Random Walk Down Wall Street

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llessac15
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Random Walk Down Wall Street

Post by llessac15 »

I just finished the classic book 'A Random Walk Down Wall Street'. Is it just me, or is the first half of the book a waste of time? I feel like it could be summarized by just saying, "Don't try to time the market." I wish someone would have told me that before I spent 3 hrs reading the first few chapters. Any thoughts or opinions?
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Re: Random Walk Down Wall Street

Post by livesoft »

I guess you haven't read Moby Dick by Melville then?

I did notice RWDWS on my bookshelf yesterday. I think I read this in 1973 or so. Back then, guess which index funds were available? So the ideas were somewhat unconventional wisdom when it first came out, but in 2014 the book is pretty much main stream thinking.
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mptness
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Re: Random Walk Down Wall Street

Post by mptness »

I read RWDW a couple years ago and enjoyed from start to finish.
livesoft wrote:I guess you haven't read Moby Dick by Melville then?
Spoiler alert

I can save you more than three hours...whale kills Ahab, Ishmael survives.

P.S. Don't try to time the market. :D
Elbowman
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Re: Random Walk Down Wall Street

Post by Elbowman »

The less history you know, the more susceptible you are to the idea that "this time it's different".
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Re: Random Walk Down Wall Street

Post by IlliniDave »

Well, that's sort of the way it is. Some idea of the history of investing is helpful. If you're willing to accept the conclusions without the arguments, don't bother with the rest of the book either. It just says, in a nutshell, "buy low cost index funds".
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Random Musings
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Re: Random Walk Down Wall Street

Post by Random Musings »

I remember reading that book in an economics class in 1982. I was already investing at Vanguard, and had one index fund (but also low cost actives). At that time, index investing was not mainstream yet, so the book was powerful.

RM
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nisiprius
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Re: Random Walk Down Wall Street

Post by nisiprius »

mptness wrote:I can save you more than three hours...whale kills Ahab, Ishmael survives. :D
Ah, landsman. Wouldst, thou, then bind the numinous expanse of the cetacean within the tobacco-pouch confines of a tweet? That denies the cask, the carrick-bend, the turks-head, the quoin, the feldspar, the gabled violas and circumflected aneurysms, which each play their appointed role in the homuncular world of the Pequod. Think ye on this, landsman: is it not so, from the peaks of Nukahiva to the leprosarium of Penikese? Are not you, yourself, the very simulacrum of Queequeg? Skippeth ye the cetology and ye skippeth the very liver and lights of the tale. And besides, how else are you going to know what Starbucks is named after?
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Hub
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Re: Random Walk Down Wall Street

Post by Hub »

Thanks for the book review OP. :)

I actually have this one on my 2014 to-do list after noticing a copy on my bookshelf, but I know it will say a bunch of stuff I am already convinced of so it keeps getting bumped for more interesting fare.
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Taylor Larimore
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"A Random Walk Down Wall Street"

Post by Taylor Larimore »

llessac15 wrote:I just finished the classic book 'A Random Walk Down Wall Street'. Is it just me, or is the first half of the book a waste of time? I feel like it could be summarized by just saying, "Don't try to time the market." I wish someone would have told me that before I spent 3 hrs reading the first few chapters. Any thoughts or opinions?
llessac:

Professor Malkiel's, "A Random Walk Down Wall Street" and Jack's "Bogle on Mutual Funds" are the two books that caused me to abandon my loser's game of trying to "beat the market."

I am eternally grateful to both these men and their books.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Rodc
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Re: Random Walk Down Wall Street

Post by Rodc »

If someone simple said with no data and no rationale:

Buy 1/3 TSM, 1/3 ITSB, 1/3 TBM as cheaply as possible and hold to that and never listen to any professional advisor because despite years of training they have no skill,

How many people would listen?

