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Going for the long run
on 8 November 2006
A good investment for those interested in playing the "Wall Street" game.
The first three parts of the book were really exciting, but in the last one Malkiel goes practical, and that's when he lost me for some moments, since most of it focus on US tax reallity.
The basic message goes something like this:
- You can sometimes beat the market, either by performing time series analysis on stock prices and finding some kind of a pattern, either by studying the companies's numbers and finding an undervalued stock, or by foreseing a crowd movement and getting there before everyone else. But most of the time the market will beat you, because there are random events that are impossible to predict, books can be cooked, future growth for several years in a row is pratically impossible to forecast, and sometimes you are just another sucker in the crowd. So Malkiel states that you'll be better of going for the long run, getting a do-it-yourself diverse portfolio or putting your money in a broad index fund, saving this way lots of taxes, comissions and sleepless nights, and gaining above average returns.