A Random Walk Down Wall Street漫步华尔街.pptVIP

A Random Walk Down Wall Street Business 3059 Investment Management NOTICE This text is mandatory reading for this course. This slide set has been constructed to help you understand that there are important concepts in this resource for you to understand. This slide set IS NOT a substitute for your own independent reading of the text. Chapter 7 – Technical Analysis and the Random Walk Theory “…the history of stock price movements contains no useful information that will enable an investor consistently to outperform a buy-and-hold strategy in managing a portfolio.” In this chapter, Malkiel helps you understand what is meant by Random Walk. He uses the example of flipping a coin to demonstrate that stock price movements over time perform very like the classic coin toss. This is because information that affects stock prices come to the market randomly…and stock prices ‘vibrate’ randomly in response. Is There Momentum in the Stock Market? Malkiel admits that there is a persistent upward trend in stock prices over time…but it is so small that it is not possible to buy and sell (and incur transactions costs) to take advantage of it using technical analysis. In the end, you are better off to simply buy a diversified portfolio and hold it over time (consciously minimizing your transactions costs) Just What Exactly Is a Random Walk? A random walk describes the pattern of stock prices over time that is created when the next stock price movement is not connected or related to the past price movements…it reflects a commonly random series of events…each future event unconnected with the immediate past. More Elaborate Technical Systems More will be said about these systems in the Technical analysis chapter of the Bodie and Kane text. The filter system The Dow theory The relative-strength system Reading chart patterns Randomness Is Hard to Accept All of us are human …we all have the capacity to ‘see what we want to see’’…we have selective perception in a complex world. I don