Monday, February 21, 2005

Completing the random walk ...

I was done reading most of A Random Walk Down Wall Street by Burton Malkiel a while ago, except for the last 3 chapters. I got to the remaining ones this past week.

Add this to your to-read list.

The most important lesson to take away from this book is that it is very hard to beat the market. It is even harder to do so when you go through high fees / high turnover mutual funds - a good 50% or more of the funds thus just lose money for you! Index Fund investing is the way to go, especially combined with dollar-cost averaging.

That may sound odd coming from a blog that aims to do better by focusing on M & A targets! I realize that M & A targeted investing is unlikely to beat the market in the short-term and definitely won't in the long-term. I am taking a slightly (?) higher risk in the hopes of beating the market over the next 2/3 years as I expect higher than average deal flow. At some point within the next 5 years, the increased deal flow will turn to a mania - I am hoping to be able to sense and stop sinking more funds into such targets when that happens.


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