Economics

A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy (Thirteenth)

A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy (Thirteenth)

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  • Type：Epub+TxT+PDF+Mobi
  • Create Date：2023-01-04 10:21:50
  • Update Date：2025-09-06
  • Status：finish
  • Author：Burton G. Malkiel
  • ISBN：B0B3G6FVT5
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Summary

Using the dot-com crash as an object lesson in how not to manage your portfolio， here is the best-selling， gimmick-free， irreverent， vastly informative guide to navigating the turbulence of the market and managing investments with confidence。

A Random Walk Down Wall Street is well established as a staple of the business shelf， the first book any investor should read before taking the plunge and starting a portfolio。 With its life-cycle guide to investing， it matches the needs of investors at any age bracket。 Burton G。 Malkiel shows how to analyze the potential returns， not only for stocks and bonds but also for the full range of investment opportunities， from money market accounts and real estate investment trusts to insurance， home ownership， and tangible assets like gold and collectibles。


Whether you want to verse yourself in the ways of the market before talking to a broker or follow Malkiel's easy steps to managing your own portfolio， this book remains the best investing guide money can buy。

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Reviews

Christina ，

DNF

Jonatan Sotelo ，

Muy interesante libro。 Puede servir como material introductorio en cuestiones de finanzas y mercados de capitales。 Tiene una parte de historia de Wall Street para， en su segunda parte， dar consejos sobre inversiones y conformación de carteras para diferentes tipos de inversores。La lectura es sencilla y no requiere conocimientos previos。

Joyce R ，

This review has been hidden because it contains spoilers。 To view it， click here。 Goes the long way round to basically conclude that index fund is THE answer， all things considered！

Kevin Luo ，

As someone interested in personal finance， I picked up this book due to the many positive reviews and overall， I found this book to be informative， but long-winded。 The nature of this book is a direct reflection of the author， Burton G Malkiel， who is an academic and this book is comprehensive， but can be a bit dry。 He begins by writing about many different investment strategies/theories before discussing the general recommendations for investing （eg。 index funds and buy and hold）。 This book doe As someone interested in personal finance， I picked up this book due to the many positive reviews and overall， I found this book to be informative， but long-winded。 The nature of this book is a direct reflection of the author， Burton G Malkiel， who is an academic and this book is comprehensive， but can be a bit dry。 He begins by writing about many different investment strategies/theories before discussing the general recommendations for investing （eg。 index funds and buy and hold）。 This book does a decent job of explaining concepts for someone without a finance background， but can be taxing to read。 There are also some humorous aspects which I do appreciate。 I would recommend a read once， but it will take time。 。。。more

Michael Sheppard ，

Practical， clear， and time-tested advice that may be easier to find on the internet。

Mariya ，

"Start saving early and save regularly。 Live modestly and don't touch the money that's been set aside。"Practical， accessible， and full of common sense wisdom。 Good for complete novices。 "Start saving early and save regularly。 Live modestly and don't touch the money that's been set aside。"Practical， accessible， and full of common sense wisdom。 Good for complete novices。 。。。more

Davide IngGeom ，

Il libro è ricco di contenuti e dati。 Utili suggerimenti sugli investimenti di Borsa

Nate ，

Absolutely essential reading for almost every adult。 Probably the only book on investment the average person truly needs to read。

Lada ，

Updated and concrete info on how markets and investment strategies work。 All those terms， e。g。 "risk parity"， "momentum"， etc。 -- explained。 The first book I've read on investing that straight-on addressed what contributes to stock price （fundamentals vs castles in the air）， the worry of "what if everybody blindly invests in index funds？"， what actually happened in decades past， etc。 Only nits were the long initial chapters devoted to stories of ruin and ineffective strategies， and the use of se Updated and concrete info on how markets and investment strategies work。 All those terms， e。g。 "risk parity"， "momentum"， etc。 -- explained。 The first book I've read on investing that straight-on addressed what contributes to stock price （fundamentals vs castles in the air）， the worry of "what if everybody blindly invests in index funds？"， what actually happened in decades past， etc。 Only nits were the long initial chapters devoted to stories of ruin and ineffective strategies， and the use of sex jokes/anecdotes that are not needed。 。。。more