Indeed how many have heard this and think it is a lie?
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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SmileyFace
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Re: Random Walk Down Wall Street

Post by SmileyFace »

Like others - I enjoyed going through all the analysis.
I believe this was one of the FIRST investment-related books I read. I read this after "Learn to Earn", "Motely Fool" and a few other stock-picking-classics around Year 2000 - this and Bogle's first book (and a few bad stock-picking choices:)) where what convinced me to stop investing in individual stocks and move to index mutual funds. I have actually kept to reading at least one finance-book a year (Bernstein, Ferri, Bogle, etc.) and while I find a lot of the info in a lot of these books repetitive with the same "don't time the market" analysis - they serve as a good reminder why we are doing the right thing with Index Mutual Funds.
meaghansketch
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Re: Random Walk Down Wall Street

Post by meaghansketch »

I read this book after I'd already been investing through index funds for a few years, and had been convinced of the reasons why index funds were better, and why I shouldn't time the market, and still found it very powerful. Knowing the history of the markets is, to me, invaluable in protecting yourself against the emotions that can lead you to make poor investment decisions. Whenever my eye is caught by something like Bitcoin, or some stock that only seems to be going up, and half my brain is yelling at me 'but look how much it's going up!', the other half of my brain is saying 'Don't you do that, you know how this ends.'

I don't have the book any longer because I borrowed it from the library, but William Bernstein's 'The Investor's Manifesto' mentions four qualities investors need to be successful. One of them is a knowledge of history. It lets you counter "This time is different!" with the more truthful (if I may steal from Battlestar Galactica): "All this has happened before, and all this will happen again".
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Kevin21
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Re: Random Walk Down Wall Street

Post by Kevin21 »

I read this book in college from a government/historical perspective, and the background cases really set me up for a nice "A-HA" moment. For the current boglehead, the stories are not necessary for what we already accept.

I was also reading it during the financial crisis of 08, so it really set me up to appreciate Bogle and to seek out his wisdom.
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llessac15
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Re: Random Walk Down Wall Street

Post by llessac15 »

Thanks for all the replies. Being a very young investor, I like to see what books left the biggest impression on you long term Bogleheads. My next book to read is Bernstein's 'Four Pillars to Investing.' I know it starts with a historical perspective and I was considering skipping it. With all the above comments, I guess I will read it from the start and hope to gain the appreciation for the history of the market that you all have. Thanks!
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FrogPrince
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Re: "A Random Walk Down Wall Street"

Post by FrogPrince »

Taylor Larimore wrote:
llessac15 wrote:I just finished the classic book 'A Random Walk Down Wall Street'. Is it just me, or is the first half of the book a waste of time? I feel like it could be summarized by just saying, "Don't try to time the market." I wish someone would have told me that before I spent 3 hrs reading the first few chapters. Any thoughts or opinions?
llessac:

Professor Malkiel's, "A Random Walk Down Wall Street" and Jack's "Bogle on Mutual Funds" are the two books that caused me to abandon my loser's game of trying to "beat the market."

I am eternally grateful to both these men and their books.

Best wishes.
Taylor
It was Random Walk for me. The whole stock thing was mega mysterious, and I stumbled across this book in the bookstore. It was an epiphany.
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cfs
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Re: Random Walk Down Wall Street

Post by cfs »

Good conversation.

Bogle on Mutual Funds was my very first book on investing. After holding the books for years I finally gave it as a gift to one of my junior Sailors, and told him to follow Bogle's teachings -- if he did, he will reach the land of critical mass with no problems.

Thanks for reading.
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likegarden
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Re: Random Walk Down Wall Street

Post by likegarden »

Reading 'Random Walk', books by Bogle, BH books by others and this and the Morningstar forums saved me during the last meltdown of the stock market. I actually rebalanced close to the bottom.
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Re: Random Walk Down Wall Street

Post by Sagenick48 »

A lot of books over the years, most of them given away to the local libraries' books sales. I have kept Random Walk and Graham, The Intelligent Investor. Current books read, A Nation of Deadbeats, This Time is Different, Freakonomics, autographed, and When the Money Runs Out.
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llessac15
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Re: Random Walk Down Wall Street

Post by llessac15 »

I guess I should clarify the RWDW was very good overall. I don't want to sound like I'm bashing the book. Hopefully, as I grow in knowledge about BH investing, I will realize the lessons I learned from the entire book.
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Re: "A Random Walk Down Wall Street"

Post by Ged »

FrogPrince wrote:It was an epiphany.
It was for me too.
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Re: Random Walk Down Wall Street

Post by nisiprius »

The curious thing is that A Random Walk Down Wall Street is just what it says--a sort of Malkiel grab-bag. The "random walk" refers both to price movements and also to his topic selections. The title leads everyone to think it is pure advocacy of indexing--for many years the cover art showed a dart hitting a page of stock listings. But it is more in the nature of a series of disconnected essays on selected topics in investing... well, so is Common Sense on Mutual Funds for that matter. When Malkiel wrote the first edition, in 1973, he certainly thought that this young researcher Fama was on to something.

