A Random Walk Down Wall Street by Burton Malkiel

 There was nothing terribly surprising to me in this classic by Malkiel. I'd pretty much read or heard it all before.

That said, however, for someone just getting started or looking for facts and figures and objective truth about the most effective way to invest their money without the ups and downs of the stock market keeping them awake at night, this book is a great primer.

Some choice tidbits:

"The key to investing is not how much an industry will affect society or even how much it will grow, but rather its ability to make and sustain profits."

"Discount brokerages make money on the spread between bid and ask prices on stocks."

"The golden number for American xenophobes—those fearful of looking beyond our national borders—is at least fifty equal-sized and well-diversified U.S. stocks (clearly, fifty oil stocks or fifty electric utilities would not produce an equivalent amount of risk reduction). With such a portfolio, the total risk is reduced by over 60 percent. And that’s where the good news stops, as further increases in the number of holdings do not produce much additional risk reduction."

"It turns out that the portfolio with the least risk had 17 percent foreign securities and 83 percent U.S. securities. "

A good definition:

"Some stocks and portfolios tend to be very sensitive to market movements. Others are more stable. This relative volatility or sensitivity to market moves can be estimated on the basis of the past record, and is popularly known by—you guessed it—the Greek letter beta."

There was a study performed investigating herd mentality, how people are influenced by those around them to do things that are irrational or counterfactual - often the case in investing.

"If caving in to the group was the result of social pressure, the study reasoned, one should see changes in the area of the forebrain involved in monitoring conflicts. But if the conformity stemmed from actual changes in perception, one would expect changes in the posterior brain areas dedicated to vision and spatial perception. In fact, the study found that when people went along with the group in giving wrong answers, activity increased in the area of the brain devoted to spatial awareness. In other words, it appeared that what other people said actually changed what subjects believed they saw. It seems that other people’s errors actually affect how someone perceives the external world."

In other words, the people you associate with can affect your apprehension of reality. Scary, huh?