A Random Walk Down Wall Street

Investing techniques

Malkiel examines some popular investing techniques, including technical analysis and fundamental analysis, in light of academic research studies of these methods. Through detailed analysis, he notes significant flaws in both techniques, concluding that, for most investors, following these methods will produce inferior results compared to passive strategies.

Malkiel has a similar critique for methods of selecting actively managed mutual funds based upon past performances. He cites studies indicating that actively managed mutual funds vary greatly in their success rates over the long term, often underperforming in years following their successes, thereby regressing toward the mean. Malkiel suggests that given the distribution of fund performances, it is statistically unlikely that an average investor would happen to select those few mutual funds which will outperform their benchmark index over the long term.

References

References

1. Burton Malkiel (2011) [http://worldcat.org/oclc/50919959 ''A random walk down Wall Street: the time-tested strategy for successful investing'']
2. Hardback: {{ISBN. 978-0-393-05854-3, Paperback: {{ISBN. 978-0-393-32639-0