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7.17.2006 

A Random Walk Down Wall Street

Author: Burton Malkiel
Year: 2003 (8th Edition)
Pages: 432. Slow, slow and slower unless you love reading an dry academic repeat himself.
Rating: 80/100. Gets the point across and gives an overview of wall street.
Amazon: Buy A Random Walk Down Wall Street

Burton Malkiel, a Wall Street cynic, thoroughly explains the financial markets in this investment classic that is considered a "must-read" by those in "the know". He first goes through the history of Wall Street, moves on to analyze different investment theories, and then creates a practical overview on how to invest money. The strength of the book likes in his overview of almost everything concerning investing and his ability to clearly and simply explain financial ideas. For instance, building sandcastles in the air is his term for the mania that characterizes a bubble.

"A Random Walk Down Wall Street" rips apart almost every strategy that tries to beat the market. He debunks the idea that financial analysts are experts and fires academic bullets at many popular investment theories. His "shock the world" statement is that blindfolded monkey's throwing darts have as good a chance at positive results as the guy running your money. Malkiel then proposes his own bland theory on successful investing. His answer - diversify by investing in index funds that track the market.

Litty's Thoughts

I read the book to refresh my knowledge on Wall Street and the different kinds of investment vehicles. Unfortunately, I'm in debt and my investment consist of series EE bonds that were issued 10 years ago as Bar Mitzvah presents and which Malkiel considers one of the most useless investments around.

RWDWS covers all kinds of investments including stocks, tax shelters, mutual funds, and fixed income assets. The first 100 pages are the most interesting. That is when Malkiel explains the history of investing and discusses the factors and psychology behind many landmark events.

The book starts to go downhill when it scrutinizes technical and fundamental analysis and analyzes risk. Malkiel uses academic studies and research to basically kill every idea or investment strategy. At the end he proposes his strategy that seems pretty lame. Perhaps he's a professor that jealous that brainless finance monkey's make exponentially more income than he does. The book serves its purpose on educating the reader and can be a springboard for figuring out where your interests lie. Overall, wasn't sure what all the fuss is about.

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