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The Time-Tested Strategy for Successful Investing

For the past few centuries there has been rapid improvement in ways individuals as well as organizations conduct businesses. In the ancient years most business people used only one channel to transact business which involved exchange of goods and services and it was by the means of barter trade. With time however barter trade faced off as a channel of conducting business and it was replaced with the use of currency a dozen of centuries back. It is the introduction of the currency as a medium of trade (exchange of goods and services) that changed the way individuals and organizations conduct business. One major role that the currency has played in the modern day business is that it has “united” all business parties into one business community.

Purpose of the Paper

The history of the stock markets dates to more than 200 years ago when colonial government came up with a new way of financing war by selling government noted (bonds) with an assurance to the investors that they will be paid out at a later date. Since then, there has been tremendous improvement as well as an increase in the number of stock markets around the world. It is however important to note that the New York Stock Exchange is one of the oldest as well as the best performing stock market in the world.

The purpose of this essay paper is to discuss one chapter from the book “A Random Walk Down Wall Street: The time-tested strategy for successful investing” by Burton G. Malkiel. The paper will try to explain the author’s point of view in simple language, it will also give a personal focus on where you agree or disagree with the author and finally it will explain how the issue from the chapter may be relevant to me in future.

The Biggest Bubble of all: Surfing the Internet

In chapter of the Book, the author Malkiel has compared the rapid growth and development of the stock markets to the internet. From the mid 1900’s to the onset of the millennium, the world witnessed a change in technology that defined the modern day business and social world, this was when the internet replaced the ancient post mails and fixed landline telephone lines as a mode of communication and conducting business. In the chapter, the author has indicated that, “in essence that this huge soap bubble is the result of a confluence of bubbles as before, while working together: the introduction of mania in the early 1960s, the stock market, the “smoke and mirrors” that fueled businesses in the South Sea Bubble and the pursuit of future effectiveness in the 1850s was with railroad stocks all happened again with the dot-com”.

The introduction of the internet as a mode of communication did not only improve the communication on a social level but on an economic (business) level too, this was by the introduction of the electronic business or commerce (E – Commerce). It is however important to note that despite the fact that E- Business and E- Commerce have improved the way online trading, there are some slight differences between the two.

E – Commerce and E – Business :Since the discovery of the internet and online trading, there has been heated arguments among entrepreneurs and business professions on the major differences between E – business and E – commerce and whether they perform the same functions in an organization or not. Chaffey states that E – business is the process of changing the existing key business processes by the use of internet technologies (Chaffey, 2008). In addition to that, E – business is mainly applied to the company’s strategy and operations. In reference to E – commerce, Chaffey has explained that E – commerce is a online (electronic) process of business transaction (buying and selling) of goods and services, however there is a 3rd party involved in the process whose responsibility is to ensure transparency of the process and that all the parties adhere to the stipulated rules and regulations (Chaffey, 2008). There are two main branches of the E – commerce; the sell side and buy side E – commerce.

Buy – Side: In E – commerce, the buy side refers to the raw materials and resources that the company needs from its suppliers. Sell – Side: The sell side is the process of the selling of the company’s goods and services to the consumers. This is the side that greatly determines whether the organizations / company will record profits or losses.

Having looked at the definition of E- commerce it is important for to understand what are its limitation and advantages and how have they affected the growth of the stock market, not only the Wall Street but all other stock markets around the world.

Advantages of E – Commerce

The following are the main advantages of the E – commerce and how they have contributed to the improvement of service delivery and online trading;

Availability: In the ancient days the most stock markets used to open for less than 12 hours a day and it was mandatory for company agents to be there in person in order to make buys and sell shares; however with the introduction of the internet, more specifically online trading, one can buy and sell shares at any time of the day since the trade was made trading simple since one can trade 24/7 for a whole year. Another advantage of E – commerce is price. When it comes to online trading, price is of the essence and by the trading going online, more traders have come on board and as a result the prices have become more and more competitive. The last major advantage of E – commerce in relation to online trading is it is a cost cutting and time saving measures. The time spent queuing and shouting at the trade markets has been eliminated since most transactions are conducted digitally and from the comfort of an entrepreneur’s office or home. After looking at E – commerce, its advantages and contributions it has had in the business world, it is important that the author was right on point when he focused on this chapter in his book. It is with the rapid growth and development of the internet that most third world nations around the world have been able to embrace the concept of online trading more specifically when it comes to trading on the stock market. Other sub topics that the author has focused on are security analysis when it comes to online trading and the contribution of the media to the growth and development of online trading.

Summation of the Paper

In the modern world, for one to decently earn a decent living he/she must have the will and determination to diversify and invest in other projects apart from their normal jobs. This has been made easier by the rapid growth of internet which means that a person can multi task as long as they are connected to the internet.  This essay paper has focused on one chapter in the book “A Random Walk Down Wall Street: The time-tested strategy for successful investing” by Burton G. Malkiel. The paper has simplified the chapter and here it has focused on E – commerce as a way of trading. The paper has looked at the definition of E – business and E- commerce and given its advantages. It has also given how the growth of internet, E – commerce in particular has helped in the growth of online trading. In conclusion, the future of online trading looks bright and promising; however the world super powers should help the developing third world nations to ensure that they are digitally empowered. This is the only way that the “walk down the Wall Street” will be enjoyed by all.

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