Burton Malkiel on the 10th edition of "A Random Walk...

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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby EyeYield » Thu Dec 20, 2012 8:58 pm

An old thread; is the 10th edition the most recent or is there a later edition?
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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby umfundi » Thu Dec 20, 2012 9:22 pm

EyeYield wrote:An old thread; is the 10th edition the most recent or is there a later edition?

Is it easier to revive a zombie thread than to check amazon.com?

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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby EyeYield » Thu Dec 20, 2012 9:46 pm

Is it easier to revive a zombie thread than to check amazon.com?

After looking at amazon and not being sure, due to several versions, I didn't know if it was updated past version 10, so I googled which led me to this thread. I didn't look close enough to see the zombie part, but the animosity is crystal clear.
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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby umfundi » Thu Dec 20, 2012 10:08 pm

EyeYield wrote:
Is it easier to revive a zombie thread than to check amazon.com?

After looking at amazon and not being sure, due to several versions, I didn't know if it was updated past version 10, so I googled which led me to this thread. I didn't look close enough to see the zombie part, but the animosity is crystal clear.

No animosity intended.

I think you can safely assume that if Amazon shows the tenth as the latest edition, it is.

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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby tomd37 » Thu Dec 20, 2012 10:16 pm

The edition I have is the tenth edition (2012) after the initial publishing in 1975.
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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby EyeYield » Thu Dec 20, 2012 10:34 pm

tomd37 wrote:The edition I have is the tenth edition (2012) after the initial publishing in 1975.

Thanks Tom, 2012 is close enough. Since this thread started in 2010 and was about version 10, I just wanted to make sure.

I think you can safely assume that if Amazon shows the tenth as the latest edition, it is.

Keith

Keith, I've learned not to assume anything in the digital world, so I usually double check with humans when in doubt.
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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby scone » Fri Dec 21, 2012 9:17 am

Here's the link to the paper nisiprius is talking about. Professor Norstad makes the point that stocks do not get "less risky" the longer you own them. Which makes sense-- stocks are inherently risky, that's why they pay the risk premium... or not, as the case may be.

The Firecalc "results" chart makes it very clear that when you buy "securities," you are placing a bet with a wide range of possible outcomes. Nothing is guaranteed, and that needs to be made extremely clear in retirement planning. I agree with Larry Swedroe, that a "Plan B" should be in place in case the Plan A portfolio blows up-- and even then you still aren't guaranteed to succeed.

"Call no man happy until he is dead." Because the Fates can administer an unexpected hard knock any time.

http://www.norstad.org/finance/risk-and-time.html

http://firecalc.com/
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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby tadamsmar » Fri Dec 21, 2012 9:43 am

scone wrote:Here's the link to the paper nisiprius is talking about. Professor Norstad makes the point that stocks do not get "less risky" the longer you own them. Which makes sense-- stocks are inherently risky, that's why they pay the risk premium... or not, as the case may be.

The Firecalc "results" chart makes it very clear that when you buy "securities," you are placing a bet with a wide range of possible outcomes. Nothing is guaranteed, and that needs to be made extremely clear in retirement planning. I agree with Larry Swedroe, that a "Plan B" should be in place in case the Plan A portfolio blows up-- and even then you still aren't guaranteed to succeed.

"Call no man happy until he is dead." Because the Fates can administer an unexpected hard knock any time.

http://www.norstad.org/finance/risk-and-time.html

http://firecalc.com/


I don't think it's correct to think of your portfolio as your "Plan A portfolio" because there is no Plan B portfolio in Larry's advice that I can find.

I don't see anywhere that Larry suggests moving to a different portfolio. I think this is what he means:

"Plan B should list the actions that would be taken if financial assets were to drop below a predetermined level. Those actions might include remaining in or returning to the work force, reducing current spending, reducing the financial goal, selling a home, and/or moving to a location with a lower cost of living."

http://www.cbsnews.com/8301-505123_162- ... -for-them/

Larry suggests that you write out a plan and think about realistic ways to cut your expenses or earn money if your portfolio performs very badly. And if you can't come up with a realistic Plan B, then you need to come up with a less risky overall plan.
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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby scone » Fri Dec 21, 2012 10:00 am

tadamsmar wrote:
scone wrote:Here's the link to the paper nisiprius is talking about. Professor Norstad makes the point that stocks do not get "less risky" the longer you own them. Which makes sense-- stocks are inherently risky, that's why they pay the risk premium... or not, as the case may be.

The Firecalc "results" chart makes it very clear that when you buy "securities," you are placing a bet with a wide range of possible outcomes. Nothing is guaranteed, and that needs to be made extremely clear in retirement planning. I agree with Larry Swedroe, that a "Plan B" should be in place in case the Plan A portfolio blows up-- and even then you still aren't guaranteed to succeed.

"Call no man happy until he is dead." Because the Fates can administer an unexpected hard knock any time.

http://www.norstad.org/finance/risk-and-time.html

http://firecalc.com/


I don't think it's correct to think of your portfolio as your "Plan A portfolio" because there is no Plan B portfolio in Larry's advice that I can find.

I don't see anywhere that Larry suggests moving to a different portfolio. I think this is what he means:

"Plan B should list the actions that would be taken if financial assets were to drop below a predetermined level. Those actions might include remaining in or returning to the work force, reducing current spending, reducing the financial goal, selling a home, and/or moving to a location with a lower cost of living."

http://www.cbsnews.com/8301-505123_162- ... -for-them/

Larry suggests that you write out a plan and think about realistic ways to cut your expenses or earn money if your portfolio performs very badly. And if you can't come up with a realistic Plan B, then you need to come up with a less risky overall plan.

I think that's what I said. If Plan A does not work, you implement Plan B. So you need a Plan B, a backup in case the first Plan fails. The reference is in Investment Mistakes Even Smart Investors Make, Mistake 76, "Do You Have A Plan B?", page 248.

The big point I am trying to make is, your risk is inevitable, and your results are not guaranteed, no matter what you do. I think that fact has to be accepted, and not just shrugged off.
"Sometimes you're the windshield, sometimes you're the bug." -- Mary Chapin Carpenter
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Re: Burton Malkiel on the 10th edition of "A Random Walk...

Postby Sunny Sarkar » Fri Dec 21, 2012 11:10 am

You can nitpick all you want about Prof. Malkiel's view on China, his REIT allocations, and little things here & there in his book, but the fact remains that his is perhaps one of the best, if not the best, book for us to understand how markets actually work and why widely held investment beliefs like fundamental analysis, technical analysis, market timing, etc. simply do not work. Most books just tell that these do not work, but Prof. Malkiel's book is the one that actually explains why they do not work.

I have read dozens of books on investing over my decade or so long investment life, and have found the following three books to be the most enlightening:
* Bogle on Mutual Funds - explained to me what I need to do
* Random Walk Down Wall Street - explained why I need to do so
* Why Smart People Make Big Money Mistakes - explained how I could do so despite myself

I am, and will remain, forever indebted to Prof. Malkiel for his wonderful book.

All the best,
Sunny
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