| Random
Walk Theory |
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A
stock market theory that states the past movement or direction of
the price of a stock or market cannot be used to predict its future
movement. The
theory also believes stock price changes are independent of each other
and have the same probability distribution, but over time maintains
an upward trend. |
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In
short, the idea that stocks take a random and unpredictable path.
A follower in the random walk believes it is impossible to outperform
the market without assuming additional risk. |
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Dictionary
