Random walk
TheoryDefinition
Theory that stock prices move randomly such that future moves can't be predicted from past prices. Cornerstone of efficient market hypothesis. Implies technical analysis adds no value.
Modern empirical evidence: stocks aren't pure random walks (momentum, value, low-vol effects exist), but most short-term price moves are sufficiently random that retail timing is a losing game.
Modern empirical evidence: stocks aren't pure random walks (momentum, value, low-vol effects exist), but most short-term price moves are sufficiently random that retail timing is a losing game.