A Random Stroll Up to Wall Street

At the recommendation of my friend Bobby, I have started to read “A Random Walk Down Wall Street”.  This book is known as one of the premier investment books and a modern day classic.  I am slowly working my way through it, and I am sure you will hear me reference this book a lot as I read it.  However, today I wanted to share a simple tidbit from the first chapter.

The author, Burton Malkiel, references two different theories with regard to investing based on what the prospects of the future hold.  He calls these two theories, “The Firm Foundation Theory” and the “Castle-in-the-air Theory”.

The Firm Foundation Theory assumes that there is an intrinsic value for all stocks.  Something is either undervalued, overvalued, or at the right price.  Discovering what is undervalued or overvalued, and playing the market in the right direction until the stock reaches equilibrium is the way this theory works.  This also epitomizes the ‘buy and hold’ strategy of investing.  For example, lets assume Microsoft’s stock has been in the tank for some reason the past handful of months.  You know they will bounce back eventually; it’s only a matter of time.  So you buy the stock when it’s low, and hold onto it.  Eventually it will come back to its equilibrium value, and you made yourself a nice profit.  Warren Buffett is the perfect example of someone who has made billions using strategies similar to this.

Tickle Me Elmo Was The Hottest Toy of 1996

Tickle Me Elmo Was The Hottest Toy of 1996

The Castle-in-the-air Theory was put forth by legendary economist John Maynard Keynes.  In layman’s terms, Keynes felt that investors were better off and would rather catch trends on the upswing, and then sell their stake in the trend at its peak.  For example, if you bought a crate of Tickle Me Elmo’s back in the summer of 96 for $30 a piece, you could have bought yourself a couple of cars if you sold your stock in early December of 96.  However, if you bought that same crate of Elmo’s in late December, and held onto them until January, you stood to lose a lot of money.  The Castle-in-the-air theory takes advantage of trends.  If you get in on a hot stock before anyone else, and exit just as it’s starting to plateau or fall, you have done well.  This theory focuses on consumer psychology more than on actual valuation of stocks.

There will be more to come from this book, but these were interesting enough theories to share.  If you have read the book, or if you have other investing books to recommend, please leave a comment below.

15,702 Responses to A Random Stroll Up to Wall Street
  1. Rannevorina
    January 3, 2019 | 2:25 am

    viagra canada online generic

  2. Fursorina
    January 3, 2019 | 4:17 am

    pharma express at is

    aacd online is american express

  3. خرید اپل ایدی
    January 3, 2019 | 4:19 am

    خرید اپل ایدی

  4. TogEtexAgoxSota
    January 3, 2019 | 6:54 am

    viagra and face flushing viagra online que tan seguido puedo tomar cialis

  5. Lavern Swoopes
    January 3, 2019 | 7:44 am

    the Gilmore Girls are really gorgeous, and that is the main reason why i watch that tv show~

  6. bitcoin
    January 3, 2019 | 9:21 am

    Hi, if you want to buy 10 Million SEO Backlinks for $5, contact me on fiverr. Profile Link: https://www.fiverr.com/roseslapoffski

  7. Fursorina
    January 3, 2019 | 11:43 am

    pharmacie ligne is

    aacd is dopo mangiato

  8. internet marketing
    January 3, 2019 | 12:14 pm

    I’m extremely impressed with your writing skills and also with the layout on your blog. Is this a paid theme or did you modify it yourself? Anyway keep up the nice quality writing, it is rare to see a nice blog like this one nowadays..

  9. technology articles
    January 3, 2019 | 12:15 pm

    You really make it seem really easy with your presentation but I in finding this matter to be actually something which I feel I’d never understand. It seems too complicated and very vast for me. I am looking forward on your subsequent post, I¡¦ll attempt to get the hold of it!

  10. science
    January 3, 2019 | 12:46 pm

    Hello my loved one! I wish to say that this article is awesome, nice written and come with approximately all vital infos. I would like to look more posts like this .

  11. health insurance
    January 3, 2019 | 12:46 pm

    Thanks for some other informative blog. The place else may I get that type of information written in such an ideal means? I’ve a undertaking that I am simply now running on, and I have been on the glance out for such information.

  12. pet adoption
    January 3, 2019 | 12:50 pm

    I would like to thank you for the efforts you’ve put in writing this blog. I’m hoping the same high-grade website post from you in the upcoming also. In fact your creative writing abilities has encouraged me to get my own website now. Actually the blogging is spreading its wings rapidly. Your write up is a great example of it.

