A random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing

particularly useful for funds earmarked for inheritance.
If you want an easy, time-tested method to achieve
superior investment results, you can stop reading here. The
indexed mutual funds or ETFs that I have listed will provide
broad diversification, tax efficiency, and low expenses. Even
if you want to buy individual stocks, do what institutional
investors are increasingly doing: Index the core of your
portfolio along the lines suggested and then take active bets
with extra funds. With a strong core of index funds, you can
take these bets with much less risk than if the whole portfolio
were actively managed. And even if you make some errors,
they won’t prove fatal.
THE DO-IT-YOURSELF STEP:
POTENTIALLY USEFUL STOCK-
PICKING RULES
Indexing is the strategy I most highly recommend for
individuals and institutions. I do recognize, however, that
indexing the entire portfolio may be considered by many to

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be a very dull strategy. Those with speculative temperaments
will undoubtedly prefer using their own steps (and wits) to
pick winners, at least for some portion of their investment
funds. For those who insist on playing the game themselves,
the Do-It-Yourself Step may be appealing.
Having been smitten with the gambling urge since
childhood, I can well understand why many investors have a
compulsion to try to pick the big winners on their own and a
total lack of interest in a system that promises results merely
equivalent to those in the market as a whole. The problem is
that it takes a lot of work to do it yourself, and consistent
winners are very rare. For those who regard investing as play,
however, this section demonstrates how a sensible strategy
might produce substantial rewards and, at the very least,
minimize the risks in playing the stock-picking game.
Before putting my strategy to work, however, you need to
know the sources of investment information. Most
information sources can be obtained at public libraries. You
should be an avid reader of the financial pages of daily
newspapers, particularly the 
New York Times
and the 
Wall
Street Journal
. Weeklies such as 
Barron’s
should be on your
“must-read” list as well. Business magazines such as

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Bloomberg Businessweek
, 
Fortune
, and 
Forbes
are also
valuable for gaining exposure to investment ideas. The major
investment advisory services are good, too. You should, for
example, try to have access to Standard & Poor’s 
Outlook
and the Value Line 
Investment Survey
. The first is a weekly
publication that contains recommendation of stocks to buy;
the second presents historical records, current reviews, and
risk (beta) ratings of all the major securities. Finally, a wealth
of information, including security analysts’ recommendations,
is available on the Internet.
In the first edition of 
A Random Walk Down Wall Street
,
almost forty years ago, I proposed four rules for successful
stock selection. I find them just as serviceable today. In
abridged form, the rules, some of which have been mentioned
in earlier chapters, are as follows: