A Random Walk Down Wall Street
The case for index investing and market efficiency
"A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts."
— Burton G. Malkiel
My Review
Malkiel's efficient market hypothesis suggests that markets incorporate information so quickly that consistent outperformance is nearly impossible. This maps to ecological equilibrium - in efficient environments, no strategy consistently dominates.
Why It Matters
Understanding market efficiency illuminates competitive dynamics - when information spreads quickly, sustainable advantages become harder to maintain.
Key Ideas
- Markets are largely efficient at incorporating information
- Past performance doesn't predict future returns
- Index funds beat most active managers over time
- Bubbles and manias recur despite rationality
How It Connects to This Framework
The competitive exclusion concepts in Book 3 and market evolution throughout.
Get the Book
Support the author and your preferred bookseller:
Tags
Want to go deeper?
The full Biology of Business book explores these concepts in depth with practical frameworks.