  13. cap
    January 3, 2019 | 1:15 pm

    I’ve been surfing online more than three hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. Personally, if all web owners and bloggers made good content as you did, the net will be a lot more useful than ever before.

  14. juicy chat
    January 3, 2019 | 3:52 pm

    here are some hyperlinks to sites that we link to simply because we assume they are worth visiting

  15. Chantelle Lopiccolo
    January 3, 2019 | 4:52 pm

    I simply intended to leave a quick discuss your post today. I have actually been on your site a couple of times over the last few months and also have actually found a number of your posts well created as well as interesting. I am questioning if your website approves guest blog posts or short articles as I have interest in this particular niche as well as would want to add to your website.

  16. womens health
    January 3, 2019 | 6:59 pm

    I have not checked in here for a while since I thought it was getting boring, but the last several posts are good quality so I guess I¡¦ll add you back to my daily bloglist. You deserve it my friend 🙂

  17. computer monitor
    January 3, 2019 | 7:01 pm

    I think this is among the most vital info for me. And i am glad reading your article. But wanna remark on few general things, The site style is perfect, the articles is really nice : D. Good job, cheers

  18. improvements
    January 3, 2019 | 7:12 pm

    I truly appreciate this post. I have been looking everywhere for this! Thank goodness I found it on Bing. You’ve made my day! Thanks again

  19. Fursorina
    January 3, 2019 | 8:09 pm

    is generique sildenafil

    aacd at pill for is

  20. business news article
    January 3, 2019 | 8:47 pm

    Heya i am for the first time here. I came across this board and I find It really useful & it helped me out much. I hope to give something back and aid others like you helped me.

  21. vacation packages
    January 3, 2019 | 8:48 pm

    I am always searching online for articles that can aid me. Thx!

  22. definition of business
    January 3, 2019 | 8:55 pm

    Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something. I think that you can do with some pics to drive the message home a bit, but other than that, this is excellent blog. A great read. I will definitely be back.

  23. instagram beğeni satın al
    January 3, 2019 | 9:14 pm

    Medgen’den Türk Instagram beğeni satın al ve hesabının popülerliğini arttır. Fotoğrafların ve videoların Keşefet’e düşsün daha fazla kişi tarafından etkileşim alsın. 6 yıldır Türkiye’nin en çok tercih edilen firması ile çalışmanın keyfine varın.

  24. brazil flag image
    January 4, 2019 | 12:02 am

    I know this if off topic but I’m looking into starting my own blog and
    was curious what all is required to get setup?
    I’m assuming having a blog like yours would cost a pretty penny?
    I’m not very web savvy so I’m not 100% positive.
    Any recommendations or advice would be greatly appreciated.
    Cheers

  25. personal training san antonio
    January 4, 2019 | 1:17 am

    Really informative blog article.Thanks Again.

  26. cleaning company in london
    January 4, 2019 | 3:38 am

    Hi, the best cleaning company in Londaon, if you are looking for domestic cleaning in london. please visit our website for more.

  27. pregnancy workout
    January 4, 2019 | 5:22 am

    I really like and appreciate your blog.Much thanks again. Want more.

  28. Knowing brother indo
    January 4, 2019 | 8:59 am

    There is clearly a bunch to realize about this. I suppose you made certain good points in features also.

  29. frankfordfinancial
    January 4, 2019 | 10:58 am

    Hi! I simply wish to give you a huge thumbs up for the excellent info you have got right here on this post. I will be returning to your website for more soon.

  30. apa itu jasa
    January 4, 2019 | 3:11 pm

    Hmm it seems like your site ate my first comment (it was extremely long) so I guess I’ll just sum it up what I wrote and say, I’m thoroughly enjoying your blog. I too am an aspiring blog writer but I’m still new to everything. Do you have any suggestions for first-time blog writers? I’d certainly appreciate it.

  31. chto mozhno sdelat s chlenom
    January 4, 2019 | 5:29 pm

    one of our guests lately advised the following website

  32. Frankford Financial
    January 4, 2019 | 9:09 pm

    Hey there! I just would like to offer you a huge thumbs up for your excellent info you’ve got right here on this post. I’ll be coming back to your website for more soon.

  33. PCB manufacturer Shenzhen China
    January 5, 2019 | 7:14 am

    although sites we backlink to beneath are considerably not associated to ours, we really feel they may be basically worth a go as a result of, so have a look

  34. sildenafil
    January 5, 2019 | 9:09 am

    sildenafil pills over the counter
    buy sildenafil
    precautions while taking sildenafil
    [url=http://viagrabs.com/]sildenafil[/url]

  35. anal toys for beginner
    January 5, 2019 | 9:55 am

    I really liked your article.Thanks Again. Much obliged.

