Book Review: A Random Walk Down Wall Street by Burton Malkiel

by | May 11, 2026

I want to tell you a story about The South Sea Company. According to Wikipedia, the official name of the company was either “The Governor and Company of the merchants of Great Britain, trading to the South Seas and other parts of America and for the encouragement of the Fishery,” or “The Governor and Company of merchants of Great Britain, trading to the South-Seas, and other parts of America, and for encouraging the Fishery.”

But, most people called it The South Sea Company. It was a joint-stock company that was founded in 1711, and by 1720, it went bankrupt after frenzied speculation caused a bubble called the South Sea Bubble.

Sir Issac Newton was an investor in the company, and ended up losing a lot of money in it. The experience allegedly prompted him to say, “I can calculate the movement of stars, but not the madness of men.”

I was thinking of this when I recently re-read A Random Walk Down Wall Street: The Time-tested Strategy For Successful Investing by Burton G. Malkiel. Not because of the book itself, which is excellent and features a detailed telling of the South Sea bubble, but because of the odd takeaway that people seem to get from the book. The central argument that Malkiel makes is that stock prices are unpredictable, and because of that, it is unlikely that most people would be able to beat the market. Yet some people read the book and think, “I should be a stock picker.” That’s the wrong message, and because of this, I have decided to review this really great book today.

Note: I re-read the 2023 version of the book, which is the 13th edition. The first part of the book covers various bubbles in history, from Tulipmania to NFTs (remember those?) cryptocurrencies, and even meme stocks like Gamestop. Which is to say, the book is as timely now as it was in 1973 when the first edition came out.

The second part of the book analyzes technical and fundamental analysis for stock picking. Here is what Malkiel finds about technical strategies, “Technical strategies are usually amusing, often comforting, but of no real value.” He then analyzes fundamental analysis, and finds, “Fundamental analysis is no better than technical analysis in enabling investors to capture above-average returns.”

The third part of the book considers all the new technology and strategies available to investors. It also considers modern portfolio theory, and explains how retail investors should approach it. It covers behavioural finance, and biases, and has a new chapter on smart beta.

Finally, once all the theories and the histories are reviewed, the fourth part of the book provides a general guide on what an investor should do.

Four Key Takeaways for Investors:

  1. You likely won’t be able to beat the market – at least not consistently. Stock picking requires knowledge, skill, and time, and chances are most investors won’t have all three consistently to beat the market with any regularity.   
  2. Diversification is the only free lunch in investing. Owning 10 stocks is not diversification. In order to insulate your portfolio from sudden shocks, you need to diversify across sectors, and geographies, and in possible, asset classes too.
  3. Time in the market is better than timing the market. See point 1 – chances are you won’t be able to consistently beat the market. But if you spend time in the market, you have longer to recover.
  4. Investing is about more than money. Psychology is a critical factor in investment success. You need to be aware of your behaviour, and your biases, in order to maximize your return. If you are a risk averse person, putting all of your money into a highly speculative stock is unlikely to end well.

General Tips and Tricks Directly from A Random Walk Down Wall Street

Tip 1: Start investing now. Ideally, the best time to have started investing was from your first paycheck. That should have been from the tooth fairy. If you had, you’d have had decades for your savings to compound. But if you, like most people, did not think about retirement at age 5, did not start investing then, then you should start at the second best time, which is now.

Tip 2: Automate, and leave your portfolio alone. Our own behaviour can sometimes be the worst enemy for investing. So take the decisions away from yourself by automating your investments, and then resist the urge to constantly check your portfolio. Instead, have a clearly laid out time frame for your investments, and then annually rebalance your portfolio to meet your targets.

Tip 3: Diversify. Spread your investments across countries, sectors, and asset classes. Remember, diversification is the only free lunch in investing. Exchange traded funds (ETFs) offer a lower cost way to invest across the board.

Tip 4: Use tax-efficient accounts. Granted this tip is not directly in the book, because it was written for a U.S. audience, but the theory is the same. If you can, maximize your tax-free savings account (TFSA) and registered retirement savings plan (RRSP) before using non-registered accounts, so you can get the most tax-advantage.

Tip 5: Invest in what you know. That means know your time horizon, your goals, and your risk tolerance and risk appetite, and invest accordingly. Don’t chase hot funds, themes, assets, or ideas, especially if you don’t understand them.

The Final Word

I think A Random Walk Down Wall Street is an essential book for all investors to read, especially investors who have not had much experience yet. It looks at various past events, and offers interesting ways of looking at them, and finally offers a general way to invest that works for most people. A must-read!

Some Other Stuff I Tried Last Month:

  • Fat Rabbit in St. Catherines. This restaurant and butcher makes all charcuterie in-house. All of the meat served & sold is derived from whole animals butchered in house. I had a great meal there!
  • Chicago, in Toronto! Mirvish hosted Broadway’s longest-running musical. Roxie Hart, Velma Kelly and Billy Flynn have won 6 Tony Awards, 2 Olivier Awards, and a Grammy, and after watching them last month, I see why.
  • The Decibel: Artemis II. The Globe & Mail’s Madeleine White and Ivan Semeniuk explain how Canadian astronaut Jeremy Hansen got a seat on this coveted mission, and explain why it’s so hard to return to the moon, what the mission entails, and how Canada fits into it all.
Disclaimer

The opinions and views expressed in this book are those of the author and do not necessarily reflect the views of Harvest ETFs. Similarly, the opinions and views expressed in this review are solely those of the reviewer (the Author) and do not represent the views of Harvest ETFs. The Author and Harvest ETFs have no affiliation with the author of the book.
Investment decisions should be made in consultation with a licensed and experienced investment professional. This review is provided for educational purposes only and should not be interpreted as investment advice.

This communication should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Tax, investment and all other decisions should be made with guidance from a qualified professional.

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