Random Walk: Difference between revisions
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::[[Image:A%20Random%20Walk%20Down%20Wall%20Street20060913034019.jpg]] | ::[[Image:A%20Random%20Walk%20Down%20Wall%20Street20060913034019.jpg]] | ||
*'''A random walk''' is one in which future steps or directions cannot be predicted on the basis of past actions. When the term is applied to the stock market, it means that short-run changes in stock prices cannot be predicted. | *'''A random walk''' is one in which future steps or directions cannot be predicted on the basis of past actions. When the term is applied to the stock market, it means that short-run changes in stock prices cannot be predicted. | ||
*Taken to its logical extreme, it means that 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 the expert[[s]]. | *Taken to its logical extreme, it means that 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 the expert[[s]]. | ||
Revision as of 11:47, 1 May 2007
A Random Walk Down Wall Street
- A random walk is one in which future steps or directions cannot be predicted on the basis of past actions. When the term is applied to the stock market, it means that short-run changes in stock prices cannot be predicted.
- Taken to its logical extreme, it means that 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 the experts.
