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Summary of A Random Walk Down Wall Street 

4.7 . 3412 reviews

Short summary

Is there a sure-fire approach to investing? If such an approach exists, can a layperson practice it? Is there proof of the viability of this approach? Burton G. Malkiel is an American economist and writer. In “A Random Walk Down Wall Street”, Malkiel provides detailed analyses of the different approaches to investment and portfolio management. Weighing the pros and cons of different theories and providing a historical backdrop to each theory, he recommends avoidance of extremes that practitioners and academics tend to tilt toward. With practical steps, he shows how a layperson can go about investing on their own with minimal risks.

Table of content

  • Summary of A Random Walk Down Wall Street
  • About the author
  • What is A Random Walk Down Wall Street about?
  • Who should read A Random Walk Down Wall Street
  • Topics in A Random Walk Down Wall Street
first key point

A random stroll is one where future steps or destinations cannot be anticipated

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The terms "investment" and "speculation" are not interchangeable. A speculator buys stocks with the hopes of making a profit in the near run. Interest and desire are the fundamental requirements to make your investments work for you.

An investor buys equities that will generate predictable income flows and capital gains over years or decades. Investment requires work, yet it is fun. A successful investor is often an intelligent person who uses his or her innate calculations and intellectual curiosity to make more money. While it's understandable that the primary goal of investing in a business is to make profits, investments are also important to build a successful brand.
Successful investments come from taking calculated risks that have a great potential of bringing in profit in the long run.
Successful investors know that they have to win some and lose some, which is why they refuse to be defined by failure. A good investment needs more careful planning, and a bad investment needs more determination.
I view investing as a method of purchasing assets to gain profit in the form of reasonably predictable income (dividends, interest, or rentals) and /or appreciation over the long term. ~ Burton G. Malkiel
This summary draws on three different backgrounds to provide perspectives on the stock market. These are investment analysis and portfolio management, economics, and successful investment experience. Despite the facts and figures in this summary, a layperson can find practical and beneficial principles that can help them take the random walk.
second key point

It is important to note the historical patterns of investment through the centuries so that we can learn from the past

Tulip bulbs were in high demand in Holland in the 17th century. The South Sea Bubble in England in the 18th century. Early 1960s new-issue frenzy was the norm. “Nifty Fifty” was popular in the 1970s. The extraordinary rise in Japanese land and stock values was followed by an equally stunning fall in the early 1990s. The “Internet Craze” of 1999-2000 reminds us that neither people nor financial experts are immune to previous mistakes.
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third key point

To determine if particular stocks are appealing for buying, many analysts use a mix of methods

fourth key point

Technical analysts build their strategies upon fake promises and expect their assumptions to determine the market

fifth key point

Because steady long-term growth does not exist, analysts are unable to forecast it

sixth key point

The insights from Modern Portfolio Theory (MPT) will help you to reduce risk while increasing your return chances

seventh key point

Behavioral finance is not a subset of traditional finance; it is a substitute for a more humane approach

eighth key point

When investing money, the rate of interest you want should be determined by your desire to live a good life

ninth key point

You can become a financial bookie who projects long-run returns and adapts investment programs to financial needs

tenth key point

Conclusion

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What is A Random Walk Down Wall Street about?

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Do you find yourself staring at your computer for long minutes, unaware of time slipping by? Do you enter a room and suddenly cannot remember why you stepped in the first place? Is it a herculean task for you to sit through ten pages of a book without reaching for your phone? If yes, your focus needs some work and fast.

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