I have read the most recent version of Malkiel’s “A Random
Walk Down Mainstreet,” and it made me thankful for those people who actually go
out and try to make a return for themselves on the market. It provides a
service that current leftist critiques of finance capitalism forget – they provide
liquidity and aid price discovery. Now, that is just a small part of what they
do, and the bulk of their profits are actual rents, and half of the people will
end up losers whatever system they try – because there are some patterns in the
market, but I am a believer that the market will stay irrational longer than I
can stay liquid. I guess at heart I am pretty conservative about what I do with
my money because people like Malkiel and Bogle speak to me so much.
"The Little Book of Common Sense Investing" is like a cover version of Malkiel’s classic,
coming in with a shorter page count and being less of a sales document – though
where the recent “Random Walk” made me curious about Wealthfront and reading
this made me go to the Vanguard website, I still am paying more in fees than I
should to the company-administered 403(b) even in their so-called Index
Fund. This is a pretty well-written
book, but it does have a bit of an odd structure, with short chapters closed by asides referencing
the current point made with an outside source instead of integrating it in the
main chapter. Overall, though, it is a strong case for indexing your funds and
taking advantage of the work the active traders do. When you are buying the
market, you are giving up the chance of some great stock or sector that goes
parabolic, but it also prevents you from thinking you are clever and taking a
short position in that same sector just before it goes parabolic. Buy and hold
and buy again seems to be the best way to ensure that the money you do invest
will be there when you need it at the end of your life. I’m not trying to get
rich by any means, but I’m also not looking to degrade the quality of my life
at the end.
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