- Stands the test of time: first published in 1973, now in its 9th edition.
- Written for the general reader in a breezy, witty style.
- Introduces all the main topics in investing in one handy volume.
- The author has strong viewpoints which he asserts unabashedly.
- The book has morphed from an essay to something more encyclopedic.
- The author has strong viewpoints that color his presentation.
- The author's base of experience is as an economics professor, not a money manager.
- Guide to investing theories and methods.
- First lesson: beating the market is largely impossible on a long-term, consistent basis.
- Second lesson: markets are regularly beset by bubbles, manias and panics.
This is a highly readable, engaging foray into the world of investing and markets. Among other things, Malkiel discusses theories of investing, stock valuation models, great investing manias, bubbles and panics of the past and investing psychology (new for the 9th edition). He also gives an overview of security types and investment vehicles, as well as his recommendations for personal investment strategies.
As the book has been revised and updated since its debut in 1973, it has roughly doubled in length. While all these accretions are useful, and not mere filler, the original core work remains the most interesting and instructive. It has, at bottom, two principal messages.
First, it's highly unlikely that anyone, no matter how smart or sophisticated, can beat the market consistently over long periods of time. The experience of the past three decades has borne Malkiel out. When he first wrote this book, for example, the mutual fund industry was still in relative infancy. Now we have a bewildering variety of funds, whose managers utilize sophisticated computerized tools, yet only a tiny minority beat the market with any regularity.
Second, the history of markets and investing is riddled with bubbles, panics and manias, going back centuries. In the decades since I read this book, we've had the crash of 1987, the Internet and tech bubble, and the housing bubble, among others. More are bound to come. Reviewing the history of these episodes with Malkiel is a way to, perhaps, recognize the next ones.
