A Random Walk Down Wallstreet

A Random Walk: Developing An Investors Mentality

Investing, and specifically investing in stocks, is something that I have had an interest in for a very long time. The concept of picking and investing my own money into companies, which I believe will have a bright future, in order to gain a profit, is something that has peaked my interest since I was a teenager. However, after reading Burton Malkiel’s A Random Walk Down Wall Street I am quite sure he would see that as a very naïve view of investing. After all the main thesis behind Malkiel’s book is the idea that “investors would be far better off buying and holding an index fund than attempting to buy and sell individual securities or actively managed mutual funds”(Malkiel 17).

Malkiel argues that because the market prices its stocks so efficiently, most of the techniques that market professionals use to try to predict the future and create profitable investment strategies are ultimately useless. This was really a new concept to me because I had always thought of investing as a process where research is conducted in order to find specific stocks that are believed to be able to grow over time and return profits. After reading A Random Walk Down Wall Street my overall knowledge and view of investing has greatly expanded. One thing that I enjoyed about this book was that, as I read through it, it really made me consider my own investing personality, which is something that I had never put much thought into before. While I was reading along I noticed that it put me into a mentality of thinking about the type of investor that I want to be. And thinking as a future investor, a few of the ideas/concepts that I took away from A Random Walk Down Wall Street include; the opportunities that arise with bubbles, the flaws of technical analysis, and the importance of knowing your risk limits.

Chapters 2 through 4 in A Random Walk Down Wall Street all essentially deal with the psychology of speculation which Malkiel refers...