The Random Walk Guide to Investing: Ten Rules for Financial
Success Burton G. Malkiel W.W. Norton & Company, 2003 The title
of this book derives from the author’s famous book A Random Walk
Down Wall Street, published in 1973. That book, and this too,
refer to the theory of efficient markets. In the author’s words:
“The main premise of the theory is that the stock market is an
extraordinarily efficient institution for reflecting without
delay any information that arises. When news arises, an army of
profit-seeking Wall Street professionals pounces on it rapidly,
driving stock prices up or down. As a result, stock prices
reflect whatever good or bad news there is about each individual
company or about the economy as a whole.” News is unpredictable.
If not predictable and random, it wouldn’t be news, and today’s
prices would reflect that information. So the price of a stock
tomorrow is based on unpredictable — and therefore random —
events. There is nothing contained in the past prices of a stock
that has any va