The Random Walk Theory

Term of the DayThe Random Walk Theory is most famously known from Burton Malkiel's stock book, "A Random Walk Down Wall Street." A follower of the Random Walk Theory is a believer that it is impossible to outperform for the overall market with stock picking.

These theorists believe that stock prices are random and there is no actual correlation between today and tomorrow, each result is independent.

You can read more about the Random Walk Theory in the stock terms area of the site (View a full list of all terms).