Overall a good book. The bit where he says "it's highly unlikely derivatives will undermine the global economic system" is funny in hindsight though. lol.

Professor Malkiel was a very successful stock broker before he became a Princeton University Professor. His advice is based on his intimate knowledge of the equity markets and the professionals involved. His book provides the justification for the old saw "If their advice is so good why aren't they rich?".

I had the privilege of taking his courses in banking and finance and benefiting from his guidance as a grad student. His writings, like his lectures, are completely devoid of exageration, hype, or vagueness. This is the first book to read for potential investors.

This review is for the 1975 edition of A Random Walk Down Wall Street. I found the book to be too negative. All the author did was to attack and belittle people in certain positions most especially the technicians a.k.a. chartists. I didn't find anything useful in the book. The pages just go on and on, devoid of anything helpful. All in all, A Random Walk Down Wall Street wasted my time.

Are markets really efficient? Of course not, because market participants are not rational, they are emotional.

Do prices truly reflect all known information? Of course not...why so much volatilty?

For all who say this is the "must read", where exactly are the chapters on risk management and downside protection???

This is a nice presentation for when markets rise, but we all know that is not always the case

Another fallacy that sounds good in theory and is absolutely horrible in reality.

It has been about three weeks and I have not yet received this book yet.

I purchased this book as a supplement to my Corporate Finance class. I loved the title because Wall Street returns are pretty random and have driven many mad lately.

I'm a much better investor having read this book. It really explains a lot, for the novice to the experienced. Insights on stocks, bonds, creating a diversified portfolio, etc. Does a good job breaking down difficult concepts into (relatively) easy to understand descriptions. Some material is more dense and some of the writing seems repetitive at times but on the whole it's spot on, just what you need to be an informed investor.

This is a useful book to understand the whole efficient market idea. It explains very well why short term speculation is very difficult, but falls short of holding up the efficient market hypothesis in it's most rigorous form.

The latest editions of the book go through enormous contortions to maintain the efficient market thesis despite so much evidence to the contrary a lot of which he actually discusses but fails to refute. At one point he actually recommends that you try to time any NEW money you have to commit to the markets. Of course there is no reason given why new money should treated any differently than money already under risk. I guess his answer would be transaction costs? I find that very weak.

Keeping cash around for buying when markets are cheaper, and selling some of your holdings when markets get silly is so basic to professional risk management, that it is shameless for him to keep touting this stuff.

Burton Malkiel's A Random Walk Down Wall Street is well known to be one of the modern classics on stock investing. I was already aware of the premise behind the book - the stock market is pretty efficient and most everyone is wasting their time trying to find inefficiencies to exploit - but I was interested in finding out what information inside could really help me as an individual, both as an investor and as a person interested in improving my personal finances. Here's what I found.

Chapter 1: Firm Foundations and Castles in the Air
The book starts off by defining two basic investment ideologies, the firm foundation theory and the "castle in the air" theory. The firm foundation theory basically says that you should invest based on the actual real value of what you're investing in; for example, if you buy a stock of Coke, it should be based on what the value of the Coca-Cola Corporation is. The "castle in the air" theory basically says that you should invest in response to what the crowds are doing and that you can make more money by riding the waves of people who are either following trends or trying to invest based on a firm foundation. Which one is right? The truth is that they both are, but at different times.

Chapter 2: The Madness of Crowds
This chapter is quite entertaining: it discusses financial "crazes" throughout history, including my personal favorite craze of all, tulipomania. In all three examples (tulipomania, the South Sea bubble, and the Wall Street crash of 1929), a market grew like gangbusters until everything was overvalued, then the values rapidly returned to normal. Graphs of prices in all three examples bear this out; within a year or two of the end of the craze, the prices had returned to roughly the same value as they were before the big run-up.

Chapter 3: Stock Valuation from the Sixties through the Nineties
Even more amusing, Malkiel continues this theme of markets that go crazy and then level off again by using several examples of cross-sections of the stock market where this occurred throughout the last fifty years. I was aware of the overvaluation of food stocks in the 1980s, for example, but to see that it has just repeated over and over again is an eye-opener. Take the Nifty Fifty from the early 1970s - people were basically speculating in blue chips, and by the end of the decade, the speculation had gone away and the stocks returned to normal blue chip levels.

