A Random Walk down Wall Street: The Time-tested Strategy for Successful Investing Paperback – January 4, 2016
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- Chicago Tribune
“A must-read for any investor.”
- The Browser
“Imagine getting a week-long lesson on investing from someone with the common sense of Benjamin Franklin, the academic and institutional knowledge of Milton Friedman and the practical experience of Warren Buffett. That’s about what awaits you in the latest edition of this must-read by Burton Malkiel.”
“Not more than half a dozen really good books about investing have been written in the past fifty years. This one may well belong in the classics category.”
“An engagingly written and wonderfully argued tome.”
About the Author
- Item Weight : 12.9 ounces
- Paperback : 496 pages
- ISBN-10 : 9780393352245
- ISBN-13 : 978-0393352245
- Dimensions : 5.5 x 1.2 x 8.3 inches
- Publisher : W. W. Norton & Company; Eleventh edition (January 4, 2016)
- Language: : English
- ASIN : 0393352242
- Best Sellers Rank: #50,295 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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So, you are starting your journey here, attempting to formalize what until now it’s only been an intuitive understanding (if that). After finishing this book, you feel good about it, confident that you can do this. So, you then delve into Value Investing, in an attempt to use some fundamental analysis to pick a group of stocks that make up a portfolio that is stronger than the S&P. You soon realize that this is not that easy, as there are too many variables to take into account and then, even if your fundamental analysis is correct, the market for some reason does not validate your views. You feel tired, but not enough to give up. After all, this is really cool stuff and makes you sound smart at social gatherings. So, you decide to change your approach. You still feel like it is possible to create a basket of stocks that can beat the market. You see names like Amazon, Netflix, Nvidia, and think you can easily get on a sweet ride by investing in those market leaders. You do well. But you think you can do better. Because the market decided to take a break with Netflix, your results are not as great as you thought they would be. In the meantime, you’ve been reading Peter Lynch, learned about those 10 baggers, and started looking around you for those places where you usually shop at. You love going to Shake Shack. So you look up its stock symbol and realize it had a tremendous run since its IPO. At a family meeting, you hear your fresh-out-of-college nephew talk about how much he likes his job as a data scientist at Hello Fresh, where they use an incredible tool called Tableau. So, you decide to invest in all of these companies. Initially, you do well in Shake Shack. But then the market decides it had a very long run and it’s time to take some profits off the table. So, you end up with average results. Tableau does great and you keep hearing good things about it. Then it tumbles 50% overnight on disappointing earnings. Hello Fresh has an amazing business model but for some reason the stock has been trading in ranges for ever.
Now, a year has gone by and you realize you got the same results the index had. Except that you spent all that time and money trying to build and maintain your portfolio when you could have easily bought and held the SPY. Even worse, you now have to pay taxes on all those trades that you exited just so you could feel good by pocketing some profits.
Well, my friend, those are the type of lessons this book tries to teach. The problem is that you will not listen at first and will eventually learn the hard way, just to end up here again (probably re-reading this review). But that’s good. You learned your lesson and are wiser now. Good luck!
The author makes broad oversimplifications on what "technicians" really do. Most of the behaviors he mentions are rarely seen outside the message boards of penny stock forums filled with middle class retirees hoping to make it rich. He goes as far as to ask if momentum (price action) really exists; and that's his lead into performing a random walk! The irony of the author's claim is that the market is essentially a random walk, implying there are no market forces in play. Yet this invalidates the author's own idea that you should buy and hold, because the market has consistently gone up. He claims past performance cannot be used for future performance, but also claims that because the market always goes up, it will likely go up again. He doesn't even realize it, but he's a technician too, just on a much larger time scale. He bashes people that find patterns, yet trades on an overall assumption that the market will always trend up (a forever bull market). He also makes broad, dogmatic statements without any proof, and even if he had "proof," he would still be wrong. For instance, the author affirms that technical analysis cannot be used to predict future price movements from past price movements. No one can reasonably make such an affirmation, because it implies that he himself has looked into every possible feature combination, backtested, and forward tested, in all markets. Impossible. I could go on and on about this forever, but it's this simple: the author is flat out wrong. Is he correct that you can make money in the long term holding? Yes. You can make beta. Are there funds like Pure Alpha out there providing Alpha? Absolutely. Are they profitable year over year? Yes. Are they built on technical analysis? Yes. Do they imploy candlestick pattern strategies? No.
Top reviews from other countries
Before reading this book, I know nearly nothing in finance or investing. But I could understand most parts of the book without any problems.
The book can be summed up into a sentence - buy index funds. It took a few hundred pages to explain the reasonings behind, which I found quite impressive (in a good way).
Enjoyed author's sense of humor too. Definitely will recommend this to others.