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"A Random Walk Down Wall Street"
Taylor Larimore 06-04-2003, 9:39 PM | Post #85887 | 
Hi Diehards:
The first book that opened my eyes to successful investing was "A Random Walk Down Wall Street" by Professor Burton Malkiel. Here are a few of the investment 'gems' from his latest edition:

"A random walk is one in which future steps or directions cannot be predicted on the bais of past actions."

"On Wall Street, the term 'random walk' is an obscenity."

"I wrote (in the first edition) that a blindfolded chimpanzee throwing darts at the Wall Street Journal could select a portfolio that would do as well as the experts."

"Through the past thirty years--more than two-thirds of professional portfolio managers have been outperformed by the unmanaged S&P 500 Index."

"All too many investors are lazy and careless--a terrifying combination when greed gets control of the market and everyone wants to cash in on the latest craze or fad."

"It is not really hard to make money in the market."

"With index funds, you know exactly what you are getting, and the investment process is made incredibly simple."

"The most important decision you will probably ever make concerns the balancing of asset categories (stocks, bonds, real estate, money-market securities, etc.) at different stages of your life."

"According to Roger Ibbotson, more than 90% of an investor's total return is determined by the asset categories that are selected and their overall proportional representation."

"Securities analysts always find reasons to be bullish."

"In the 1990s, the ratio of buy to sell recommendations climbed to 100 to 1, particularly by brokerage firms with large inveestment banking businesses."

"Stock investors can do no better than simply buying and holding a fund that owns a representative sample of all the stocks in the market."

"I am convinced that no one will be successful in using technical methods to get above-average returns in the stock market."

"Simply buying and holding a diversified portfolio suited to your objectives will enable you to save on investment expense, brokerage charges, and taxes."

"Every investor must decide the trade-off he or she is willing to make between eating well and sleeping well."

"Again and again yesterday's star fund has proven to be today's disaster."

"The laws of chance do operate and they can explain some amazing success stories."

"It turns out that the portfolio with the least risk (1970-2002) had 24% foreign securities and 76% U.S. securities."

"What worked in the past does not necessarily work in the future."

"I strongly suggest you invest some of your assets in REITs."

"TIPS are great portfolio diversifiers."

"The current inventory of gold is some 50 times its annual industrial requirement--."

"Beta, as it is usually measured, is not a substitute for brains--."

"There is never going to be a handsome genie who will appear and solve all our investment problems."

"Buying and holding a broad-based market index fund is still the only game in town."

"Any truly repetitive and exploitable pattern that can be discovered in the stock market and can be arbitraged away will self-destruct."

"Given enough time and massaging of data series, it is possible to tease almost any pattern out of most data sets."

"Clearly, buying a portfolio of small firms is hardly a surefire technique to enable an investor to earn abnormally high, risk-adjusted returns."

"Over a period running back to the 1930s, it does not appear that investors could actually have realized higher rates of return from mutual funds specializing in 'value' stocks."

"I am convinced that many studies have been flawed by the phenomenon of 'survivorship bias.'"

"The more profitable any return predictability appears to be, the less likely it is to survive."

"I have yet to see any compelling evidence that past stock prices can be used to predict future stock prices."

"Never buy anything from someone who is out of breath."

"The decision of which IRA is best for you and whether to convert can be a tough call."

"For investors who are very risk averse, I favor GNMA funds."

"Own your own home if you can possibly afford it."

"I would also steer clear of 'hedge funds.'"

"The investor who's wise diversifies."

"If your expected investment period is only for a decade or less, no one can predict the returns you will receive with any degree of accuracy."

"Don't invest with a rear-view mirror."

"'There ain't no such thing as a free lunch.' Higher risk is the price one pays for more generous returns."

"Switching your investment around in a futile attempt to time the market will only involve extra commissions for your broker, extra taxes for the government, and poorer net performance."

"Dollar-cost averaging can reduce the risks of investing in stocks and bonds."

"Don't think that dollar-cost-averaging will solve all of your problems."


"What goes down must come back up. But this does not necessarily hold for individual stocks, just for the market in general."

"The key to whether any recommended asset allocaiton works

Originally posted in thread: 27662
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