James Maendel ，

One of the great， fundamental investing books to read and keep on your shelf。

Mark ，

This book is severely outdated。 Nuch of the research presented argues that investors can't beat the market when brokerage fees are taken into account。 Brokerage fees are quickly going the way of the abacus， so I'm very curious to see these studies re-run。This is a rather long and not extremely convincing argument for efficient market theory。 There are interesting anecdotes throughout， but overall lacking。 I felt the author's evidence was generally disconnected from his broader thesis。 Spent a lo This book is severely outdated。 Nuch of the research presented argues that investors can't beat the market when brokerage fees are taken into account。 Brokerage fees are quickly going the way of the abacus， so I'm very curious to see these studies re-run。This is a rather long and not extremely convincing argument for efficient market theory。 There are interesting anecdotes throughout， but overall lacking。 I felt the author's evidence was generally disconnected from his broader thesis。 Spent a lot of time on bonds toward the end which I found unnecessary。 。。。more

Matthew Baldone ，

I was recommended this book as a general overview and "introduction" to the world of finance， and I have to say it filled that role very well。 Though my local library didn't have the latest edition （I read the Ninth Edition， for clarity） the advice that is presented is mostly teaching from analysis of historical data anyway， so I wouldn't stress about having the latest edition if this happens to be a book on your reading list。 Interesting overview and full of useful information！ Great book to re I was recommended this book as a general overview and "introduction" to the world of finance， and I have to say it filled that role very well。 Though my local library didn't have the latest edition （I read the Ninth Edition， for clarity） the advice that is presented is mostly teaching from analysis of historical data anyway， so I wouldn't stress about having the latest edition if this happens to be a book on your reading list。 Interesting overview and full of useful information！ Great book to read for reference！ 。。。more

Anuraj Pandey ，

very good bookno hardcopysome chapters can be repeated。

Peter Lagerquist ，

Simply a very good read。 Easy， concise and very helpful in explaining some more complicated facts about markets。

Daniel ，

A。 One of the best books I’ve ever read on investing。

Herman Østensen ，

A lot of interesting themes and facts

Tim Abell ，

That was superb。* Index funds: still unbeatable* Fundamental analysis: doesn't beat the market* Technical analysis （charting）: doesn't workDiversified balanced portfolios win。 Diversity is:* stocks （bias to whole market and small-cap for higher upside with some extra risk）* REITs* Bonds* international index fundsKey takeaway: market is still highly efficient at pricing， and the *only* way to get higher returns is to take on increased risk。 That was superb。* Index funds: still unbeatable* Fundamental analysis: doesn't beat the market* Technical analysis （charting）: doesn't workDiversified balanced portfolios win。 Diversity is:* stocks （bias to whole market and small-cap for higher upside with some extra risk）* REITs* Bonds* international index fundsKey takeaway: market is still highly efficient at pricing， and the *only* way to get higher returns is to take on increased risk。 。。。more

Kristijan Spirkoski ，

Great introduction to the financial world and personal investing

James ，

An essential read for anyone saving for the future。 While Burton makes some odd analogies and bad jokes， the key message and data are clear。