  36. house renovators
    January 5, 2019 | 12:10 pm

    please stop by the websites we stick to, like this a single, as it represents our picks in the web

  37. led timer
    January 5, 2019 | 12:19 pm

    check below, are some completely unrelated web sites to ours, having said that, they’re most trustworthy sources that we use

  38. phone repair
    January 5, 2019 | 5:07 pm

    Enjoyed every bit of your article.

  39. Marcus
    January 5, 2019 | 5:36 pm

    If some one desires expert view about running a blog after that i
    recommend him/her to pay a quick visit this web site,
    Keep up the nice job.

  40. Cathern
    January 5, 2019 | 5:46 pm

    Very shortly this web site will be famous among all blogging viewers,
    due to it’s nice articles or reviews

  41. that could be the end of this article. Right here you will obtain some web pages that we assume you will value, just click the hyperlinks over

  42. https://youtu.be/4IBb_QAfd2E
    January 5, 2019 | 11:58 pm

    Hi, if you want to buy 10 Million SEO Backlinks for $5, contact me on fiverr. Profile Link: https://fiverr.com/WebSiteSeoX2

  43. although sites we backlink to below are considerably not connected to ours, we feel they’re basically really worth a go by, so possess a look

  44. fun chat
    January 6, 2019 | 3:19 am

    usually posts some very interesting stuff like this. If you are new to this site

  45. download produce sub indo
    January 6, 2019 | 3:55 am

    I would like to thnkx for the efforts you have put in writing this blog. I’m hoping the same high-grade blog post from you in the upcoming also. Actually your creative writing skills has inspired me to get my own site now. Actually the blogging is spreading its wings quickly. Your write up is a good example of it.

Trackbacks/Pingbacks
  1. 123Movies
  2. Shipping Pets to Sri Lanka
  3. google apps
  4. walmartone login
  5. cpi certification for nurses
Leave a Reply


Wanting to leave an <em>phasis on your comment?

Trackback URL http://mynextbuck.com/a-random-stroll-up-to-wall-street/trackback/

A Random Stroll Up to Wall Street

At the recommendation of my friend Bobby, I have started to read “A Random Walk Down Wall Street”.  This book is known as one of the premier investment books and a modern day classic.  I am slowly working my way through it, and I am sure you will hear me reference this book a lot as I read it.  However, today I wanted to share a simple tidbit from the first chapter.

The author, Burton Malkiel, references two different theories with regard to investing based on what the prospects of the future hold.  He calls these two theories, “The Firm Foundation Theory” and the “Castle-in-the-air Theory”.

The Firm Foundation Theory assumes that there is an intrinsic value for all stocks.  Something is either undervalued, overvalued, or at the right price.  Discovering what is undervalued or overvalued, and playing the market in the right direction until the stock reaches equilibrium is the way this theory works.  This also epitomizes the ‘buy and hold’ strategy of investing.  For example, lets assume Microsoft’s stock has been in the tank for some reason the past handful of months.  You know they will bounce back eventually; it’s only a matter of time.  So you buy the stock when it’s low, and hold onto it.  Eventually it will come back to its equilibrium value, and you made yourself a nice profit.  Warren Buffett is the perfect example of someone who has made billions using strategies similar to this.

Tickle Me Elmo Was The Hottest Toy of 1996

Tickle Me Elmo Was The Hottest Toy of 1996

The Castle-in-the-air Theory was put forth by legendary economist John Maynard Keynes.  In layman’s terms, Keynes felt that investors were better off and would rather catch trends on the upswing, and then sell their stake in the trend at its peak.  For example, if you bought a crate of Tickle Me Elmo’s back in the summer of 96 for $30 a piece, you could have bought yourself a couple of cars if you sold your stock in early December of 96.  However, if you bought that same crate of Elmo’s in late December, and held onto them until January, you stood to lose a lot of money.  The Castle-in-the-air theory takes advantage of trends.  If you get in on a hot stock before anyone else, and exit just as it’s starting to plateau or fall, you have done well.  This theory focuses on consumer psychology more than on actual valuation of stocks.

There will be more to come from this book, but these were interesting enough theories to share.  If you have read the book, or if you have other investing books to recommend, please leave a comment below.

