Introduction to “A Malkiel Random Walk Down Wall Street”
If you are a new investor who is interested in investment history or how to make investments, purchase this book by Burton G. Malkiel. This book is ideal for any experienced investor who wants to brush up on their knowledge of investment techniques and theories also. There are not many books that have been written about investing. A Random Walk Down Wall Street is broken down into four parts which include; Stocks and Their Value, How the Pros Play the Biggest Game in Town, The New Investment Technology and A Practical Guide for Random Walkers and Other Investors. In total, there are fifteen chapters that cover a lot of key points that many will find interesting and informative.
The first edition of A Random Walk Down Wall Street was written over forty years ago. Burton Malkiel’s first tip to investors in his preface is that “Investors would be far better off buying and holding an index fund than attempting to buy and sell individual securities or actively managed funds” (Malkiel, Page 17). You will learn that buying and holding all the stocks in a bond stock market average will most likely outperform professionally managed funds. I agree with Burton’s theory on this strategy. He uses an example on Page 17 showing how an initial investment of ten thousand dollars in an Index Fund would have a higher return than an investment of purchased shares of a managed fund. The author created this tenth edition of the book because there have been significant changes in the financial instruments that are available.
Many investors can benefit from using newer financial instruments and critical analysis. The tenth edition of this book also provides a clear description of the academic advances in investment theory and practice. The newest topics that were added to the tenth edition of this book include a section on behavioral finance and a section on practical investment strategies for investors who have retired or are about to retire. Another interesting topic that I enjoyed reading about was the examination of claims that it is possible to beat the market. I disagree with many of these claims. I was able to use a number of techniques of stock selection that helped me reach my goal when enrolled in the simulation game.
I found a number of arguments that I agree on and disagree on that I want to share with you. These arguments derive from topics and chapters that I selected out of the text of the book. The sections that I found most interesting include; The South Sea Bubble, The Japanese Yen for Land and Stocks, The Internet Bubble, Technical and Fundamental Analysis, and Greater Rewards by Increasing Risk. Burton Malkiel does an excellent job at guiding his readers through finance and giving advice on investment opportunities. He definitely gives me the confidence to trade and research at the same level as the professionals and experts are at. This book is very interesting because the topics...