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What Does "Random Walk" Mean? According to the Efficient Markets

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Essay

What does "random walk" mean? According to the efficient markets hypothesis, should stock prices follow a random walk?


Definitions:

Poor Choices

Decisions made that lead to suboptimal or negative outcomes, often due to a lack of information or foresight.

Substantial Costs

Significant expenses or outlays that a company or individual may incur.

Escalation of Commitment

The tendency to continue investing in a project or decision despite evidence of its failing, driven by emotional attachment or the desire to justify prior investments.

Persistent Failure

The ongoing inability to achieve success or meet objectives.

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