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A Random Walk Down Wall Street, written by Burton Gordon Malkiel, a Princeton University economist, is a book on the subject of stock markets which popularized the random walk hypothesis. Malkiel argues that asset prices typically exhibit signs of a random walk , and thus one cannot consistently outperform market averages .
Burton Gordon Malkiel (born August 28, 1932) is an American economist, financial executive, and writer most noted for his classic finance book A Random Walk Down Wall Street (first published 1973, in its 13th edition as of 2023).
The term was popularized by the 1973 book A Random Walk Down Wall Street by Burton Malkiel, a professor of economics at Princeton University, [2] and was used earlier in Eugene Fama's 1965 article "Random Walks In Stock Market Prices", [3] which was a less technical version of his Ph.D. thesis.
We all have to start from somewhere, and for many, that's close to zero. How do successful investors make their riches and start their businesses? Usually they take a small amount of money and put ...
As a result, Malkiel argued, stock prices are best described by a statistical process called a "random walk" meaning each day's deviations from the central value are random and unpredictable. This led Malkiel to conclude that paying financial services persons to predict the market actually hurt, rather than helped, net portfolio return.
Research by Alfred Cowles in the 1930s and 1940s suggested that professional investors were in general unable to outperform the market. During the 1930s-1950s empirical studies focused on time-series properties, and found that US stock prices and related financial series followed a random walk model in the short-term. [8]
The application of random walk hypothesis in financial theory was first proposed by Maurice Kendall in 1953. [50] It was later promoted by Eugene Fama and Burton Malkiel. Random strings were first studied in the 1960s by A. N. Kolmogorov (who had provided the first axiomatic definition of probability theory in 1933), [51] Chaitin and Martin ...
In 1973, Burton Malkiel wrote A Random Walk Down Wall Street, which presented academic findings for the lay public. It was becoming well known in the popular financial press that most mutual funds were not beating the market indices. Malkiel wrote: