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Solid advice for funding your life,
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This review is from: A Random Walk Down Wall Street: Completely Revised and Updated Edition (Paperback)
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.
"A Random Walk Down Wall Street" should be in every family's library.
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Showing 1-2 of 2 posts in this discussion
Initial post: Dec 6, 2012 3:27:57 PM PST
Last edited by the author on Dec 8, 2012 11:38:50 AM PST
Star Bux says:
I disagree with Malkiel's statement that Lex Luthor was speculating, when he
bought all that land, beside the West Coast, in the movie, 'Superman the Movie'.
No, Luthor was investing, intelligently. For he calculated that there was a high
probability that the West Coast would slide into the ocean, making his land holdings
worth much more than he had paid for them. I think that as long as you have a
system, you are not a speculator, but an investor. Luthor could not have foreseen
that Ms. Tessenbacher would rescue Superman from the Kryptonite prison that
Luthor had placed him in. Frequently that is what happens when one is an "intelligent
investor" - you assign probabilities to events, and sometimes the unforeseen can still
occur, upsetting your plans : "Trending... Trending... Uh-oh, did not see that coming."
After his paragraph about Luthor being a speculator (page 26?), I could not take the
rest of his book seriously. Nevertheless, this book is required reading in many university
courses about economics, and-or finance.
In reply to an earlier post on Dec 11, 2012 5:38:56 PM PST
Vincent Poirier says:
Actually, it was insider trading since he knew something other investors did not know, namely that he was going to sink all the California land west of what he owned.
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