15,702 Responses to A Random Stroll Up to Wall Street
  1. Rannevorina
    January 3, 2019 | 2:25 am

    viagra canada online generic

  2. Fursorina
    January 3, 2019 | 4:17 am

    pharma express at is

    aacd online is american express

  3. خرید اپل ایدی
    January 3, 2019 | 4:19 am

    خرید اپل ایدی

  4. TogEtexAgoxSota
    January 3, 2019 | 6:54 am

    viagra and face flushing viagra online que tan seguido puedo tomar cialis

  5. Lavern Swoopes
    January 3, 2019 | 7:44 am

    the Gilmore Girls are really gorgeous, and that is the main reason why i watch that tv show~

  6. bitcoin
    January 3, 2019 | 9:21 am

    Hi, if you want to buy 10 Million SEO Backlinks for $5, contact me on fiverr. Profile Link: https://www.fiverr.com/roseslapoffski

  7. Fursorina
    January 3, 2019 | 11:43 am

    pharmacie ligne is

    aacd is dopo mangiato

  8. internet marketing
    January 3, 2019 | 12:14 pm

    I’m extremely impressed with your writing skills and also with the layout on your blog. Is this a paid theme or did you modify it yourself? Anyway keep up the nice quality writing, it is rare to see a nice blog like this one nowadays..

  9. technology articles
    January 3, 2019 | 12:15 pm

    You really make it seem really easy with your presentation but I in finding this matter to be actually something which I feel I’d never understand. It seems too complicated and very vast for me. I am looking forward on your subsequent post, I¡¦ll attempt to get the hold of it!

  10. science
    January 3, 2019 | 12:46 pm

    Hello my loved one! I wish to say that this article is awesome, nice written and come with approximately all vital infos. I would like to look more posts like this .

  11. health insurance
    January 3, 2019 | 12:46 pm

    Thanks for some other informative blog. The place else may I get that type of information written in such an ideal means? I’ve a undertaking that I am simply now running on, and I have been on the glance out for such information.

  12. pet adoption
    January 3, 2019 | 12:50 pm

    I would like to thank you for the efforts you’ve put in writing this blog. I’m hoping the same high-grade website post from you in the upcoming also. In fact your creative writing abilities has encouraged me to get my own website now. Actually the blogging is spreading its wings rapidly. Your write up is a great example of it.

  13. cap
    January 3, 2019 | 1:15 pm

    I’ve been surfing online more than three hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. Personally, if all web owners and bloggers made good content as you did, the net will be a lot more useful than ever before.

  14. juicy chat
    January 3, 2019 | 3:52 pm

    here are some hyperlinks to sites that we link to simply because we assume they are worth visiting

  15. Chantelle Lopiccolo
    January 3, 2019 | 4:52 pm

    I simply intended to leave a quick discuss your post today. I have actually been on your site a couple of times over the last few months and also have actually found a number of your posts well created as well as interesting. I am questioning if your website approves guest blog posts or short articles as I have interest in this particular niche as well as would want to add to your website.

  16. womens health
    January 3, 2019 | 6:59 pm

    I have not checked in here for a while since I thought it was getting boring, but the last several posts are good quality so I guess I¡¦ll add you back to my daily bloglist. You deserve it my friend 🙂

  17. computer monitor
    January 3, 2019 | 7:01 pm

    I think this is among the most vital info for me. And i am glad reading your article. But wanna remark on few general things, The site style is perfect, the articles is really nice : D. Good job, cheers

  18. improvements
    January 3, 2019 | 7:12 pm

    I truly appreciate this post. I have been looking everywhere for this! Thank goodness I found it on Bing. You’ve made my day! Thanks again

  19. Fursorina
    January 3, 2019 | 8:09 pm

    is generique sildenafil

    aacd at pill for is

  20. business news article
    January 3, 2019 | 8:47 pm

    Heya i am for the first time here. I came across this board and I find It really useful & it helped me out much. I hope to give something back and aid others like you helped me.

  21. vacation packages
    January 3, 2019 | 8:48 pm

    I am always searching online for articles that can aid me. Thx!

  22. definition of business
    January 3, 2019 | 8:55 pm

    Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something. I think that you can do with some pics to drive the message home a bit, but other than that, this is excellent blog. A great read. I will definitely be back.

  23. instagram beğeni satın al
    January 3, 2019 | 9:14 pm

    Medgen’den Türk Instagram beğeni satın al ve hesabının popülerliğini arttır. Fotoğrafların ve videoların Keşefet’e düşsün daha fazla kişi tarafından etkileşim alsın. 6 yıldır Türkiye’nin en çok tercih edilen firması ile çalışmanın keyfine varın.

