A Random Walk Down Wall Street: Completely Revised and Updated Edition

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.

Amazon.com Review
It's unlikely that you'll spot many dog-eared copies of A Random Walk floating amongst the Wall Street set (although bookshelves at home may prove otherwise). After all, a "random walk"--in market terms--suggests that a "blindfolded monkey" would have as much luck selecting a portfolio as a pro. But Burton Malkiel's classic investment book is anything but random. Since stock prices cannot be predicted in the short term, argues Malkiel, individual investors are better off buying and holding onto index funds than meddling with securities or actively managing mutual funds. Not only will a broad range of index funds outperform a professionally managed portfolio in the long run, but investors can avoid expense charges and trading costs, which decrease returns.

First published in 1973, this seventh printing of a A Random Walk looks forward and does so broadly, examining a new range of investment choices facing the turn-of-the-century investor: money-market accounts, tax-exempt funds, Roth IRAs, and equity REITs, as well as the potential benefits and pitfalls of the emerging global economy. In his updated "life-cycle guide to investing," Malkiel offers age-related investment strategies that consider one's capacity for risk. (A 30-year-old who can depend on wages to offset investment losses has a different risk capacity from a 60-year-old.) In his assessment of rocketing Internet stocks, Malkiel defends his "random" position well, explaining how "the market eventually corrects any irrationality--albeit in its own slow, inexorable fashion. Anomalies can crop up, markets can get irrationally optimistic, and often they attract unwary investors. But eventually, true value is recognized by the market, and this is the main lesson investors must heed." Written for the financial layperson but bolstered by 30 years of research, A Random Walk will help individual investors take charge of their financial future. Recommended. --Rob McDonald

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All Customer Reviews
Average Customer Review:
0 of 0 people found the following review helpful:

Great Book, 2008-06-02
This is a very complete and good book. It covers the basic topics of finance related to shares.


0 of 0 people found the following review helpful:

This may be the last investing book you will need to read, 2008-03-30
Have you ever wondered about how to correctly invest your money? Do you like to understand things from first principles? If so, this book is for you. This book will teach you what to do with your money and, more importantly, why. This book explains everything from first principles, so no background knowledge is needed. The author takes time to explain all the latest money making inventions such as modern portfolio theory and others only to discredit them later with logic and statistical evidence. I found these later chapters a little hard to read because the author is so pedantic and material is a little anticlimactic. However, I think I've learned a lot from these chapters. If you would prefer a shorter summary for how to invest without detailed explanations for why, read The Random Walk Guide to Investing: Ten Rules for Financial Success instead.


1 of 8 people found the following review helpful:

Random but not rational, 2007-10-06
The concept of an efficient market is totally at odds with the way major fund managers work.
Very often the price of a stock is totally unrelated to its underlying value. Look at the theories of Graham (Amazon has him) and Warren Buffett. Buffett has followed Graham's advice for 50 years and made 25% PER YEAR returns by finding cases where Mr. Market is completely nuts, let alone inefficient! Think of the market as efficient, except sometimes completely NUTS.The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)Security Analysis


2 of 2 people found the following review helpful:

Excellent Message. Sweeps some exceptions (particularly those noted herein) under the rug., 2007-10-02
Particularly in a day and age where mutual funds are often touting themselves on the television, this book has an excellent, largely unbiased message for the average investor: buy low cost index funds and stay in them for the long haul.

The book is exceptionally well written, covering most of the lessons of an introductory to intermediate finance course in a very accessible format (i.e. all the right *ideas* without the confusing math). He utilizes dozens of powerful examples and good data to show that his basic premise, despite now being 30 years old, is sound. Due to its theoretical strength and accessible style, this book could be of particular value to Undergrad Business and MBA students who find the professor's academic approach to an Introductory Finance course confusing. Get the big picture here, making the math just that much easier to follow. (5 stars for making difficult financial concepts readable and interesting)

Despite my strong recommendation for both his message and style, the book does have some drawbacks. Number one is that he has clearly taken a side on the issue and has thrown impartiality to the wind. Regularly, the author depends on "transaction costs" (the cost to trade) to ensure that a trading strategy cannot beat his preferred portfolio (implying that it would have succeeded without the transaction costs). This "sweeps under the rug" several clear counter-examples to the basic efficient market thesis in order to reinforce his index-investment message. While I understand his reasoning for doing so -- a desire not to encourage investment in high cost funds or heaven forbid day trading -- it does lead to some skepticism about his willingness to admit any possibility that his thesis has weaknesses. To that end, I would discourage readers who are familiar with CAPM and efficient-markets from reading the book (2 stars as a brush up).

In the end, however, I think the message is sound. Rather than cite trading costs, I think the message can effectively be said another way: If you spent 5h a day investigating stocks, what are the odds that you can beat a professional manager? If a manager has a staff of 20 that invest 8h per day investigating stocks, what are the odds that they're going to beat the whole financial services industry? If the whole industry is taking advantage of every opportunity to profit from small deviations, and you're going to pay a manager most if not all of that profit anyway, investing in an index basically gets you the benefit of thousands of mutual funds and investment bankers without the cost of any of them (or of your time to do research).

With qualifications to the highly technical reader, who should pass on the book, I can't, in good conscience, fail to give this book 5 stars for a profoundly valuable message targeted at the individual investor.


1 of 2 people found the following review helpful:

Disappointed Purchaser, 2007-09-13
This is an excellent book, well written and informative. I highly recommend it. I ordered this book in July. I have a 1990 version of the book in my library but wanted the latest version. Imagine my disappointment when I completed most of the book and discovered that this was the 2003 version and not the 2007 version. You'll notice Amazon makes no distinction.

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