A Random Walk Down Wall Street: The time-tested strategy for sucessful Investing ( eleventh edition)

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A Random Walk Down Wall Street: The time-tested strategy for successful Investing Book Report
Book Written by Burton G. Malkiel
The following book report is based on A Random Walk Down Wall Street: The time-tested strategy for successful Investing, which was written by Burton G. Malkiel. The book has been published by W.W. Norton & Company, Inc.
Introduction
The book A Random Walk Down Wall Street- The time-tested strategy for successful Investment which is written by Burton G. Malkiel who is well informed in matters regarding stocks and portfolio. His expertise has proven to be of significance to individual thinking about engaging in portfolio business. The eleventh edition of the book has features like the investment opportunities and exchange-traded funds that are in most cases found in the emerging markets around the globe. A chapter on the smart beta that has been included in the new edition is a concept that is of great importance to the investors because of it the newest marketing gimmick that is found in the current investment management industry. The book is also of great significance because it can be of help in tackling work of derivatives that has increasingly been becoming complex to handle. The book is a lucid mix of the pragmatic and theoretical understanding of the portfolio market.
Summary
I have found the book to be well written and thought out especially on the matters relating to the portfolio market.

The book has offered a guided tour of the complexities that exists in the world of finance and has offered investment advice to the reader regarding the strategies available and the investment opportunities that people should explore (Malkiel 1). According to the author, the book serves as a guide for the individual investors, and it will equip them with adequate knowledge on how to handle different complexities in the marker. The book is of great importance because it has taught people on how to buy life insurance as well as making sure that they have avoided getting ripped off by the bankers and other brokers. A random walk has been termed as a direction which future is unpredictable. The author as applied the concept in the stock market which is aimed at presenting the meaning that the short-term changes that occur in the stock markets are unpredictable since the prices keep on fluctuating. Malkiel has started by introducing himself and the experiences that he has achieved in trading in stock over the period he has lived. He has extensive knowledge on the portfolio management and investment analysis and has for years worked in one of the preeminent investment firms in the Wall Street. Further, he has experience in insurance since he once chaired investment committee of a multinational insurance company as well as attending as a director in one of the largest investment companies in the world. He is also an economist and chairing several investment committees. Malkiel has Academic research knowledge that is detailed as well as his finding on the emerging investment opportunities (10).
As expected, the book has elucidated on the psychology of speculation which is absurd. Through his castle-in-the-air theory, he has explained how speculative binges and the act of outguessing the reactions brought about by the fickle crowd can be a dangerous affair in investing. According to Malkiel, the markets that have been supported by psychic have always succumbed to a downfall (15). The author has also explained how explosive bubbles in early 2000 were devastating to the world economies leading to a loss of over $ 8 trillion in the market value (Malkiel 36). The book is very informative and has also explained some of the important methods that are used by the professional portfolio managers around the world. Efficient-Market Hypothesis that has been presented by Malkiel has practical implication on the investors.
I feel that the purpose of the book is to put more emphasis on the stock investment. The author has categorically stated that there is no way the investors can do better in the market rather than in buying and holding index funds that are in possession of portfolio that consist of all stocks in the market (Malkiel 98). The book has also emphasized on the use of the “new walking shoe” which represent the application of the modern portfolio theory in the portfolio market so as to yield extraordinary profits (Malkiel 408). The book is crucial because it has given all the information needed to prosper in the stocks market.
Body of the review
The book is very persuasive in nature, and it tries to influence people on how they should invest. Burton Malkiel has written a book that is easy to read and understand. According to him, is that investors who purchase and hold index funds are better off compared to the stock pickers or the wall street experts. This situation can be explained by the fact that investors who have invested in index funds have, effectively invested in the market as a whole and therefore they are likely to reap more than the other speculators.
The book talks about efficient market theory. According to Malkiel is that people are very smart around the world and information about a company is reflected in the market at a very fast rate. Investors will not have time to read the news before other people get the information. It is, important to invest in a widespread portfolio of stocks given the current market prices rather than trying to go picking stocks and selling them (Malkiel 325). Malkiel states that markets are not correct most of the time. They, therefore, do not predict the things that will occur in the future. He recommends that people continue to purchase all stocks and hold all of them.
Malkiel states that investors should be ready to accept stock price fluctuations. For individuals investing for their retirement, they should be comfortable when the stock prices go down (Malkiel 428). The stock prices will always go up and down. Many people panic when stock prices go down, and they are likely to sell their stocks. Those investors that wait can reap great benefits in the long-term since the stock prices could rise again in the future. The only individuals who should be worried about low stock prices are people who are in retirement stage and need to liquidate their stocks. He states that everybody else in the market should be happy when the prices of stocks go down rather than panicking and selling at low prices (Malkiel 457).
From his experience, he states that individuals who buy low-cost stocks frequently for a long time from the diversified international index of stocks are likely to have their stocks perform better compared to those carefully picked by experts who use their sophisticated analytical techniques. The book gives a guide to people who want to invest and therefore suggest strategies that investors can use in any age. This book can help investors to plan well and confidently for the future.
I would recommend people who have the intention of investing in stocks or other kinds of investment to read this book. It will give direction on how to do things so they can be successful in their plans. Readers will learn how to assess potential returns from investment. Individuals who want to invest in collectibles and other tangible assets like gold, real estate, home ownership and other can read this book to help in guiding their investment decisions. Individual investors who have different levels of experience, as well as risk tolerance, need to read this book as it will present the relevant facts that they need to know. It will also offer a step by step guidance to ensure that investors protect and multiply their investments. The book is quite informative, and it reassures investors on what they need to do in regards to their investments. Readers cannot regret buying this book as it will offer the finest investment guide.
Conclusion
I found this book very useful especially because I intend to become an investor sometime in the future. The book can assist people in making investment decisions. When I got to read the book in the first chapter, I was bored since I did not understand the phrases used. When I continued to read the book I got a revelation about what the book is all about. It is amazing to understand the behavior of people in the market. I learned that experts are not always accurate about the predictions that they make, but rather it is vital to take measures that would safeguard investment. Investors need to diversify the stocks that they purchase and continue to hold on to them regardless of market fluctuations, and there is a great likelihood that they would reap great benefits in the future. This book is informative and persuasive and is good for people looking for investment guidance.
Works Cited
Malkiel, Burton G. A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, 2015. Internet resource.