Chapter 4: The Biggest Bubble of All: Surfing on the Internet
This all of course leads to the dot-com boom of the late 1990s and the bust in the early 2000s. Malkiel basically argues that this huge bubble was the result of a confluence of the same bubbles as before, all working in concert: the IPO mania that fueled the early 1960s stock market, the "smoke and mirrors" businesses of the South Sea bubble, and the chasing of future efficiencies that happened in the 1850s with railroad stocks all happened again with the dot-com businesses. And, again, it peaked and crashed and everything returned to roughly as they were before. Coincidence? Malkiel's main point in the whole book is that it's not a coincidence. Markets are efficient and time and time again, when inefficiencies occur, it won't take long for the market to weed them out.

Chapter 5: Technical and Fundamental Analysis
Given this central idea of market efficiency that's been pounded in with dozens of examples, Malkiel moves on to look at the two most common forms of analysis that occur on Wall Street: technical analysis and fundamental analysis. Technical analysis is the study of the behavior of prices on the market, using past performance to speculate on future performance, often using complex charts and trend lines. On the other hand, fundamental analysis revolves around analyzing the health of a business by carefully dissecting its financial statements, the market the business competes in, and its competitors. This chapter mostly serves as a detailed introduction to both, though it's already clear that Malkiel has somewhat more respect for fundamental analysis than technical analysis.

Chapter 6: Technical Analysis and the Random-Walk Theory
This chapter is basically a complete decimation of technical analysis; there's no other way to really put it. Perhaps the most devastating part is when he compares the stock market to the average length of a hemline in women's fashion and finds a correlation. In other words, technical analysis spends all of its time looking for correlations - but most of these correlations are spurious at best. By spending all of your time looking at charts, you're essentially cutting yourself off from a broader picture, making the spurious correlations even worse.

Chapter 7: How Good Is Fundamental Analysis?
Malkiel has at least some respect for fundamental analysis because it is based on foundational logic and is open to accepting wide varieties of data. However, he finds fundamental analysis to be deeply flawed as well. There are many reasons why fundamental analysis can be completely off base: random events (like 9/11), dubious financial data from companies (like Enron), human failings (emotional attachments and incompetence), the loss of good analysts to better positions, and so on. Basically, Malkiel concludes that professional analysts may have a slight leg up on individual investors, but this is mostly due to having more ready access to information and other materials and the advantage is minimal.

Chapter 8: A New Walking Shoe: Modern Portfolio Theory
From there, we move on to portfolio theory, which is basically the idea that people should have a diverse selection of investments and that these investments should maximize the rewards while minimizing the risk. Malkiel basically argues that it doesn't matter how much you diversify your stocks (and other assets), you are still exposed to some risk. In general, he has some respect for modern portfolio theory, but he goes on in the next chapter to point out why minimizing risk isn't always the best strategy.

Chapter 9: Reaping Reward By Increasing Risk
This was easily the most complicated chapter in the book and left me taking some lengthy breaks in the middle to digest the information. This chapter basically takes the ideas from the previous chapter and introduces a new factor: beta. Basically, beta is a number that expresses how closely an individual stock matches the behavior of the overall stock market in the past. Thus, in theory, stocks with a high beta should jump like crazy during a bull market and then dive like Greg Louganis during a downturn. With a very wide scope, this is true, but in specifics, it rarely turns out to be highly accurate.

Chapter 10: Behavioral Finance
This chapter takes a close look at behavioral finance, which applies human cognitive and emotional biases to their investment choices and thus how these biases affect overall markets. From behavioral finance, Malkiel concludes that the only parts that really work are the ones that are common sense: don't invest long term in what's hot right now, don't overtrade, and only sell stocks that are losers.

