9780393325355

Random Walk 8E PA

by
  • ISBN13:

    9780393325355

  • ISBN10:

    0393325350

  • Edition: 8th
  • Format: Paperback
  • Copyright: 2004-01-17
  • Publisher: W. W. Norton & Company

Note: Supplemental materials are not guaranteed with Rental or Used book purchases.

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Supplemental Materials

What is included with this book?

Summary

Using the dot-com crash as an object lesson in how not to manage your portfolio, here is the best-selling, gimmick-free, irreverent, vastly informative guide to navigating the turbulence of the market and managing investments with confidence. A Random Walk Down Wall Street is well established as a staple of the business shelf, the first book any investor should read before taking the plunge and starting a portfolio. With its life-cycle guide to investing, it matches the needs of investors at any age bracket. Burton G. Malkiel shows how to analyze the potential returns, not only for stocks and bonds but also for the full range of investment opportunities, from money market accounts and real estate investment trusts to insurance, home ownership, and tangible assets like gold and collectibles. Whether you want to verse yourself in the ways of the market before talking to a broker or follow Malkiel's easy steps to managing your own portfolio, this book remains the best investing guide money can buy.

Author Biography

Burton G. Malkiel is a member of the economics department and holds the Chemical Bank Chairman's Professorship at Princeton University

