副博主近期决定投身到全职炒股票的事业中去，为了显示副博主的敬业精神+B格，今天隆重推出#读书笔记#系列。
A Random Walk down Wall Street (10th Edition)
About the author
Burton Malkiel is Emeritus Professor in Department of Economic at Princeton University. He is a leading proponent of the efficient-market hypothesis and in general supports buying and holding index funds as the most effective portfolio-management strategy. He also spent 28 years as a director of the Vanguard Group.
Chapter 1: Firm Foundations and Castle in the Air
Inflation
In US and most of the developed world, inflation fell to 2% in the early 2000s, and some believe that relative price stability will continue indefinitely. (True? What affect inflation?) What is the possibility that inflation will accelerate again at some time in the future? Productivity growth accelerated in the 1990s and 2000s, but history tells us the pace of improvement has always been uneven. Moreover, productivity improvement is hard to come by in some service-oriented activities (like musicians, surgeon, etc).
Firm-foundation Theory
It relies on some tricky forecasts of the extent and duration of future growth (dividend, cash distribution, etc.). An influential book is Security Analysis (by B. Graham and D. Dodd).
Castle-in-the-air Theory
The castle-in-the-air theory concentrates on psychic values ("greater fool" theory).
Every investor should remember: Res tantum valet quantum vendi potest (A thing is worth only what someone else will pay for it).
Chapter 2: The Madness of Crowds
GREED RUN AMOK
has been an essential feature of every spectacular boom in history. Remember the movie Margin Call ? "I am here for one reason and one reason alone. I am here to guess what the music might do a week, a month, a year from now. That's it. Nothing more..." Unsustainable prices may persist for years, but eventually they reverse themselves.
Tulip-bulb Craze and South Sea Bubble
Part of the genius of financial markets is that when there is a real demand for a method to enhance speculative opportunities, the market will surely provide it.
Options provide one way to leverage one's investment to increase the potential rewards as well as the risks. Such devices helped to ensure broad participation in the market. The same is true today.
As happens in all speculative crazes, prices eventually got so high that some people decide they would be prudent and sell their bulbs.
Big losers in the South Sea Bubble included Isaac Newton, who exclaimed, "I can calculate the motions of heavenly bodies, but not the madness of people."
Wall Street lays an egg (1929)
Calvin Coolidge - "The business of America is business." Stock market speculation was central to the culture.
Specialist could be so valuable to the pool manager. The book gave information about the extent of existing orders to buy and sell at prices below and above the current market. Wash sales created the impression that something big was afoot.
Monday, October 21, 1929: The stage was set for a classic stock market break. The declines in stock price had led to calls for more collateral from margin buyers. Unable or unwilling to meet the calls, these customers were forced to sell their holdings. This depressed prices and led to more margin calls and finally to a self-sustaining selling wave.
The crash in the stock market was followed by the most devastating depression in history. History teaches us that very sharp increases in stock prices are seldom followed by a gradual return to relative price stability. Even if prosperity had continued into the 1930s, stock prices could never has sustained their advance of the late 1920s. In addition, the anomalous behavior of close-end investment company shares provides clinching evidence of wide-scale stock market irrationality during the 1920s. From January to August 1929, the typical closed-end fund sold at a premium of 50%.
An afterword
It is not hard to make money in the market. What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges. It is an obvious lesson, but one frequently ignored.
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