Gaurav Srivastava ，

Different view of the market。

Benedikte ，

Another great personal finance book。 I loved how the author has updated the book to current times; first published in 1973， this latest version brings all illustrations and price data up to 2018， and even discusses newer events such as the 2008 financial crisis and cryptocurrencies。 Malkiel recommends keeping the core of your portfolio in low-cost broad-market index funds， but also goes into greater depth on asset allocation and life cycle investing。 Whilst he often refers to the stock market as Another great personal finance book。 I loved how the author has updated the book to current times; first published in 1973， this latest version brings all illustrations and price data up to 2018， and even discusses newer events such as the 2008 financial crisis and cryptocurrencies。 Malkiel recommends keeping the core of your portfolio in low-cost broad-market index funds， but also goes into greater depth on asset allocation and life cycle investing。 Whilst he often refers to the stock market as the S&P 500， he actually recommends holding a combination of the US Total Market Index， emerging market equities， international equities， REITs and bond index funds。 Data presented proves that active portfolio managers have not ever consistently beat the market， that market movements are a random walk and therefore impossible to predict。 However， he sympathizes with the fun of stock picking and recommends indexing the core of your portfolio and maybe playing with 5% that you can afford to loose。 Very clever book but also for the people more interested in the workings of the financial markets， as this one goes into quite a lot of detail on fundamental and technical analysis， modern portfolio theory， market history， smart beta and derivatives， etc。 Great book。Key takeaways:- Investors will be far better off buying and holding an index fund than attempting to buy and sell individual securities or actively managed mutual funds- Random walk; where future steps or directions cannot be predicted on the basis of past history。 For the stock market， means short-run changes in stock prices are unpredictable。 Taken to the extreme， means a blindfolded monkey throwing darts at the stock listings could select a portfolio that would do as well as one selected by the experts- Discounting; look at money expected in the future and see how much less it is worth currently- It is not hard， really， to make money in the market。 As we shall see later， an investor who simply buys and holds a broad-based portfolio of stocks can make reasonably generous long-run returns- 2008 MBS crisis; credit-default swaps were issued as insurance policies on mortgage-backed bonds that would pay if the bonds defaulted。 Eventually the CDSs trading in the market grew to as much as 10x the value of the underlying bonds- Bitcoin is likely to turn out to be one of the greatest financial bubbles of all time。 It’s the extreme volatility in the value of bitcoin that makes it fail the second and third definitions of money。 It will not serve as a useful unit of account nor as a dependable store of value。- Stock investors can do no better than simply buying and holding an index fund that owns a portfolio consisting of all stocks in the market- Fundamental Rule 1; a rational investor should be willing to pay a higher price for a share the larger the growth rate of earnings and dividends and the longer the extraordinary growth rate is expected to last。 High P/E ratios are associated with high expected growth rates- Fundamental Rule 2; a rational investor should pay a higher price for a share， other things equal， the larger the proportion of company’s earnings are paid out in cash dividends or used to buy back stock- Compensation for higher risk must be greater future rewards and thus lower current prices- Interest rates if they are high enough can offer a stable， profitable alternative to the stock market。 When interest rates are very low， fixed-interest securities provide very little competition for the stock market and stock prices tend to be relatively high- Stock’s P/E multiple will be higher the larger; its growth rate， longer its duration， dividend payout and less risky stock and lower general level of interest rates- Generally， the earnings multiple for the market as a whole is a helpful benchmark for valuation。 Growth stocks selling at multiples in line with or not very much above this multiple often represents good value- A simple buy-and-hold strategy using a portfolio consisting of all stocks in a broad stock-market index has provided investors with an average annual rate of return of about 10% over the past 90 years- Believes technical analysis must ultimately be worthless- Because there is a long-term uptrend in the market， can be very risky to be in cash- 95% of the significant market gains over a 30 year period came on 90 of the 7，500 trading days。 If you happened to miss those 90 days， just over 1% of the total， the generous long-run stock-market returns of the period would have been wiped out。 Market timers risk missing the infrequent large sprints that are the big contributors to performance- Many in Wall Street refuse to accept the fact that no reliable pattern can be discerned from past records to aid in the analyst in predicting future growth- Studies on Wall Street recommendations was nothing short of disastrous。 Buy recommendations underperformed the market by 3% per month whilst sell recommendations outperformed the market 3。8% per month- Over long periods， mutual-fund portfolios have not outperformed the market。 Superior performance is not consistent and there is no way to predict how funds will perform in any given future period- Just as past earnings growth cannot predict earnings， past fund performance cannot predict future results - During 2018， over 45% of the money invested by individuals and institutions was invested in index funds- Peter Lynch， just after he retired from managing Magellan Fund， as well as Warren Buffett， admitted that most investors would be better off in an index fund rather than investing in an actively managed equity mutual fund。 