Table of Contents

Preface 15(19)
Acknowledgments from Earlier Editions 19(4)
Part One Stocks and Their Value
Firm Foundations and Castles in the Air
23(11)
What Is a Random Walk?
24(2)
Investing as a Way of Life Today
26(2)
Investing in Theory
28(1)
The Firm-Foundation Theory
29(1)
The Castle-in-the-Air Theory
30(3)
How the Random Walk Is to Be Conducted
33(1)
The Madness of Crowds
34(18)
The Tulip-Bulb Craze
35(3)
The South Sea Bubble
38(6)
Wall Street Lays an Egg
44(7)
An Afterword
51(1)
Stock Valuation from the Sixties through the Nineties
52(30)
The Sanity of Institutions
52(1)
The Soaring Sixties
53(15)
The New ``New Era'': The Growth-Stock/New-Issue Craze
53(4)
Synergy Generates Energy: The Conglomerate Boom
57(7)
Performance Comes to the Market: The Bubble in Concept Stocks
64(4)
The Sour Seventies
68(3)
The Nifty Fifty
68(3)
The Roaring Eighties
71(5)
The Triumphant Return of New Issues
71(1)
Concepts Conquer Again: The Biotechnology Bubble
72(2)
ZZZZ Best Bubble of All
74(2)
What Does It All Mean?
76(1)
The Nervy Nineties
77(5)
The Japanese Yen for Land and Stocks
77(5)
The Biggest Bubble of All: Surfing on the Internet
82(23)
How Bubbles Arise
82(2)
A Broad-Scale High-Tech Bubble
84(3)
An Unprecedented New-Issue Craze
87(3)
TheGlobe.com
90(2)
Security Analysts $peak Up
92(2)
New Valuation Metrics
94(2)
The Writes of the Media
96(2)
Fraud Slithers In and Strangles the Market
98(3)
Should We Have Known the Dangers?
101(3)
A Final Word
104(1)
The Firm-Foundation Theory of Stock Prices
105(20)
The ``Fundamental'' Determinants of Stock Prices
106(7)
Two Important Caveats
113(3)
Testing the Rules
116(2)
One More Caveat
118(1)
What's Left of the Firm Foundation?
119(6)
Part Two How the Pros Play the Biggest Game in Town
Technical and Fundamental Analysis
125(20)
Technical versus Fundamental Analysis
126(2)
What Can Charts Tell You?
128(4)
The Rationale for the Charting Method
132(2)
Why Might Charting Fail to Work?
134(1)
From Chartist to Technician
135(1)
The Technique of Fundamental Analysis
136(4)
Why Might Fundamental Analysis Fail to Work?
140(1)
Using Fundamental and Technical Analysis Together
141(4)
Technical Analysis and the Random-Walk Theory
145(26)
Holes in Their Shoes and Ambiguity in Their Forecasts
145(2)
Is There Momentum in the Stock Market?
147(1)
Just What Exactly Is a Random Walk?
148(4)
Some More Elaborate Technical Systems
152(5)
The Filter System
152(1)
The Dow Theory
153(1)
The Relative-Strength System
154(1)
Price-Volume Systems
154(1)
Reading Chart Patterns
154(2)
Randomness Is Hard to Accept
156(1)
A Gaggle of Other Technical Theories to Help You Lose Money
157(4)
The Hemline Indicator
157(2)
The Super Bowl Indicator
159(1)
The Odd-Lot Theory
160(1)
A Few More Systems
161(1)
Technical Market Gurus
161(4)
Why Are Technicians Still Hired?
165(1)
Appraising the Counterattack
166(3)
Implications for Investors
169(2)
How Good Is Fundamental Analysis?
171(32)
The Views from Wall Street and Academia
172(1)
Are Security Analysts Fundamentally Clairvoyant?
172(4)
Why the Crystal Ball Is Clouded
176(10)
The Influence of Random Events
177(1)
The Production of Dubious Reported Earnings through ``Creative'' Accounting Procedures
178(3)
The Basic Incompetence of Many of the Analysts Themselves
181(2)
The Loss of the Best Analysts to the Sales Desk or to Portfolio Management
183(1)
The Conflicts of Interest between Research and Investment Banking Departments
183(3)
Do Security Analysts Pick Winners?---The Performance of the Mutual Funds
186(6)
Can Any Fundamental System Pick Winners?
192(1)
The Verdict on Market Timing
193(3)
The Semi-strong and Strong Forms of the Efficient-Market Theory
196(2)
The Middle of the Road: A Personal Viewpoint
198(5)
Part Three The New Investment Technology
A New Walking Shoe: Modern Portfolio Theory
203(19)
The Role of Risk
204(1)
Defining Risk: The Dispersion of Returns
205(3)
Illustration: Expected Return and Variance Measures of Reward and Risk
205(3)
Documenting Risk: A Long-Run Study
208(2)
Reducing Risk: Modern Portfolio Theory (MPT)
210(4)
Diversification in Practice
214(8)
Reaping Reward by Increasing Risk
222(20)
Beta and Systematic Risk
223(3)
The Capital-Asset Pricing Model (CAPM)
226(5)
Let's Look at the Record
231(3)
An Appraisal of the Evidence
234(6)
The Quant Quest for Better Measures of Risk: Arbitrage Pricing Theory
236(4)
A Summing Up
240(2)
Potshots at the Efficient-Market Theory and Why They Miss
242(35)
What Do We Mean by Saying Markets Are Efficient?
244(2)
Potshots That Completely Miss the Target
246(4)
Dogs of the Dow
246(1)
January Effect
247(1)
