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

A FINAL WORD
One of the most rewarding features for me in writing ten
editions of this book has been the many letters I have
received from grateful investors. They tell me how much they
have benefitted from following the simple advice that has
remained the same for over forty years. Those timeless
lessons involve broad diversification, annual rebalancing,
using index funds, and staying the course.
BROADLY 
DIVERSIFIED
PORTFOLIO OF MUTUAL FUNDS
(WITH ANNUAL REBALANCING)
VS. 
PORTFOLIO 
CONTAINING
U.S. STOCKS ONLY

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Source: Vanguard and Morningstar.
The first decade of the new millennium has been a most
challenging time for investors. Even a broadly diversified
Total Stock Market fund devoted solely to U.S. stocks lost
money. But even in this horrible decade, following the
timeless lessons I have espoused would have produced
satisfactory results. The chart above shows that an

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investment in the VTSMX (the Vanguard Total Stock Market
Fund) did not produce positive returns in the “lost” decade of
the “naughties.” But suppose an investor diversified her
portfolio with the approximate conservative percentages I
suggested previously for the “aging Baby Boomers.” The
diversified portfolio (annually rebalanced) produced a quite
satisfactory return even during one of the worst decades
investors have ever experienced. And if the investor also used
dollar-cost averaging to add small amounts to the portfolio
consistently over time, the results were even better. If you
will follow the simple rules and timeless lessons espoused in
this book, you are likely to do just fine, even during the
toughest of times.

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