Preface                                            17 (4)
Acknowledgments from Earlier Editions              21 (4)
  Part One STOCKS AND THEIR VALUE
    1 Firm Foundations And Castles In The Air      25 (12)
      What Is a Random Walk?                       26 (2)
      Investing as a Way of Life Today             28 (2)
      Investing in Theory                          30 (1)
      The Firm-Foundation Theory                   31 (2)
      The Castle-in-the-Air Theory                 33 (2)
      How the Random Walk Is to Be Conducted       35 (2)
    2 The Madness Of Crowds                        37 (19)
      The Tulip-Bulb Craze                         38 (3)
      The South Sea Bubble                         41 (7)
      Wall Street Lays an Egg                      48 (7)
      An Afterword                                 55 (1)
    3 Speculative Bubbles From The Sixties Into    56 (24)
    The Nineties
      The Sanity of Institutions                   56 (1)
      The Soaring Sixties                          57 (12)
        The New "New Era": The                     57 (3)
        Growth-Stock/New-Issue Craze
        Synergy Generates Energy: The              60 (6)
        Conglomerate Boom
        Performance Comes to the Market: The       66 (3)
        Bubble in Concept Stocks
      The Nifty Fifty                              69 (1)
      The Roaring Eighties                         70 (6)
        The Return of New Issues                   70 (2)
        Concepts Conquer Again: The                72 (1)
        Biotechnology Bubble
        ZZZZ Best Bubble of All                    73 (3)
      What Does It All Mean?                       76 (4)
        The Japanese Yen fcr Land and Stocks       76 (4)
    4 The Explosive Bubbles Of The Early 2000S     80 (31)
      The Internet Bubble                          80 (18)
        A Broad-Scale High-Tech Bubble             82 (3)
        Yet Another New-Issue Craze                85 (2)
        TheGlobe.com                               87 (2)
        Security Analysts $peak Up                 89 (1)
        New Valuation Metrics                      90 (2)
        The Writes of the Media                    92 (2)
        Fraud Slithers In and Strangles the        94 (3)
        Market
        Should We Have Known the Dangers?          97 (1)
      The U.S. Housing Bubble and Crash of the     98 (7)
      Early 2000s
        The New System of Banking                  99 (2)
        Looser Lending Standards                   101(1)
        The Housing Bubble                         102(3)
      Bubbles and Economic Activity                105(6)
        Does This Mean That Markets Are            105(6)
        Inefficient?
  Part Two HOW THE PROS PLAY THE BIGGEST GAME
  IN TOWN
    5 Technical And Fundamental Analysis           111(27)
      Technical versus Fundamental Analysis        112(1)
      What Can Charts Tell You?                    113(4)
      The Rationale for the Charting Method        117(2)
      Why Might Charting Fail to Work?             119(1)
      From Chartist to Technician                  120(1)
      The Technique of Fundamental Analysis        121(8)
      Three Important Caveats                      129(4)
      Why Might Fundamental Analysis Fail to       133(1)
      Work?
      Using Fundamental and Technical Analysis     134(4)
      Together
    6 Technical Analysis And The Random-Walk       138(25)
    Theory
      Holes in Their Shoes and Ambiguity in        138(2)
      Their Forecasts
      Is There Momentum in the Stock Market?       140(2)
      Just What Exactly Is a Random Walk?          142(3)
      Some More Elaborate Technical Systems        145(5)
        The Filter System                          145(1)
        The Dow Theory                             146(1)
        The Relative-Strength System               147(1)
        Price-Volume Systems                       147(1)
        Reading Chart Patterns                     148(1)
        Randomness Is Hard to Accept               149(1)
      A Gaggle of Other Technical Theories to      150(7)
      Help You Lose Money
        The Hemline Indicator                      151(1)
        The Super Bowl Indicator                   152(1)
        The Odd-Lot Theory                         153(1)
        A Few More Systems                         154(1)
        Technical Market Gurus                     154(3)
      Why Are Technicians Still Hired?             157(1)
      Appraising the Counterattack                 158(3)
      Implications for Investors                   161(2)
    7 How Good Is Fundamental Analysis?            163(32)
      The Views from Wall Street and Academia      164(1)
      Are Security Analysts Fundamentally          164(4)
      Clairvoyant?
