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.
Customer Review Chris Edwards
Customer Review Jake Hamm
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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