Buffett has stipulated in his will that cash from his estate be invested solely in index funds- Academics say risk and risk alone determines the degree to which returns will be above or below average- Financial risk can be defined as the variance or standard deviation of returns （the more spread out the returns）。 Variance is the measure of dispersion of returns。 The square root of variance is the standard deviation。 The higher the standard deviation， the more probable that at least in some periods you will lose money in the market- Diversification; portfolio of risky stocks can be put together in a way making it less risky than the individual stocks in it。 Diversification will not help much if there is high covariance （high correlation） between the returns of the stocks。 Anything less than perfect positive correlation can potentially reduce risk- Systematic risk， or market risk， can be measured by beta。 Beta is a comparison between the movements of an individual stock （or portfolio） and the movements of the market as a whole。 The beta of the market is 1。 A beta of 2， on average swings twice as far as the market。 Cannot be eliminated with diversification。- Unsystematic risk， specific risk， is the variability in stock prices （and stock returns） that result from company specific factors。 Can be reduced with diversification。- The only part that investors will get paid for bearing is systematic risk because unsystematic risk is easily eliminated with adequate diversification - CAPM says returns （and risk premiums） for any stock （or portfolio） will be related to beta， the systematic risk that cannot be diversified away。 Investors will not get paid for bearing risks that can be diversified away- Fama and French found there was no relationship between returns or portfolios and their beta risk measures- Inflation; increase in inflation tends to increase interest rates and thus tends to decrease the prices of some equities- There is evidence that returns are higher for stocks with lower price-book ratios and smaller size- Four factors that create irrational market behaviour: overconfidence， biased judgements， herd mentality and loss aversion- The development of stock prices from period to period is very close to a random walk， where price changes in the future are essentially unrelated to changes in the past- “Disposition effect”; disposition among investors to sell their winning stocks and hold on to their losing investments- Invariably， the hottest stocks or funds in one period are the worst performers in the next。 Investors tend to put money into mutual funds at or near market tops （when everyone is enthusiastic） and to pull their money out at market bottom （when pessimism reigns）。 In 2008 and early 2009， just at the bottom of the market during the financial crisis， more money went out of the market than ever before- Warren Buffet: lethargy bordering on sloth remains the best investment style。 The correct holding period for the stock market is forever- If you do trade; sell losers not winners。 Sometimes it’s sensible to hold on to a stock that has declined during a market meltdown， but it makes no sense to hold on to Enron。 A “paper loss” is just as real as a realized loss- The US stock market may have averaged over 9% a year over long periods of time but only with tremendous volatility including years when investors have lost as much as 40% of their capital- Sharpe ratio; numerator is excess return over the risk free rate， denominator is risk of the strategy or standard deviation of returns。 A higher Sharpe ratio means a higher return per unit of risk- There is evidence a portfolio of stocks with relatively low earnings multiples （as well as low multiples of book value， cash flow and/or sales） produces above-average rates of return- Stocks with low P/E multiples have produced higher returns than stocks with high multiples。 Stocks that sell at low ratios of price to book value tend to produce higher future returns- Low P/E and low P/BV; from 1927 through 2017， the annual risk premium available from holding a portfolio of value stocks gas been 4。9%- A representative “value” ETF sponsored by Vanguard trades under VVIAX。 Tracks CRSP US Large-Cap Value Index- Small-company stocks have since 1926 produced return of 2% higher than large-company stocks- ETF IWB tracks Russell 1000 index of 1000 largest US companies- ETF IWN tracks small cap Russell 2000 index containing the next 2000 companies in size- The most important driver in growth of your assets is how much you save and saving requires discipline。 Begin a regular savings program and start as early as possible- The secret to getting rich slowly （but surely） is the miracle of compound interest。 Earning a return not only on your original investment but also on the accumulated interest that you reinvest- You can only get poor quickly。 To get rich， you will have to do it slowly and you have to start now。 Start saving early and save regularly。 Live modestly and don’t touch the money that’s been set aside- Keep a cash reserve to cover 3 months of living expenses- Tax advantage of tax-deferred vs taxable investing; $5，500 a year after 45 years is $1，687，135 for tax deferred and $938，601 for taxable- Save as much as you can through tax-sheltered means- High investment rewards can only be achieved by accepting substantial risk。 Finding your sleeping point is one of the most important investment steps you must take- Real estate returns seem to be higher than stock returns during periods when inflation is accelerating， but do less well during periods of disinflation - Whatever the investment objectives， the investor who is wise diversifies- In times of great optimism， such as early Mar 2000， stocks sold at P/E multiples well above 30。 