Book Review: A Random Walk Down Wall Street
I just finished up A Random Walk Down Wall Street by Burton G. Malkiel. This book became famous in 1973 for suggesting that a bunch of monkeys throwing darts at the Wall Street Journal could beat out most professional managers. And that theme, supported by a lot of statistics spit out by a lot of grad students, endures today. As the Amazon editorial review simply puts:
“Malkiel advises investors to “buy and hold” a diversified portfolio heavy on index funds that passively mirror the market, which usually out-perform actively managed funds.”
It also contains history about the stock market, and very easy to follow statistics descriptions that will help you grasp those funky terms in stock listings like “P/E” and “Beta” and “EMA”. Overall, I found the book very enjoyable and an easy read, and I can see how transaction costs in actively managed funds eat into the final return. Low expenses are key. The final part is what “diversified” means, as in asset allocation. The book does give the following suggestion for people in their mid-20s:
65% Stocks / 20% Bonds / 10% Real Estate / 5% Cash
This book is a great primer on investing overall and also gives some useful pointers on bulding your own portfolio.
Overall Rating: 
(ratings explained)
Next book: The Four Pillars of Investing : Lessons for Building a Winning Portfolio by William J. Bernstein.
Find more in Book Reviews | 12/14/04, 9:37am | Trackback
January 8th, 2006 at 5:34 pm
A little late, but the book is called “A Random Walk Down WALL Street”, not “WALK Street”.
January 8th, 2006 at 6:05 pm
LOL, I can’t believe no one (including me) caught that until now.
November 5th, 2006 at 10:51 pm
[...] A Random Walk Down Wall Street, 1 copy (review) [...]
January 22nd, 2007 at 9:17 pm
[...] A Random Walk Down Wall Street by Malkiel (Review) [...]
February 1st, 2007 at 10:25 am
Have you read “A Non-Random Walk Down Wall Street”? –it basically refutes the main premise of that book. Just asking.
February 1st, 2007 at 11:40 am
I’ve heard of it. The idea does sound interesting, but it sounded like a pretty dry academic text. On top of that, the reviews I’ve read don’t suggest that the casual investor (or even pro) can necessarily profit consistently from such inefficiencies.
But on a certain level, I’ve personally always had a hard time believing the market is 100% random. Just random enough
February 2nd, 2007 at 9:18 am
I agree–it wasn’t that interesting. I also read “Origin of Wealth”, which is a large book, but explains the “evolutionary” nature of investing strategies and that the prices in the market support a “power log” profile (i.e., price moves twice as large happen 25% as often). I thought it was interesting.
March 7th, 2008 at 1:07 am
[...] You need to have a pretty thorough knowledge of investing to be able to dissect it. People (MyMoneyBlog, and TheSimpleDollar) give good reviews on it across the web, and I WILL read it eventually, but [...]
September 26th, 2011 at 1:40 am
[...] A Random Walk Down Wall Street, 1 copy (review) [...]
October 5th, 2011 at 9:59 pm
[...] } var addthis_product = 'wpp-262'; var addthis_config = {"data_track_clickback":false};While A Random Walk Down Wall Street was more of a primer on investing in general, The Four Pillars of Investing by William Bernstein [...]
October 5th, 2011 at 9:59 pm
[...] to my two favorite investing books so far – The Four Pillars of Investing (same author) and A Random Walk Down Wall Street. Finally, although I had hoped to get one gratis from the publisher *cough* *cough*, I went ahead [...]
October 10th, 2011 at 12:00 am
[...] that nothing has imploded. My desire to be a knowledgeable stock investor fizzled after reading books about index funds and how people much smarter than me can’t beat the market. But I still have [...]
October 15th, 2011 at 6:20 pm
[...] A Random Walk Down Wall Street: Provides a great frame of reference for investing, giving a history of the markets and laying out clearly the surprising findings that monkeys can beat Wall Street. [my full review] [...]
February 24th, 2012 at 2:28 am
I agree–it wasn’t that interesting. I also read “Origin of Wealth”, which is a large book, but explains the “evolutionary” nature of investing strategies and that the prices in the market support a “power log” profile (i.e., price moves twice as large happen 25% as often). I thought it was interesting.