Chapter 11: Potshots at the Efficient-Market Theory and Why They Miss
Here, Malkiel walks through a series of criticisms of the overall idea of the book, which is that the market is generally very efficient and always reverts to the mean. He starts off by discarding some poor arguments and gradually moves onto better and better arguments, ending with evaluating Benjamin Graham's idea that one should identify and invest in value stocks for the long term. He easily deconstructs most of them and only has significant trouble with Graham's argument. I felt he slightly missed the boat on what Graham has to say, which is that value stocks will always have value. Malkiel points out that over a long period, both growth and value stocks do match up with the overall market, but value stocks do not have the monstrous dips that growth stocks have.

Chapter 12: A Fitness Manual for Random Walkers
This chapter is rather ordinary, as it is a basic chapter on how to build a healthy investment foundation, similar to ones that appear in most investment books. Get an emergency fund, make sure you're well insured, put as much investment as you can into accounts that are tax-sheltered (like Roth IRAs and 401(k)s), and so on - standard personal finance advice. He does strongly encourage home ownership, though. As for the question of what exactly to invest in, the next two chapters handle that.

Chapter 13: Handicapping the Financial Race: A Primer in Understanding and Projecting Returns from Stocks and Bonds
Ever heard the phrase "past performance is no guarantee of future results"? That's what this chapter is about: you can only use past performance as a very, very broad indicator of the future. In short, Malkiel believes that over a very long period, stocks will beat bonds and inflation, but with any period shorter than a decade, it's basically random and it's all about the risk you can stomach.

Chapter 14: A Life-Cycle Guide to Investing
Given that, the next chapter is basically a detailed guide on how to invest for yourself. In short, when your goal is more than a decade off, you should be heavily into stocks for the long haul, but if your goal is in the shorter term, you should be widely diversified, tending towards investments with lower risk (bonds and cash) as the big day approaches. In other words, Malkiel believes that investing in a target retirement fund is a really good idea.

Chapter 15: Three Giant Steps Down Wall Street
The book concludes with some more specific investment tips. In short, if you don't have the time to micromanage things, invest in an index fund. If you want to chase individual stocks, minimize your trading, only buy stocks that have numbers that are reasonable, and look for ones that have stories upon which people can build the "castles in the sky" mentioned in the first chapter. As for other options, like managed funds? He basically says no, or gives a very hesitant yes with a ton of caveats.

*Buy Or Don't Buy?*
We know one thing for sure: there's a ton of information packed away in this book concerning how the stock market - or any market - works. Most of the book focuses on different ways of analyzing the market to find an edge - and concludes that they're largely junk; the end of the book takes what was learned from this and applies it to investing in general.

This might sound really weighty, but it's not. This book was very easy to read, much easier than I expected before I opened the cover. There's a solid sense of humor behind it, nestled in with all the information, and the information itself is presented in a way that's easily digestible.

If you have any interest in how the stock market works, you should definitely read A Random Walk Down Wall Street. It gives a very critical look at what most people are saying about the stock market - and why a lot of it is potentially rubbish. It also clues you in on how to invest if you take that view of the world.

Of course, there are many other perspectives on the market, and the truth is that the stock market can be exploited by individuals, but that exploitation requires a lot of work, work that is simply not feasible for most people (or even for most investment professionals). While I recommend buying this book, I also recommend pairing it with a solid book on individual stock investing to get another perspective. Taking both viewpoints together will give you a very good understanding of how Wall Street - and pretty much any market - really works, and how you can either try to beat it or ride with it.

Burton Malkiel's book "A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition" is easy and fun to read. It offers some interesting historical examples in a buildup to his main conclusion: Index funds are probably the best way to hold securities for the long term. Both Malkiel and Krugman make Princeton look good.

Professor Malkiel is one of the few professors who has actually done independent research on performance of traders, mutual fund managers, and stock analysts and why most fund managers and stock analysts cannot do what they are expected to do: beat the market or pick out the winners. The author also lays out classical cases investors caught in the middle of bull market hype shows what is obvious to us: most people lose money. He concludes the book with sound recommendations that would be helpful for people who are getting introduced in the investing world.

One thing I hoped that the author has addressed is the fact that we have managed/rigged markets and natural consequences of having them. Many researchers tend to assume that the market is free of any significant forces trying to influence or rig it, but they should look more into fields of political economics and history. This is why we have some phenomenon like Warren Buffet or some very few star traders.

