A Random Walk Down Wall Street


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A Random Walk Down Wall Street

A 1973 book by Burton Malkiel arguing that security prices are completely unpredictable, especially in the short term. The book sets forth the idea that both fundamental analysis and technical analysis are wastes of time, as securities behave randomly. Thus, Malkiel holds that it is impossible to outperform the market by choosing the "correct" securities; it is only possible to outperform the market by taking on additional risk. Malkiel cites the fact that many actively managed mutual funds do not outperform the market over time, and in many cases revert to the mean. Critics of this idea contend that empirical evidence shows that security prices do indeed follow particular trends that can be predicted with a fair degree of accuracy. The title of the book gave birth to the term random walk theory. See also: Efficient markets theory.
References in periodicals archive ?
LATELY I HAVE BEEN THINKING A LOT ABOUT PRINCETON Professor Burton Malkiel's A Random Walk Down Wall Street (W.
Yet, as noted by Burton Malkiel, author of A Random Walk Down Wall Street, "For all 25- and 35-year investment periods from 1926 to 2004, investors have always earned positive rates of return.
It's not quite a random walk down Wall Street, but it is pretty close to it.