Princeton University Economics professor Dr. Burton Malkiel has written an excellent book in A Random Walk Down Wall Street, which has sold a million copies and is periodically updated with new insights. I had the book on my reading list for quite some time and finally got a chance to read it a few weeks ago. While the book is long and I don’t agree with the efficient market hypothesis (the strong form or the weak form that Dr. Malkiel believes in), it is very interesting to see how he goes about debunking the importance of technical analysis and even fundamental analysis. Dr. Malkiel is convinced that investing in a market index fund is the best approach as any inefficiencies or anomalies that exist in the market will rapidly disappear and cannot be exploited profitably after taking slippage (trading costs, etc) into account.
While the pages of the book are packed with solid data and charts (I found the historical relationship between dividend yields and bull/bear market tops/bottoms very interesting), the prose is easy to read and often entertaining (the hemline indicator or the charting of coin tosses). Without giving too much away, I highly recommend checking out this book if you don’t already have a dog-eared copy sitting on your shelf.