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A Random Walk Down Wall Street (Book Review)

A Random Walk Down Wall Street Book Review

“A Random Walk Down Wall Street” (by Burton G. Malkiel) Book Review

A Random Walk Down Wall Street by Burton G Malkiel is “The Time Tested Strategy For Successful Investing.”

A Random Walk Down Wall Street is a classic introductory market text, originally published in 1973. The 9th edition (published in 2007) shows you…

How to navigate the turbulence on Wall Street and beat the pros at their own game, giving individual investors the information they need to manage their money with confidence.”

And since this one of the first investment books I ever read, I think you’ll find my review honest, accurate and insightful. So let me tell you what the premise of the book is about and the important lessons I learned reading it. I hope this will help you determine if “A Random Walk Down Wall Street” is the right book for you.

So without further ado…

Here’s Why You Should Read: “A Random Walk Down Wall Street”

A Random Walk Down Wall Street is based on the premise that low-cost index funds will outperform actively managed mutual funds over time, every time. That makes sense right? But for people like you and me who want to manage their own money, it might be a little bit discouraging.

But here’s why I really liked reading “A Random Walk Down Wall Street”:

Malkiel’s classic investment text presents a lot of very compelling data to disprove a lot of common market myths. And like almost all good investment books, A Random Walk starts with a discussion of crowd psychology and probability. Because while trading tactics and investing styles go in and out of style, human nature remains the same. And…

This stark, objective look at how these factors manifest in the world of finance is incredibly illuminating. When you read A Random Walk Down Wall Street you start to understand all the objections of your potential clients, and the whispers of your skeptical friends. And as an active money manager, having a firm understanding of what your critics are saying is a great way to stay educated. It also reminds you that if you don’t bring your A-game (as in alpha), an index fund will eat your lunch.

Thus, if you’re looking to get educated about all the active rebuttals against active money management (and the data to support it), “A Random Walk Down Wall Street” just might be for you!

Here’s a little more information on some of the core concepts…

What “A Random Walk Down Wall Street” Teaches Best

A Random Walk Down Wall Street does a very good job highlighting the academic data supporting the efficient market hypothesis. If you don’t know, the efficient market theory postulates that markets are excellent at analyzing and integrating information into the price of stock. The gist of the efficient market theory is thus that stock prices perfectly represent all prices and all information known about stocks. I know this sounds a little hard to believe in this era of insider trading. But A Random Walk builds a compelling case with over 40 years of historical data.

I particularly like investment books that give you actionable ideas you can take straight to the stock market. Some of the actionable ideas I really appreciated from “A Random Walk Down Wall Street” were…

    • Five Asset Allocation Principles: A detailed look at risk, reward and how different balances of equities and debt can help round out your portfolio.
    • Risk Distinctions: Understanding the difference between your attitude toward risk, and your capacity to endure market risk.
    • The No Brainer Step: Easy instructions for investing in index funds.

And believe me, these three points are just scratching at the surface. A Random Walk contains a plethora of information you can use to objectively evaluate the investment ideas you’re already investigating. Don’t you see how that might save you some money?

Here’s What Isn’t Covered By: “A Random Walk Down Wall Street”

Now as I just mentioned, “A Random Walk Down Wall Street” does a lot of things well. But sometimes buying a book for the wrong reasons can be disappointing (especially if you figure it out two thirds of the way through!). So…

If you were hoping for an active approach to picking stocks… then, “A Random Walk Down Wall Street” might not be for you. “A Random Walk Down Wall Street” does a great job covering the reasons for indexing your money, and debunking stock selecting techniques that don’t work… but it’s not meant to focus on how you can pick stocks for yourself.

Does that make sense? I hope you’re getting a clear picture of how you might benefit from this book. So should you read “A Random Walk Down Wall Street” or not?

“A Random Walk Down Wall Street” – The Final Word…

It’s really up to you! I enjoyed “A Random Walk Down Wall street” a lot, for the reasons described above. But don’t let me speak for you! Invest in your knowledge today! Check out the reviews on amazon, and the additional details below…

“A Random Walk Down Wall Street” Details and Video Book Review:


Author: Burton G. Malkiel
436 Pages
Publisher: W.W. Norton & Company Inc.
Published: 1973, 1974, 1981, 1985, 1990, 1996, 1999, 2003 and 2007

Other Books By Burton G. Malkiel: