 Good day fellow investors. One of the best Wall Street investment books is Burton Malkiel's A Random Walk Down Wall Street. I will discuss the book a little bit today and I hope to intrigue you enough so that you read it. The link for the book is of course in the description below. So Burton Malkiel says that Wall Street is a random walk. He is against technical analysis. He says that obsessing over stock charts puts holes in investor shoes and yachts in broker's docks. He is also against fundamental analysis because he says that analysts are completely futile and that they miss always what's going on. So because of course Wall Street is a random walk and you cannot really predict what will happen. I slightly disagree with what he is saying as we have seen in our value video that value investing has beaten growth of any other kind of investing during the long time. Also if you buy small caps. However that is more risky. So therefore again if you look at the risk reward some would say okay more risk. However if you look at the risk of returns then there is no risk. Yes it will be more volatile but better in the long term. So that's also something to discuss. Nevertheless let's dig into some concepts of Burton Malkiel's book which in addition to what I have said talks about Wall Street. How are the bubbles created on Wall Street. How Wall Street works extremely interesting extremely interesting knowledge for every investor. Let's discuss some topics that I hope will intrigue you to further read the book because it's extremely interesting. Now let's start with the random walk. Is Wall Street a random walk. If you look at this chart from the SAP 500 in the last 10 years you can clearly spot a pattern. Wall Street goes down and then goes up. However if you look at Malkiel's interpretation of this he shows us this chart also up down and then up. You can say okay stocks go up stocks go down and stocks go back up. However this is a pattern created by a coin toss. So similarly to what happened in the stock market can be created by a coin toss. So there is really no predictability in what will happen. If you would have asked people in 2010 nobody could have predicted the consequent bull market. So again it is really a random walk. We could have seen a lost decade as many were afraid it will be but we have seen one of the best decades in history. So it's really impossible to predict what could happen. I disagree on Malkiel. I think if you buy fundamentals if you buy cheap then you can beat the market in the very long term or at least you can manage your risks and rewards better. However if you don't have the time to look at fundamentals to really understand investing as Buffett does then what Malkiel suggests is really important. Diversification index funds discussing and it's very important is how investing fits your personal life because that's it. Everything in investing should be related to your personal life not to the market not what's good not what's bad not hot stocks not this not that how it fits you personally because that in the end is the most important thing. And one thing that Malkiel discusses and it's extremely important and people very often forget about this is inflation. We have touched on inflation on this channel a few times nevertheless it's important to see how inflation varies around different things. If you wanted to buy a refrigerator in 1962 and in 1992 the price didn't go up that much. However if you wanted to Hershey bar then it costed almost nothing in 1962 and extremely high in 1998 now it probably costs even more. So some things depends on what you want in life really increase in prices some things really don't. Depending again what is your age what do you want to do in life what are your goals you have to really see how inflation impacts what you're doing and then also structure your portfolio so that you're protected in relation to how much protection you need towards inflation. Never forget about inflation even if it is low now might get higher in the future but also one two percent per year over 10 20 years really amounts to a lot so be protected against for inflation always. Another very important topic that Malkiel discusses and I fully agree is international diversification. Here you can see for the same return the risk of US stocks compared to international stocks so a portfolio of 20 stocks in the US is much more risky for the same return than a portfolio of international stocks. So if you are not diversified internationally you really should think about diversifying and taking advantage of international diversification. Another concept that Malkiel discusses is risk and age. If you're 20 25 30 you can take much more risk because even if it goes wrong you will have a good salary as your salary will be rising over the next 20 years to cover that risk and even take advantage if the stock market drops you will have the money to buy more because your initial portfolio is small. However if you're 60 65 you cannot have everything in stocks and risk a 50 70 percent downturn because then oh yes you can buy more but if you are forced to sell to retire then you're toasted. So it's very interesting the life concepts that Burton Malkiel discusses in his books I really think that's a book everyone should read about Wall Street about investing about how to invest and see what better fits your investing preferences. As I said check the book in the link below thank you for watching looking forward to the comments any other books that we haven't covered please share them in the comments and I'll see you in the next video.