Financial Risk Management 2A


  1. The random-walk theory, with its implication that investing in stocks is like playing roulette, is a powerful indictment of our capital markets.
  2. If everyone believes you can make money by charting stock prices, then price changes won’t be random.
  3. The random-walk theory implies that events are random, but many events are not random. If it rains today, there’s a fair bet that it will rain again tomorrow.