chapters and an earlier one on risk are perhaps the highlights of this book.

Though the book ends on a very cliche'd tone ("No well-diversified investment portfolio can afford to ignore the investment opportunities that China offers"), the message is clear, well-articulated and almost always to-the-point. Certainly not as 'technical' or gravitas-inspiring as the book that made the author famous, so, Malkiel purists may find the book a little underwhelming. A serious investor, would however, benefit from the detailed discussion. A great addition.

8 of 8 people found the following review helpful:

3.0 out of 5 stars Booster Club for Investing in China, April 19, 2008

By 

Rachelle Ayala (USA) - See all my reviews

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This review is from: From Wall Street to the Great Wall: How Investors Can Profit from China's Booming Economy (Hardcover)

Knowing that Malkiel is the father of efficient market hypothesis and wide diversification, I find it somewhat surprising that he has written a book on investing in a specific country. The brief summary of China's culture and history gives some background on how China found itself in the turmoil of the Cultural Revolution and why it lacks qualified accountants and financial analysts (an entire generation sent for reeducation).

The chapter covering risks is titled "Perceived Risks", and Malkiel basically debunks most of them as fiction or explains away the risks by pointing to the cultural pride, work ethics, and other factors to overcome them. It seems one-sided much like apologetics and boosterism. Maybe I'm skeptical, but it's not a foregone conclusion that China will avoid all their problems, political, social, economical, and become the dominant economy in the world. And no stock market only goes up.

What Malkiel does a good job of is explaining the tests of efficiency for Chinese stocks. He explains the alphabet soup of A share, N share, H shares, and concludes that as of 2005 the N and H shares a pretty efficient. However the A share market is still inefficient and subject to manipulation. He also explains the discrepancy of pricing between shares of the same company in the different exchanges. Furthermore it is confusing how to analyze the earnings, growth, profitability of state owned enterprises, who are 70% owned by the government and only float a small percentage of their shares on three different exchanges where they are all priced or bundled differently.

He concludes with several strategies for small, medium, large investors, with portfolios of ETFs and/or index funds. And for the true speculator he covers a few of the stocks in each industry. But as in any book, the information will be woefully old and out of date by the time it is published, printed and read. For the average investor who wants to have an exposure to China, I would personally buy a mixture of China index funds (GXC, FXI) Vanguard Emerging Market Index (VWO), but don't let that be your entire portfolio. Malkiel recommends a percentage based on your risk tolerance. For this wisdom, I don't think you need to buy the entire book, unless you want to learn about the various ways stock is available (Chapter 4).

8 of 9 people found the following review helpful:

5.0 out of 5 stars An Investor's Guide To Investing In China's Economy, January 17, 2008

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My Opinion "For What It's Worth" (La Canada, CA) - See all my reviews

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This review is from: From Wall Street to the Great Wall: How Investors Can Profit from China's Booming Economy (Hardcover)

In my opinion, this is an excellent guide for any individual investor who feels he (she) may want to "profit from China's booming economy." Even if the reader decides not to invest in China, the account of how far China has come in a period of approximately three decades is an interesting and amazing read.

The book is divided into three sections: The Setting, which provides a historical background on China and its people; The Investments, which explains how Chinese securities are structured and traded; and The Strategies, which provides advice as to how investors might go about investing in China's economic success.

The final chapter, The Optimal Investment Strategy, presents the authors advice as to how an individual investor might pursue an investment plan and at the same time minimize risk. The authors throughout the book emphasis risk and in the final chapter clearly state, "We warn you in advance that it is not an exciting strategy that will make you a millionaire shortly after reading it - but it is a strategy that sharply curtails your risk."

Another reviewer of this book has made comparisons of this book with Jim Rogers' A Bull In China. In my opinion, From Wall Street to the Great Wall is a far superior read. Burton Malkiel has the academic credentials and decades of experience in teaching investing to students. He has also been on the board of directors for many years at the Vanguard Group, a company dedicated to the best interests of individual investors. The average investor would be foolish to invest directly in Chinese companies as Mr. Rogers suggests. That would be like walking through a mine field. I suggest sticking with the advice of the professor.