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A Gem: "Random Walk Guide to Investing"
Taylor Larimore 10-19-2003, 8:32 PM | Post #95067 | 
Hi Diehards:
Diehard Adrian Nenu sent me Burton Malkiel's new book, "A Random Walk Guide to Investing". It is an easier-to-read version of the classic, "Random Walk Down Wall Street". Former SEC Chairman, Arthur Levitt describe the new "Guide: this way: "Rarely have I read such a plain English investment guide that reads like a novel and carries understandable, valuable lessons on every page." Here are excerpts:

"Obtaining well above average investments results is strikingly easy."

"There are only three kinds of financial prognosticators: those who don't know, those who don't know they don't know, and those who know they don't know but who get paid big bucks to pretend they know."

"A stockbroker is someone who invests other people's money until it is all gone." (Woody Allen)

"Wall Street still manages to conceal one very nasty secret: The financial 'experts' know precious little more than you know."

"A blindfolded chimpanzee throwing darts at the stock pages can select individual stocks as well as the experts."

"The correct investment strategy is actually to throw a towel over the stock pages and buy a low-cost mutual fund that includes all stocks and does no trading."

"By keeping your savings and investment strategy as simple as possible, you will free up the time to do the really important things your want to do in your life such as spending more time with friends and family."

"Every investor needs a cash reserve cushion to meet the various emergencies of life that always seem to come up at the most inconvenient times."

"As George Soros once said, if you are going 'to be in the stock-market game, you have to endure the pain.'"

"Experience is the toughest kind of teacher--it give you the test first and the lesson afterwords. Perhaps, by learning a bit of history, you can assimilate the lesson vicariously without bearing the costs."

"The biggest bubble of all time splattered in March 2000."

"Adding real estate to a portfolio tends to reduce its overall volatility."

"Higher investment returns can only be achieved by accepting greater risk."

"A bad year for bonds is like a day at the beach when compared to the kinds of losses suffered by stock investors."

"There is no magic potion in the investment world."

"Much of the financial advice offered to consumers is unnecessarily fancy and complex."

"The amount of capital you start with is not nearly as important as getting started early."

"The secret of getting rich slowly (but surely) is the miracle of compound interest. -- One dollar invested in stocks since 1802 would have accumulated to almost $7 million by the end of 2002."

"The only thing worse than being dead is to outlive the money you have put aside for retirement."

"I would avoid buying variable annuity products."

"Take advantage of every opportunity to make your savings tax-deductible."

"Many studies have concluded that the major determinant (90%) of the overall rate of return earned by investors is not the particular bond or stock funds they buy, but rather the way they allocate their investment funds among the various asset classes."

"Financial professionals are still seeking the perfect way to measure risk."

"The key question is what asset allocation allows you to sleep at night."

"The correct response to a fall in the price of one asset class is not to panic and sell out. Rather, you need the discipline and the fortitude to buy more."

"Don't be trigger-happy. But rebalance at least once a year."

"Never forget that diversity reduces adversity."

"For most people of modest means, I go back to my mantra: Keep it simple. You can get along fine by just investing in U.S. companies."

"Probably the biggest cost that can wreak havoc with your financial future is to allow yourself to get saddled with credit card debt."

"Let me assure you, many financial services companies make every effort to obscure the total costs you are actually paying."

"The only factor reliably linked to future mutual fund performance is the expense ratio charged by the fund."

"Every extra dollar of expense you pay is skimmed from your investment capital."

"Don't let low commission rates seduce you into becoming one of the legion of unsuccessful former day traders."

"On Wall Street, the terms 'random walk and 'efficient market' are obscenities."

"No one can time the market. As the legenday investor Bernard Barudch once put it: 'Only liars manage always to be out during bad times and in during good times.'"

"If you utilize an indexing approach, you will never do worse than the market."

"I have believed in the efficient-market theory for over thirty years. As more and more evidence accumulates, I am more convinced than ever."

"The broad stock-market indexes have regularly outperformed two thirds or more of the actively managed funds."

"In terms of stock-market trading, professional investors make up something like 90% of the volume in the stock exchanges."

"I have examined the lack of persistency in fund returns over perio

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