But there was also a very substantial chapter on "The Malkiel Method for Selecting Individual Common Stocks," which survives in attenuated form in the current edition. This is the chapter in which he quotes--from Ibsen's "The Master Builder," which I've never seen or read through although I did pull up the text once just to find the quotation--about "Castles in the air, but on a firm foundation." He likes stocks that both have an element of spurring the imagination (castles in the air), that have a good "story" to them, but that nevertheless are good on the fundamentals (the firm foundation).

My favorite part is "Potshots at the Efficient Market Theory and Why They Miss." He dismisses both the small-company effect and the value premium in a couple of pages each.
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Re: Random Walk Down Wall Street

Post by billjohnson »

llessac15 wrote:'A Random Walk Down Wall Street'
Great Book!! I usually re-read it every two or three years...
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Re: "A Random Walk Down Wall Street"

Post by Jena »

Ged wrote:
FrogPrince wrote:It was an epiphany.
It was for me too.
Same for me. Two years ago my investments were being managed by a financial advisor who had me in hundreds of different stocks, funds and other investments. Due to foolish inattention on my part and opaque reporting by my financial advisor, I had no good feel for performance or fees. Then a colleague lent me A Random Walk. Not only did it tell me something I didn’t know, it told me in a very persuasive way. It was the spark that eventually lead me to take charge of my investments and join this group. I just wish I had read it sooner. For folks who are immersed in investing literature, A Random Walk might be old news, but for me it was a game changer.

Jena
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bardenay
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Re: Random Walk Down Wall Street

Post by bardenay »

I read the 2011 edition of A Random Walk Down Wall Street which was the first financial book I read that covered the 2008/2009 market crash. Putting that event in context with the past history of the stock market greatly helped me put things perspective and understand the market of today.

The history of Technical Vs Fundamental Analysis was extremely eye opening and helpful for me. To be honest, I never really understood what the "talking heads" on financial shows were talking about until read the section on Technical Analysis.
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Re: Random Walk Down Wall Street

Post by abuss368 »

I have never read Random Walk Down Wall Street.
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island
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Re: Random Walk Down Wall Street

Post by island »

Just checked it out from the library last weekend, but haven't started it yet. It's a 2007 edition and noticed the 2012 is at another branch. Worth requesting the 2012 or is it basically the same info?
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Taylor Larimore
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Which edition of Random Walk ?

Post by Taylor Larimore »

Just checked it out from the library last weekend, but haven't started it yet. It's a 2007 edition and noticed the 2012 is at another branch. Worth requesting the 2012 or is it basically the same info? Island
bardenay wrote:
I read the 2011 edition of A Random Walk Down Wall Street which was the first financial book I read that covered the 2008/2009 market crash. Putting that event in context with the past history of the stock market greatly helped me put things perspective and understand the market of today.
I would wait and read the latest edition.

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
island
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Re: Which edition of Random Walk ?

Post by island »

Taylor Larimore wrote:
Just checked it out from the library last weekend, but haven't started it yet. It's a 2007 edition and noticed the 2012 is at another branch. Worth requesting the 2012 or is it basically the same info? Island
bardenay wrote:
I read the 2011 edition of A Random Walk Down Wall Street which was the first financial book I read that covered the 2008/2009 market crash. Putting that event in context with the past history of the stock market greatly helped me put things perspective and understand the market of today.
I would wait and read the latest edition.

Best wishes
Taylor
Bardenay makes a good point. Thanks for drawing my attention to it Taylor. I'll put a hold on the newer edition. Didn't realize there were so many updates until I opened the book. Will pay attention to that in the future!
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