47 of 52 people found the following review helpful
Learn why investors do crazy stuff over and over again - and how to avoid those mistakes.,
This review is from: A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Ninth Edition) (Hardcover)
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.
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Initial post: Jun 21, 2009 12:57:28 AM PDT
Are markets really efficient? Of course not, because market participants are not rational, they are emotional.
Do prices truly reflect all known information? Of course not...why so much volatilty?
For all who say this is the "must read", where exactly are the chapters on risk management and downside protection???
This is a nice presentation for when markets rise, but we all know that is not always the case
Another fallacy that sounds good in theory and is absolutely horrible in reality.
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