At times of great pessimism， such as 1982， stocks sold at only 8x earnings- By the trough in the market in 2009， P/E multiple for the S&P 500 had fallen to less than 15x cyclically depressed earnings。 These changes in valuation relationships created the conditions for positive stock-market returns over the next decade。 Through April 2018， equities produced an average annual return if 17。5%。 Inflation was less than 2%- When interest rates are high， stock yields rise to more competitive and stocks tend sell at low P/E multiples - It is possible to calculate the anticipated long-run rate of return on stocks by adding the dividend yield of stock averages to the anticipated growth of EPS- The major determinants of stock returns over short periods of time will be changes in market P/E multiples。 P/E multiples in 2018 were in the high teens higher than their long-run historical average- Investors have earned higher total rates of return from the stock market when the initial P/E of the market portfolio was relatively low- We are likely in a low return environment for some time to come- The most important investment decision you will probably ever make concerns the balancing of asset categories （stocks， bonds， real estate， money-market securities etc。） at different stages of your life- 5 Asset Allocation Principles: 1） History shows risk and return are related， 2） the longer an investor’s holding period， the lower the likely variation in the asset’s return， 3） dollar-cost averaging can be useful to reduce risk of stock and bond investing， 4） rebalancing can reduce risk and in some circumstances increase investment return， and 5） you must distinguish between your attitude toward and your capacity for risk- Dollar cost averaging simply means investing the same fixed amount of money in， for example， shares of an index mutual fund， at regular intervals - say every month or quarter - over a long period of time- The longer the time period over which you can hold on to your investments， the greater should be the share if stocks in your portfolio - If you expect to be a net saver during the next five years， should you hope for a higher or lower stock market during that period？ Only those who will be sellers of equities in the near future should be happy at seeing stock’s rise。 Prospective purchasers much prefer sinking prices- Systematic rebalancing is the closest analogue we have to “buy low and sell high”- Asset allocation for someone in their mid-twenties; 5% cash， 15% bonds and bond substitutes （no-load high-grade corporate bond fund， some Treasure inflation-protected securities， foreign bonds， dividend growth stocks）， 70% stocks （50% in US stocks with good representation of smaller growth companies， 50% international stocks incl emerging markets） and 10% REITs- The 4% solution; you should spend no more than 4% of the total value of your nest egg annually。 By spending less than the total return from the portfolio， the retiree can preserve the purchasing power of both the investment fund and its annual income。 Take estimated return minus inflation to find sustainable rate of spending- A conservative spending rate maximizes chances of never running out of money。 To rebalance， sell the portions if the portfolio that has become overweighted relative to your target asset mix- Many people incorrectly equate indexing with buying the S&P 500 index。 The S&P 500 omits thousands of small companies that are the most dynamic in the economy。 I believe that if an investor is to buy only one US index fund， the best general US index to emulate is one if the broader indexes such as the Russell 3000， Wilshire Total Market Index， the CRSP Index or the MSCI US Broad Market Index - not the S&P 500- From 1926 to 2018， smaller stocks produced a return of 12% annually whilst larger stocks in S&P 500 was 10%- The Wilshire Index contains all publicly traded US stocks。 The Russell 3000 and MSCI index contain all but the smallest stocks in the market- Total stock market index funds have consistently provided higher returns than the average equity mutual fund manager- One of the biggest mistakes that investors make is to fail to obtain sufficient international diversification - I suggest a substantial part of every portfolio be invested in emerging markets。 Emerging markets CAPEs were below 12 in 2018， less than half of the US。 Future long-run returns have tended to be generous when stocks could be bought at those valuations- Specific index funds; Vanguard REIT Index Fund （VGSIX）， Vanguard Total Stock Market Index Fund （VTSMX）， Vanguard International Index Fund （VTMGX） and Vanguard Emerging Market Index Fund （VEIEX）- Index the core of your portfolio along the lines suggested and then take active beta with extra funds- Emerging markets ETFs: Vanguard Emerging Markets， SPDR Emerging Markets， iShares Core MSCI Emerging Markets- The market P/E is a good place to start: But stocks selling at multiples in line with or not very much above this ratio- I am merciless with losers。 With few exceptions， I sell before the end of each calendar year any stocks on which I have a loss。 The reason for this timing is that losses are deductible （up to certain amounts） for tax purposes， or can offset gains you may already have taken。 Thus， taking losses can lower your tax bill- If you do want to pick stocks yourself， I strongly suggest a mixed strategy: Index the core of your portfolio， and try the stock-picking game for the money you can afford to put at somewhat greater risk。 You can safely take a flyer on some individual stocks， knowing that your basic nest egg is reasonably secure- Rebalancing can often be accomplished by investing dividends or by allocating new deposits of cash into the asset classes that have become underweighted - Derivatives are simply financial instruments whose value is determined by （or “derived” from） the price of some underlying asset， such as stocks， bonds， currencies or commodities 。。。more

