Top positive review
Good book but it strengthens my view that the markets are inefficient
Reviewed in the United States on April 7, 2018
To clear up what some readers misconceive, I found the author's summary at the end of Ch. 4 helpful: "Probably more so than any other chapter in the book, this review of the Internet [sic] bubble seems inconsistent with the view that the stock market is rational and efficient. The lesson from this chapter, it seems to me, is not that markets occasionally can be irrational and, therefore, that we should abandon the firm-foundation theory. Rather, . . . in every case, the market did correct itself. The market eventually corrects any irrationality . . . ." So in short, Malkiel acknowledges the market temporarily becomes irrational but eventually corrects such irrationality; thus, the market eventually acts rational.
In my view, even if the market eventually acts rational, the market acts inefficiently as Malkiel admits: "markets occasionally can be irrational." As Malkiel points out, the market acted irrationally for years by over valuing internet stocks during the late 1990's. A market that fails to rationally value companies for years acts inefficiently.
So far, I like the book and take away its points. However, that does not mean I changed my thinking. As I pointed out in the example above, Malkiel's points strengthen by view: at times, the markets act irrational. Because at times, the markets acts irrationally, the market is inefficient. Because the market is inefficient, investors who understand the inefficiency can consistently produce a return greater than the market. Read the Market Wizard series where Jack Schwager interviews investors who have done so.