``Thank God It's Monday Afternoon'' Pattern
247(1)
Hot News Response
248(1)
Why the Aim Is So Bad
249(1)
Potshots That Get Close but Still Miss the Target
250(14)
The Trend Is Your Friend (Otherwise Known as Short-Term Momentum)
250(2)
The Divdend Jackpot Approach
252(2)
The Initial P/E Predictor
254(1)
The ``Back We Go Again'' Strategy (Otherwise Known as Long-Run Return Reversals)
255(4)
The Smaller Is Better Effect
259(2)
The ``Value Will Win'' Record
261(1)
Stocks with Low Price-Earnings Multiples Outperform Those with High Multiples
261(2)
Stocks That Sell at Low Multiples of Their Book Values Tend to Produce Higher Subsequent Returns
263(1)
But Does ``Value'' Really Trump Growth on a Consistent Basis?
264(1)
Why Even Close Shots Miss
264(3)
And the Winner Is...
267(4)
The Performance of Professional Investors
267(4)
A Summing Up
271(6)
Part Four A Practical Guide for Random Walkers and Other Investors
A Fitness Manual for Random Walkers
277(37)
Exercise 1: Cover Thyself with Protection
278(1)
Exercise 2: Know Your Investment Objectives
279(8)
Exercise 3: Dodge Uncle Sam Whenever You Can
287(6)
Pension Plans and IRAs
287(1)
Keogh Plans
288(2)
Roth IRAs
290(1)
Tax-Deferred Annuities
291(1)
Saving for College: As Easy as 529
292(1)
Exercise 4: Be Competitive---Let the Yield on Your Cash Reserve Keep Pace with Inflation
293(4)
Money-Market Mutual Funds
293(1)
Money-Market Deposit Accounts
294(2)
Bank Certificates
296(1)
Tax-Exempt Money-Market Funds
297(1)
Exercise 5: Investigate a Promenade through Bond Country
297(8)
Zero-Coupon Bonds Can Generate Large Future Returns
299(1)
No-Load Bond Funds Are Appropriate Vehicles for Individual Investors
300(1)
Tax-Exempt Bonds Are Useful for High-Bracket Investors
301(2)
Hot TIPS: Inflation-Indexed Bonds
303(1)
Should You Be a Bond-Market Junkie?
304(1)
Exercise 6: Begin Your Walk at Your Own Home---Renting Leads to Flabby Investment Muscles
305(1)
Exercise 7: Beef Up with Real Estate Investment Trusts
306(2)
Exercise 8: Tiptoe through the Fields of Gold, Collectibles, and Other Investments
308(3)
Exercise 9: Remember That Commission Costs Are Not Random; Some Are Cheaper than Others
311(1)
Exercise 10: Diversity Your Investment Steps
312(1)
A Final Checkup
313(1)
Handicapping the Financial Race: A Primer in Understanding and Projecting Returns from Stocks and Bonds
314(19)
What Determines the Returns from Stocks and Bonds?
314(5)
Three Eras of Financial Market Returns
319(9)
Era I: The Age of Comfort
320(2)
Era II: The Age of Angst
322(4)
Era III: The Age of Exuberance
326(2)
The Age of the Millennium
328(5)
A Life-Cycle Guide to Investing
333(21)
Four Asset-Allocation Principles
334(10)
Risk and Reward Are Related
334(1)
Your Actual Risk in Stock and Bond Investing Depends on the Length of Time You Hold Your Investment
335(3)
Dollar-Cost Averaging Can Reduce the Risks of Investing in Stocks and Bonds
338(4)
Distinguishing between Your Attitude toward and Your Capacity for Risk
342(2)
Three Guidelines to Tailoring a Life-Cycle Investment Plan
344(5)
Specific Needs Require Dedicated Specific Assets
344(1)
Recognize Your Tolerance for Risk
345(3)
Persistent Saving in Regular Amounts, No Matter How Small, Pays Off
348(1)
The Life-Cycle Investment Guide
349(5)
Three Giant Steps Down Wall Street
354(33)
The No-Brainer Step: Investing in Index Funds
355(13)
The Index-Fund Solution: A Summary
357(3)
A Broader Definition of Indexing
360(3)
A Specific Index-Fund Portfolio
363(1)
The Tax-Managed Index Fund
364(4)
The Do-It-Yourself Step: Potentially Useful Stock-Picking Rules
368(4)
Rule 1: Confine stock purchases to companies that appear able to sustain above-average earnings growth for a least five years
369(1)
Rule 2: Never pay more for a stock than can reasonably be justified by a firm foundation of value
369(1)
Rule 3: It helps to buy stocks with the kinds of stories of anticipated growth on which investors can build castles in the air
370(1)
Rule 4: Trade as little as possible
370(2)
The Substitute-Player Step: Hiring a Professional Wall Street Walker
372(2)
The Morningstar Mutual-Fund Information Service
374(1)
A Primer on Mutual-Fund Costs
375(5)
Loading Fees
378(1)
Expense Charges
378(1)
Comparing Mutual-Fund Costs
379(1)
The Malkiel Step
380(3)
A Paradox
383(2)
Some Last Reflections on Our Walk
385(2)
Supplement: How Pork Bellies Acquired an Ivy League Suit: A Primer on Derivatives 387(33)
Appendix to Supplement: What Determines Prices in the Futures and Options Markets? 420(5)
A Random Walker's Address Book and Reference Guide to Mutual Funds 425(10)
Index 435

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