It is nice to live with an ideology that the market is relatively free and efficient and everyone gets a fair chance, but it is not the case. There have always been hidden, outside forces that have managed to write their own version of history.

I recommend readers to check out THE CREATURE FROM JEKYLL ISLAND - A Second Look at the Federal Reserve and Crash Proof: How to Profit From the Coming Economic Collapse (Lynn Sonberg Books) to complement this classic book.

You may also want to check out Max Keiser and his documentaries to shed some light on techniques that big players use to rig the markets.

This is an investment classic that belongs on any investor's bookshelf. A caveat to those who read it--it's not something you can skim through or power read quickly on a train ride, it contains pearls of wisdom and you need to reflect on it over time. The first time I read it was in College and then again in Business School a few years later. I've found that I've gone back to it again and again and have re-read it over five times so far. For those with less patience for statistics, please consider the Random Walk Guide to Investing, also by Malkiel. It's essentially a condensed version of this and distills its core elements into just over 200 pages instead.

This is one of the classics -- a must read for someone new or experienced at investing. After reading this book, you will have a much better understanding of some of the "randomness" that plays into the markets and sneer at advisers who claim they are smarter than the market.

Some of the arguments in this book don't make much sense. It does give you an interesting historical perspective, but the author chooses poor examples to prove his points. I found a lot of the "jokes" to be mean spirited, sexist, and just not very funny.

Especially in these tumultuous economic times, you owe it to yourself to read this book! My first accountant taught me that, "No one cares as much about your money as you do." This book teaches you how to manage it yourself, saving thousands of dollars of fees to investment advisers who often have their own interests ahead of yours.

This book changed my life. And I can't say that about many books.

-Steve Parker, M.D., author of The Advanced Mediterranean Diet: Lose Weight, Feel Better, Live Longer

Very good book, the author takes you behind the scene of Wall Street and history of the market. He goes over the basics of our economy and the different avenues of investing. This is a must read for anyone who want to start investing but is confused on where to start. I would have given this book 5 stars if he had written down a step by step process to investing. I recommend this book 1st and then read Jim Cramer's Mad Money, he gives the step by step procedures I was looking for in his book.

As a novice to finance, I found this book both educational and entertaining. Highly recommended!

Would have give it 5 stars,except for the fact that they did not return my e-mail, when I had a question

This book helps to understand how the shares market works and its history.

I think it may interest all people who wants to improve his knowleadge in

investing.

The book is otherwise fabulous, but you should steer clear of the Kindle version. The Kindle handles charts poorly, and this book has a lot of them. Some are manageable, but many others contain small text that is so blurry that it might as well be written in Arabic. Quite honestly, it is not entirely clear to me how Amazon gets away with selling this item. The Kindle is great, but Amazon absolutely should not sell books that cannot actually be read on it.

This is great to have in your library to know the intimate working of the various markets and how they came to be. You can't invest in something wisely without knowing how it works!

Fantastic Book - full of common sense and ultmate truths. Read it in October 2007 when it was screaming at me "the market is in a bubble, get out!!" - unfortunately I listened but didnt act. Great book

This book lives up to its classic billing by delivering a rich array of data to support the authors arguments in an engrossing and entertaining style. The importance of really understanding the relevance of randomness to market action cannot be overemphasized. I truly appreciate the clarity and simplicity that this book has brought to my investing efforts.

Deep investing instruction. Not for the novice. Great peeks inside the inner workings of Wall Street; covers historical reviews of the efficiencies of the markets, as well as the glaring problems investors failed to recognize and had to endure; reviews of investment bubbles and manias. Some great technical and fundemental analysis offered.

What I took out of it was one section that happened to be what we all work on. Focus on how to break out of the same trading bad habits, and mastering a successful formula through time tested techniques (stop losses, selling in pieces, quickly reducing positions and re-evaluating losing positions, scaling into strong positions. You name it.

i'm a beginner in the field of personal investment and have been looking for a book to help me understand the basics of investment. i have found that in 'random walk'. it's fun to read as well as a well researched book. i am hoping it'll help me make some money :).