      Why the Crystal Ball Is Clouded              168(9)
        1 The Influence Of Random Events           169(1)
        2 The Production Of Dubious Reported       170(2)
        Earnings Through "Creative" Accounting
        Procedures
        3 Errors Made By The Analysts Themselves   172(2)
        4 The Loss Of The Best Analysts To The     174(1)
        Sales Desk, To Portfolio Management, Or
        To Hedge Funds
        5 The Conflicts Of Interest Between        174(3)
        Research And Investment Banking
        Departments
      Do Security Analysts Pick Winners?--The      177(7)
      Performance of the Mutual Funds
      Can Any Fundamental System Pick Winners?     184(1)
      The Verdict on Market Timing                 185(1)
      The Semi-Strong and Strong Forms of the      186(3)
      Efficient-Market Theory
      The Middle of the Road: A Personal           189(6)
      Viewpoint
  Part Three THE NEW INVESTMENT TECHNOLOGY
    8 A New Walking Shoe: Modern Portfolio         195(20)
    Theory
      The Role of Risk                             196(1)
      Defining Risk: The Dispersion of Returns     197(3)
        Illustration: Expected Return and          197(3)
        Variance Measures of Reward and Risk
      Documenting Risk: A Long-Run Study           200(2)
      Reducing Risk: Modern Portfolio Theory       202(4)
      (MPT)
      Diversification in Practice                  206(9)
    9 Reaping Reward By Increasing Risk            215(20)
      Beta and Systematic Risk                     216(3)
      The Capital-Asset Pricing Model (CAPM)       219(6)
      Let's Look at the Record                     225(2)
      An Appraisal of the Evidence                 227(2)
      The Quant Quest for Better Measures of       229(2)
      Risk: Arbitrage Pricing Theory
      The Fama-French Three-Factor Model           231(1)
      A Summing Up                                 232(3)
    10 Behavioral Finance                          235(32)
      The Irrational Behavior of Individual        238(14)
      Investors
        Overconfidence                             238(3)
        Biased Judgments                           241(4)
        Herding                                    245(4)
        Loss Aversion                              249(2)
        Pride and Regret                           251(1)
      Behavioral Finance and Savings               252(2)
      The Limits to Arbitrage                      254(4)
      What Are the Lessons for Investors from      258(8)
      Behavioral Finance?
        1 Avoid Herd Behavior                      259(3)
        2 Avoid Overtrading                        262(1)
        3 If You Do Trade: Sell Losers, Not        262(1)
        Winners
        4 Other Stupid Investor Tricks             263(3)
      Does Behavioral Finance Teach Ways to        266(1)
      Beat the Market?
    11 Potshots At The Efficient-Market Theory     267(36)
    And Why They Miss
      What Do We Mean by Saying Markets Are        269(1)
      Efficient?
      Potshots That Completely Miss the Target     270(5)
        Dogs of the Dow                            271(1)
        January Effect                             271(1)
        "Thank God It's Monday Afternoon"          272(1)
        Pattern
        Hot News Response                          273(1)
        Why the Aim Is So Bad                      273(2)
      Potshots That Get Close but Still Miss       275(14)
      the Target
        The Trend Is Your Friend (Otherwise        275(2)
        Known as Short-Term Momentum)
        The Dividend Jackpot Approach              277(1)
        The Initial P/E Predictor                  278(2)
        The "Back We Go Again" Strategy            280(3)
        (Otherwise Known as Long-Run Return
        Reversals)
        The "Smaller Is Better" Effect             283(2)
        The "Value Will Win" Record                285(1)
        Stocks with Low Price-Earnings             285(1)
        Multiples Outperform Those with High
        Multiples
        Stocks That Sell at Low Multiples of       286(1)
        Their Book Values Tend to Produce
        Higher Subsequent Returns
        Does "Value" Really Trump Growth on a      287(2)
        Consistent Basis?
