J. V. Bruni and Company
1528 North Tejon Street
Colorado Springs, Colorado 80907
(719) 575-9880 or (800) 748-3409
J. V. Bruni and Company1528 North Tejon Street Colorado Springs, Colorado 80907 (719) 575-9880 or (800) 748-3409
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A Random Walk Down Wall
Street,
by Burton Malkeil.  This trailblazing book has been so
popular that it has almost as many editions as cats have lives. The
term
"random walk" describes the path shown on a time-based chart
wherein each successive move upward or downward occurs by chance. When Malkeil first wrote this book in 1973, he used the random walk concept
as a means of presenting the background of and basic argument for what
is generally known as the Efficient Market Hypothesis--part of Modern
Portfolio Theory (MPT). (Some critics pronounce this
"empty.")
Throughout this interesting and easy to read book, Malkeil covers a lot
of useful ground, especially for readers who haven't read the academic
rebuttals to the once-popular view that historical stock price patterns
(charts) can predict future price movements. Interestingly, although Malkeil is commonly identified with MPT supporters, he identifies some
inefficiencies in the stock market, even though MPT proponents believe
that markets are so efficient that active, purposeful portfolio
management makes little sense. For example, in earlier editions of this
book, Malkeil pointed out the gross under-pricing of a number of
closed-end stock funds, which sold far below their net asset values. To
his credit, Malkeil also discusses the limitations and misuse of
"beta"
coefficients (a measure of investment volatility)--once the darlings of
his fellow efficient market proponents. This clearly written book
argues the case for efficient markets and provides a lot of worthwhile
information. However, don't expect an explanation of how a supposedly
efficient market could plunge over 20% in just one day, as U.S. stocks
did in October of 1987, or how the NASDAQ index could soar to remarkable
heights and then crash in a few short years. Good explanations of these
unusual phenomena are best addressed by the rapidly growing field of
behavioral finance. |
"...his message continues to resonate. Recommended for all investment collections." Library Journal
"This edition looks at new wrinkles (it seems you can't beat the market by buying companies with '.com' in the name), and provides a lucid overview of novel investment vehicles." Publishers Weekly
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