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Showing 1-10 of 14 reviews(1 star)show all reviews
3 of 4 people found the following review helpful
on June 3, 2001
While I agree that a person cannot predict tomorrow's prices based on today's prices, I do not believe prices are random. A random walk implies (that the market's price displays) no discernable pattern of travel. The size and direction of the next step cannot be predicted from the size and direction of the last or even from all previous steps. The serial correlation is (functionally) zero.
Every market is an auction market, either passive or active. In a passive auction, the individual does not take part in an active negotiating process but selects from products offered at different prices, which make up the range. In an active auction, participants negotiate the range. Whether the auction is passive or active, all markets auction or "trend" up and down in order to fulfill their purpose, to facilitate trade. In an auction, prices _do not_ develop randomly, but rather to fulfill the purpose of the auction.
The purpose of any market is to facilitate trade. Lack of trade facilitation inevitably causes price to move. This price movement behavior is as true in the organized markets as it is in a grocery store or any other everyday market. Thus, price changes to satisfy the condition of the market and every price is a result of the condition of the market. The fact that price moves for a specific reason further precludes price from developing in a _random manner_.
Furthermore, prices are not statistically independent of each other. Price, in moving to satisfy the condition of the market, provides an informational flow. In other words, markets must generate trade, and in doing so, prices fluctuate, generating information about where trade is being conducted and where it is not. This information is valuable to the market participant. But _true_ randomness does not generate valuable information. In other words, in statistical randomness, knowledge of the present is not important, for it conveys no advantage. If knowledge of the present structure of a market is important and does convey an advantage a market cannot be random walk.
Each day there are various market participants each having a different timeframe. Price moves because of the degree of each timeframe's participation at various levels of price. The ultimate structure of a market for one day depends on the activity level of the various groups. The market develops logically, as price fulfills the need of the market. Thus, prices can be distinguished from one another yielding valuable information.
All markets operate similarly and are motivated by the same principles. Anyone who can understand these principles - plus observe and record the individual characteristics of the specific market - and can employ a sound trading strategy and discipline, can profit handsomely from any market.
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2 of 3 people found the following review helpful
Forget this version. Instead, go to the library and check out the 1996 version, which at least discusses 'pork bellies' (derrivatives and option trading), if too little. Instead of taking the cue from the collapse (10/98) of Long Term Capital Management and producing something new and more interesting, Malkiel keeps on giving us warmed over versions of the same old EMH (efficient market hypothesis), which many researchers by now know is wrong (Fisher Black & Co. knew it in the eighties). Malkiel's beloved 'back of the envelope' calculation showing large how stock price changes can be caused by small interest rate changes is also irrelevant, because it assumes that dividends determine stock prices, and everyone in the market knows that dividends haven't mattered in the last ten years, at least. The 1996 edition (3 stars) is informative. There, you can learn what beta is, and the example discussed of using covered calls as a conservative strategy is also nice.
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2 of 4 people found the following review helpful
on April 5, 2000
How interesting that an efficient market theory advocates' advice only helps create market inefficiencies! By urging everyone to buy into passively-managed index funds, Malkiel only helps spur widespread indiscriminate capital allocation by America's investors. If the American public, en masse, turned to index funds, it would create an overpriced market in general through the massive pouring of investor capital into arbitrary lists of stocks (like the Dow, the S&P and the Russell 2000).
There is a fundamental reason people invest: to be paid for delaying their gratification. Why does Malkiel only briefly discuss the work of Williams, Fisher and Graham, and not even touch upon the true champion of fundamental analysis, Warren Buffett? The long-term strategy they proposed and used (all are among the most successful investors of all time; Graham and pupil Buffett rank 4th and 1st, respectively) has produced the most consistent and profitable returns of any method ever.
Malkiel's work is not completely without merits (he does debunk the authority of high-profile "analysts" on Wall St. whose aim is not to give you good advice, but to produce profits from selling something to the investor), but the core of his work, Efficient Market Theory, doesn't hold water, especially in light of the spectacular results fundamental analysis has provided generations of investors. Malkiel misses the boat by not impressing upon the reader the fact that stocks are shares of a company; by buying them, you become an owner. Burton just sees them as scraps of paper. Go ahead, take a random walk. You'll do just as well as the average investor. But the whole crux of investing is being better than average. Burton proves his professorship to be a misnomer by urging millions of investors to pursue mediocrity.