Good book for the average person with little time or interest in trading or investing. For those people the book makes sense. However, there are traders as found the book Market Wizards or those who use trading programs such RMC Q Trader that will beat the market.

A book that leaves a lasting impression, and changes your mind, forever, about how to invest for the long run.

The first half of the book goes through the basic of index funds, then moves onto the current views of how people try to make money in the market, from the straightforward approaches to some really weird ideas that people have. Malkiel goes through each of them, using mathematics and psychology to explain which do and which don't hold any water - and what the chances are of *predictably* and *consistently* producing returns that *beat the market average* for each of those techniques.

The only downside (from my perspective) is that the book is aimed at a US-centric audience - which means it automatically rules out the larger part of the reading audience... as this book would otherwise be perfect for the entire world.
However, I strongly believe there are enough useful chunks of information that it's well worth buying, even for the European and Aussie markets.

I never thought I'd have the time or knowledge to be able to beat the average broker at the market, but I'd always thought there was more room to move than this. Seems that my best bet is also the easiest!
Index funds for me from now on!

It's amazing how the 35+ years since the first edition have consistently proved Malkiel correct. I would recommend this book to anyone new to the U.S. workforce who finds him- or herself faced with deciding what to do about a new employer's 401(k) offering.

In the U.S. today, since the responsibility for a secure retirement rests almost solely on the individual, it is crucial to make the right decisions early on, lest you cost yourself a great deal of money in the future. It is also next to impossible to do so, as our society does a woefully inadequate job of preparing us for these decisions.

Previous generations could rely on defined benfit plans and Social Security, so while we can turn to our parents for advice in many things, this is one area they never had to know much about. While I took an excellent personal finance course in college, we did not talk much, if at all, about retirment savings. Our consumption-oriented society does little to encourage prudent money management. Finally, if there is a more difficult mental activity than considering one's retirement at age 21, I would like to know what it is.

Not too many of us consider ourselves investors at 21, yet once we sign up for that 401(k) plan, we absolutely are. Malkiel uncomplicates what can be a complicated and intimidating world for those unfamiliar with it, and give clear, rational advice in an entertaining writing style. I wish I had picked up this book when I first enrolled in a 401(k) plan back in 1994; I would undoubtedly have more money in my account than I do now.

If you know someone about to finish school and enter the workforce, I cannot think of a better gift to give. If you yourself are confused by the choices offered in your company's retirment plan, I would say that the money you invest (yes, invest) in this book will enjoy an exponential return. Rather than an absurd, get-rich-quick scheme, you will find an easy-to-understand, rational guide to building wealth slowly and deliberately.

Happy investing to us all!

In a nutshell Malkiel's advice is to own your own home, buy no-load index funds (equities and bonds), buy international index funds, and mix your investments according to your age. You should also have medical and plain term life insurance, and cash on hand for a few months in case of an emergency. This book is a complete course in how to manage your money effectively, whether you're a millionaire or a low-income earner. It also gently but firmly chastises proponents of get-rich-quick schemes such as day traders.

First, the book explains what is financial risk, and points out that everything is risky, even insured savings accounts since inflation can destroy the value of cash. Malkiel describes just how risky various investments are, and how the risk is one investment is often offset by the risk in another. Second, Malkiel describes a variety of specific investments (e.g. no load index funds, your own home, individual stocks) and suggests how individual investors should mix them, depending on their personal circumstances. For instance, an ambitious young woman in her twenties can consider aggressive high-risk high-growth funds. If they boom, she's rich, if they bust she's young enough to recover her losses through income. This would not be true of a middle-aged couple about to pay for their children's college years.

This edition is updated with a whole section on the internet bubble and other scandals. However, it maintains the same principle as all other editions; and Malkiel's advice remains that we should diversify broadly.

"A Random Walk Down Wall Street" should be in every family's library.

Vincent Poirier, Dublin

This is a clear, concise guide for the novice investor. It is easy to read as well as entertaining. It is full of information of the pitfalls
and opportunties of investing.

This book was a gift for the man interested in investments!
He loves it!