Review

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.

Buy New from $12.70 Buy Used from $4.00

 

Customer Review Chris Edwards

This book is an extensive and complete review of the investing sector, with a particular focus on equities. If you are trying to read one book only on this subject, this is probably the book that I would recommend. If you are quite familiar with this subject, you may not find as much depth as you hope but this book would serve as a historical reference. I particularly recommend reading the sections relating to the formation of bubbles and the subsequent collapses throughout the decade. The author clearly demonstrates how this is an inherent phenomena in the investing world, as we have recently experienced, and shows us ways to better understand and deal with these situations. I also liked the discussion about technical vs fundamental analysis of equities, when each should be used and how to harness the power of each. Finally, although the author does take a side on some of the topics he discusses, he does a great job of objectively presenting the different view points which is key for any reference material. A recommended primer!

Customer Review Jake Hamm

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.

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