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2 of 4 people found the following review helpful
on May 19, 1998
It's tough to say anything nice about an author who wrote a book 20 years ago with a false premise who has updated the book without revising the fundamental thrust. The stock market, and other financial markets, are not random: they are chaotic. The difference is significant and profitable. I know, both theoretically (schooled as a mathematician) and practically (trading successfully, as I do, is impossible in a negative sum game, which the market is, unless the market is chaotic rather than random).
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2 of 4 people found the following review helpful
on March 8, 2001
This author claims stock prices are random. If this were the case there would be no need for exchanges. People who buy into this thinking are clueless. Besides this author was quoted in 1999 as saying the stock market was over-valued. It went up 80% then back down 56% after that. Prices are random, but they trend?
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2 of 4 people found the following review helpful
on June 27, 1999
the market is not random at all. the academia knows nothing about the market. if the author gets into the real stock market, he will lose tons of money. that is why he would rather stay in the academia and write this gabage.
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1 of 3 people found the following review helpful
on June 30, 2013
This book must be the worst investment book I have ever read.... I have read hundreds. For me to take the time to write this review, it's got to be really, really, really, bad. There is zero academic value to this book as it is filled with inaccuracies, popular misconceptions, personal bias, fabricated evidence to prove his points, as the author mocks every investment theory and practice that does not reflect his own personal beliefs. For example, he ridicules Technical Analysis using "made up" charts to prove how the technique does not work? Is he serious? Can't take 5 minute to find a real chart on a real stock? He often shows his total ignorance on various topics and relies on his personal prejudice to explain his views. The bulk of the book consists of this ludicrous material... and at the end we get some common place advice. Just not worth the read to get there.

There are way better books out there... this is just too personal to be of use to any serious investor.
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2 of 5 people found the following review helpful
on February 19, 2002
Contradictions, Caveats, Ambiguities and a lot of faith
That¡¦s what you going to find in this piece of junk
I don¡¦t understand how the author can
¡§Believe even more strongly in the original thesis¡¨
(the random walk theory) after fully acknowledging all the market anomalies and inefficiency that have been discovered thirty years since he first wrote the book, he does accept the fact that market do get out of line sometime, which is clearly against the random walk theory.
May be it is because there is too much vested interest in the random walk theory to dump it away now.
Some peoples¡¥s reputation and entire careers is on the line here.
I really question the author¡¦s academic honesty.
The author is obviously not trained in any scientific discipline and has to rely on his own intuition and philosophical musing to support his arguments, although he claims it¡¦s scientific but he hasn¡¦t provide any empirical prove for the random walk theory. His treatment of the stock market crash in 87 is simply embarrassingly weak
He relies more on blind faith than science and I would rank him amongst the market technician/chartist he so despise
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2 of 5 people found the following review helpful
on February 19, 2002
Contradictions, Caveats, Ambiguities and a lot of faith
That¡¦s what you going to find in this piece of junk
I don¡¦t understand how the author can
¡§Believe even more strongly in the original thesis¡¨
(the random walk theory) after fully acknowledging all the market anomalies and inefficiency that have been discovered thirty years since he first wrote the book, he does accept the fact that market do get out of line sometime, which is clearly against the random walk theory.
May be it is because there is too much vested interest in the random walk theory to dump it away now.
Some peoples¡¥s reputation and entire careers is on the line here.
I really question the author¡¦s academic honesty.
The author is obviously not trained in any scientific discipline and has to rely on his own intuition and philosophical musing to support his arguments, although he claims it¡¦s scientific but he hasn¡¦t provide any empirical prove for the random walk theory. His treatment of the stock market crash in 87 is simply embarrassingly weak
He relies more on blind faith than science and I would rank him amongst the market technician/chartist he so despise
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2 of 5 people found the following review helpful
on November 13, 2000
This book is the ideal piece of folly of academic generalization. Mr Malkiel is no trader himself. Thus he ignore the psychological aspect of trading. I am wholly qualified to write this critics because I am a full time trader by myself with an annual compound growth for 25% (for the past 3 years in stocks and futures). So, if you want to promote an efficent market theory, please prove it first. For disproving the thesis, according the Karl Popper, you just need to find one instance to prove that the thesis is wrong. And all of you know that around us there are bundles of successful trader, such as Warren Buffett, Soros, Livermore, Gann , O'Neil, Darvas, Michael Marcus, Stanley Kroll (the one I most appreciated among living) and so on. If you want an academic discussion of the subject of investment, trading is not for you. If you believe that your position is the market is random, if you think that Warren Buffett's analytical skill is no different than a monkey, then you may go and buy this book. The only book I give it a one star rating is becasuse I think that it has acquainted me with the mainstream academic belief of the market. Hope that there will continue there belief and make us a even profitable class.
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