A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Tenth Edition) Kindle Edition

I read quite a few books 10 to 15 on investing in about a month time frame 300 plus pages each. Years of reading articles online and in magazines. And a few bad experiences in The stock market and a few good ones. I even read the intelligent investor, and security analysis among other great books. I recently decided I needed to take investing more seriously and decided to finally read this book. I bought the Kindle edition since I'm overseas, but after reading this I'm buying a hard copy as well. This blows every other book I've read on the topic of investing away. I was allready a strong believer in indexing as it was after this my mind expanded and there is so much to gain from this book. If you care about yourself, and your families future buy this book. Words do it no justice. With that said the material can at times be a little dry. The first few chapters are a bit interesting at times but boring as can get most of the time. Great knowledge but boring knowledge. The rest of the book is great especially the views of the author on bonds and the various investment strategies that people have e used in the past. My only critiques are on the part about futures or derivatives, as well as Treasury bills. I've had bad experiences dealing with the Treasury and I don't trust them so this portion although small annoyed me I just had no interest in reading it. The futures/ derivatives last portion of the book just didn't appeal to me. I had no interest in these types of investments and after reading about them in more detail have even less Interest In them. The portfolio diversification suggestions could have been more detailed. Otherwise great book, I will be reading a few other books just to get different views or strategies.

I have no beef against the active traders. Maybe I have a little pity for them, since half of them have to lose money if the market’s a zero-sum game. That’s more than half, once you start to factor in fees.

I have long ago realized that though I am interested in the workings of the market, I am not going to delve to the minutiae of companies and different trades and try to be smarter than someone else on the other side who thinks he’s doing the same thing. Nope. Malkiel and Bogle figured out a way I could get away with making the most return possible with the least effort possible - indexing.

Basically this book is a defense of the efficient market hypotheses, or at least part of it. As I understand it, there are two parts to the EMF. One is that the price is always right. So that there’s no such thing as a bubble ever because all the valuations of the market price of securities are representative of their underlying value. The other part is that there’s no free lunch. Or basically arbitrage opportunities may exist, but they are not predictable nor do they persist. I think that the second part is more true than the first, and that’s what this book really digs into, showing you that there are no persistent ways to beat the market. If that’s true, then the best way to consistently make money is to just buy the market. Thankfully there are financial instruments that make that possible - and they’re where I have my money. Cards on the table, this book is just a giant exercise in confirmation bias for me, but it is confirmation bias well done in clear writing with a well-organized structure. I read this burning through the pages on a long holiday weekend, and I wanted to send it to my parents. I thought again about that. It might be too late for them since I don’t know their financial positions. Maybe I’ll send it to my siblings.

A final note, though. Even though Malkiel shows convincingly that there is no way to beat the the market, there is an odd paradox. For the market to work, it needs people out there who think that they can beat the market. Even if the best strategy is to buy and hold a low cost index fund, if everyone did that liquidity and price discovery would drop. What someone following Malkiel needs is people who think he is wrong and that they can generate “alpha” (returns above the market). This goes against the second part of the EMF, where arbitrage opportunities can’t exist because if you have a way to beat the market, then everyone has a way to beat the market and then once everyone is in, no one has a way to beat the market.

I read this book years ago, in an earlier edition. It was a eye-opener. It taught me how the stock market works and showed me the best strategy for an ordinary investor to accumulate a retirement nest egg. After reading Malkiel, I "fired" my investment advisor and switched my savings mostly to inexpensive index funds. As a result, I started keeping more of my money and worrying less about what the market was doing on any given day. I'm now on the verge of retirement, and thanks to the advice of Malkiel (and other like-minded personal finance writers, such as John Bogle, Charles Ellis, and Daniel Solin), I've accumulated enough savings to take the plunge. I only wish I'd come across this book sooner.