      Why Even Close Shots Miss                    289(2)
      And the Winner Is...                         291(5)
        The Performance of Professional            291(5)
        Investors
      A Summing Up                                 296(7)
  Part Four A PRACTICAL GUIDE FOR RANDOM
  WALKERS AND OTHER INVESTORS
    12 A Fitness Manual For Random Walkers         303(37)
      Exercise 1 Gather the Necessary Supplies     304(2)
      Exercise 2 Don't Be Caught Empty-Handed:     306(3)
      Cover Yourself with Cash Reserves and
      Insurance
        Cash Reserves                              306(1)
        Insurance                                  307(2)
        Deferred Variable Annuities                309(1)
      Exercise 3 Be Competitive--Let the Yield     309(3)
      on Your Cash Reserve Keep Pace with
      Inflation
        Money-Market Mutual Funds (Money Funds)    310(1)
        Bank Certificates of Deposit (CDs)         310(1)
        Internet Banks                             311(1)
        Treasury Bills                             311(1)
        Tax-Exempt Money-Market Funds              312(1)
      Exercise 4 Learn How to Dodge the Tax        312(6)
      Collector
        Individual Retirement Accounts             313(2)
        Roth IRAs                                  315(1)
        Pension Plans                              316(1)
        Saving for College: As Easy as 529         317(1)
      Exercise 5 Make Sure the Shoe Fits:          318(7)
      Understand Your Investment Objectives
      Exercise 6 Begin Your Walk at Your Own       325(2)
      Home--Renting Leads to Flabby Investment
      Muscles
      Exercise 7 Investigate a Promenade           327(6)
      through Bond Country
        Zero-Coupon Bonds Can Generate Large       328(1)
        Future Returns
        No-Load Bond Funds Are Appropriate         329(1)
        Vehicles for Individual Investors
        Tax-Exempt Bonds Are Useful for            330(1)
        High-Bracket Investors
        Hot TIPS: Inflation-Indexed Bonds          331(1)
        Should You Be a Bond-Market Junkie?        332(1)
      Exercise 8 Tiptoe through the Fields of      333(3)
      Gold, Collectibles, and Other Investments
      Exercise 9 Remember That Commission Costs    336(1)
      Are Not Random; Some Are Lower than Others
      Exercise 10 Avoid Sinkholes and Stumbling    337(1)
      Blocks: Diversify Your Investment Steps
      A Final Checkup                              338(2)
    13 Handicapping The Financial Race: A          340(19)
    Primer In Understanding And Projecting
    Returns From Stocks And Bonds
      What Determines the Returns from Stocks      340(5)
      and Bonds?
      Four Eras of Financial Market Returns        345(10)
        Era I The Age of Comfort                   346(2)
        Era II The Age of Angst                    348(4)
        Era III The Age of Exuberance              352(3)
        Era IV The Age of Disenchantment           355(1)
      Handicapping Future Returns                  355(4)
    14 A Life-Cycle Guide To Investing             359(30)
      Five Asset-Allocation Principles             360(13)
        1 Risk And Reward Are Related              360(1)
        2 Your Actual Risk In Stock And Bond       361(4)
        Investing Depends On The Length Of Time
        You Hold Your Investment
        3 Dollar-Cost Averaging Can Reduce The     365(4)
        Risks Of Investing In Stocks And Bonds
        4 Rebalancing Can Reduce Investment        369(2)
        Risk And Possibly Increase Returns
        5 Distinguishing Between Your Attitude     371(2)
        Toward And Your Capacity For Risk
      Three Guidelines to Tailoring a              373(3)
      Life-Cycle Investment Plan
        1 Specific Needs Require Dedicated         373(1)
        Specific Assets
        2 Recognize Your Tolerance For Risk        374(1)
        3 Persistent Saving In Regular Amounts,    374(2)
        No Matter How Small, Pays Off
      The Life-Cycle Investment Guide              376(3)
      Life-Cycle Funds                             379(1)
      Investment Management Once You Have          380(1)
      Retired
        Inadequate Preparation for Retirement      381(1)
      Investing a Retirement Nest Egg              381(4)
        Annuities                                  382(3)
      The Do-It-Yourself Method                    385(4)
    15 Three Giant Steps Down Wall Street          389(30)
      The No-Brainer Step: Investing in Index      391(11)
      Funds
        The Index-Fund Solution: A Summary         392(3)
        A Broader Definition of Indexing           395(2)
        A Specific Index-Fund Portfolio            397(2)
        ETFs and the Tax-Managed Index Fund        399(3)
      The Do-It-Yourself Step: Potentially         402(5)
      Useful Stock-Picking Rules
        Rule 1 Confine stock purchases to          403(1)
        companies that appear able to sustain
        above-average earnings growth for at
        least five years
        Rule 2 Never pay more for a stock than     403(1)
        can reasonably be justified by a firm
        foundation of value
        Rule 3 It helps to buy stocks with the     404(1)
        kinds of stories of anticipated growth
        on which investors can build castles in
        the air
        Rule 4 Trade as little as possible         404(3)
      The Substitute-Player Step: Hiring a         407(2)
      Professional Wall Street Walker
      The Morningstar Mutual-Fund Information      409(1)
      Service
      The Malkiel Step                             410(3)
      A Paradox                                    413(2)
      Some Last Reflections on Our Walk            415(1)
      A Final Word                                 416(3)
Supplement: How Pork Bellies Acquired an Ivy       419(35)
League Suit: A Primer on Derrivatives
Appendix to Supplement: What Determines Prices     454(9)
in the Futures and Options Markets?
A Random Walker's Address Book and Reference       463(8)
Guide to Mutual Funds
Index                                              471