  24. brazil flag image
    January 4, 2019 | 12:02 am

    I know this if off topic but I’m looking into starting my own blog and
    was curious what all is required to get setup?
    I’m assuming having a blog like yours would cost a pretty penny?
    I’m not very web savvy so I’m not 100% positive.
    Any recommendations or advice would be greatly appreciated.
    Cheers

  25. personal training san antonio
    January 4, 2019 | 1:17 am

    Really informative blog article.Thanks Again.

  26. cleaning company in london
    January 4, 2019 | 3:38 am

    Hi, the best cleaning company in Londaon, if you are looking for domestic cleaning in london. please visit our website for more.

  27. pregnancy workout
    January 4, 2019 | 5:22 am

    I really like and appreciate your blog.Much thanks again. Want more.

  28. Knowing brother indo
    January 4, 2019 | 8:59 am

    There is clearly a bunch to realize about this. I suppose you made certain good points in features also.

  29. frankfordfinancial
    January 4, 2019 | 10:58 am

    Hi! I simply wish to give you a huge thumbs up for the excellent info you have got right here on this post. I will be returning to your website for more soon.

  30. apa itu jasa
    January 4, 2019 | 3:11 pm

    Hmm it seems like your site ate my first comment (it was extremely long) so I guess I’ll just sum it up what I wrote and say, I’m thoroughly enjoying your blog. I too am an aspiring blog writer but I’m still new to everything. Do you have any suggestions for first-time blog writers? I’d certainly appreciate it.

  31. chto mozhno sdelat s chlenom
    January 4, 2019 | 5:29 pm

    one of our guests lately advised the following website

  32. Frankford Financial
    January 4, 2019 | 9:09 pm

    Hey there! I just would like to offer you a huge thumbs up for your excellent info you’ve got right here on this post. I’ll be coming back to your website for more soon.

  33. PCB manufacturer Shenzhen China
    January 5, 2019 | 7:14 am

    although sites we backlink to beneath are considerably not associated to ours, we really feel they may be basically worth a go as a result of, so have a look

  34. sildenafil
    January 5, 2019 | 9:09 am

    sildenafil pills over the counter
    buy sildenafil
    precautions while taking sildenafil
    [url=http://viagrabs.com/]sildenafil[/url]

  35. anal toys for beginner
    January 5, 2019 | 9:55 am

    I really liked your article.Thanks Again. Much obliged.

  36. house renovators
    January 5, 2019 | 12:10 pm

    please stop by the websites we stick to, like this a single, as it represents our picks in the web

  37. led timer
    January 5, 2019 | 12:19 pm

    check below, are some completely unrelated web sites to ours, having said that, they’re most trustworthy sources that we use

  38. phone repair
    January 5, 2019 | 5:07 pm

    Enjoyed every bit of your article.

  39. Marcus
    January 5, 2019 | 5:36 pm

    If some one desires expert view about running a blog after that i
    recommend him/her to pay a quick visit this web site,
    Keep up the nice job.

  40. Cathern
    January 5, 2019 | 5:46 pm

    Very shortly this web site will be famous among all blogging viewers,
    due to it’s nice articles or reviews

  41. that could be the end of this article. Right here you will obtain some web pages that we assume you will value, just click the hyperlinks over

  42. https://youtu.be/4IBb_QAfd2E
    January 5, 2019 | 11:58 pm

    Hi, if you want to buy 10 Million SEO Backlinks for $5, contact me on fiverr. Profile Link: https://fiverr.com/WebSiteSeoX2

  43. although sites we backlink to below are considerably not connected to ours, we feel they’re basically really worth a go by, so possess a look

  44. fun chat
    January 6, 2019 | 3:19 am

    usually posts some very interesting stuff like this. If you are new to this site

  45. download produce sub indo
    January 6, 2019 | 3:55 am

    I would like to thnkx for the efforts you have put in writing this blog. I’m hoping the same high-grade blog post from you in the upcoming also. Actually your creative writing skills has inspired me to get my own site now. Actually the blogging is spreading its wings quickly. Your write up is a good example of it.

Trackbacks/Pingbacks
  1. 123Movies
  2. Shipping Pets to Sri Lanka
  3. google apps
  4. walmartone login
  5. cpi certification for nurses
Leave a Reply


Wanting to leave an <em>phasis on your comment?

Trackback URL http://mynextbuck.com/a-random-stroll-up-to-wall-street/trackback/