Dave B ，

Very detailed break down of everything stock market related， from theories to the history of the market。 This version was written a couple years pre-pandemic so would be interesting to see how drastic it changes some of the theories and long term plans。

Aaaschless ，

Filled with useful information on investing。 The only drawback is that just four years later， many events have occurred which have changed the investment landscape。

Eric Swanson ，

Malkiel's depiction of investing methods， and his repudiation of the commonly held mania of Wall Street professionals is sound， insightful and eye-opening。 A great read for anyone who is looking to start a journey of logical， value-based investing strategies。 Malkiel's depiction of investing methods， and his repudiation of the commonly held mania of Wall Street professionals is sound， insightful and eye-opening。 A great read for anyone who is looking to start a journey of logical， value-based investing strategies。 。。。more

Sky Anderson ，

Probably the second best book on investing。

Jack Osborne ，

This book plays itself like an adventure。 Turmoil and total capitulation is a very fine line throughout history and only through these means can one seize it all

Sarah Platt ，

I appreciated that this book was written well and wasn’t bone dry considering its subject。 It was a bit over my head in places， but gave me a starting place to learn about investing。

Brandon ，

Good explanation of the basic theories of investment。 Strong proponent of diversified passive portfolio。

Zawad Amin ，

A good book to get a basic idea regarding the stocks and other securities。 Repetitive on some parts。。but， enjoyable due to some sly dark humor。

Phillip Hardy ，

This review has been hidden because it contains spoilers。 To view it， click here。 First half is great。 It covers big stock market history events and discusses TA and FA。 Drags a lot in the second half with a convoluted attempt at portfolio advice。

Reference

google book https://www.google.com/search?tbm=bks&q=A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy (Thirteenth)

hathitrust digital library https://babel.hathitrust.org/cgi/ls?q1=A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy (Thirteenth)&field1=ocr&a=srchls&ft=ft&lmt=ft

The British Library https://bll01.primo.exlibrisgroup.com/discovery/search?query=any,contains,A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy (Thirteenth)&tab=LibraryCatalog&search_scope=Not_BL_Suppress&vid=44BL_INST:BLL01&lang=en&offset=0