STOCK GOODIES PLAYS OF THE WEEK

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Random Versus Non-Random

The great debate continues to rage between random walkers and non-random walkers. Two competing books best represent these theories. Originally written by Burton Malkiel in 1973, A Random Walk Down Wall Street has become a classic in investment literature. The book has been revised numerous times with new editions as recently as 2007. Malkiel, a Princeton Economist, argues that price movements are largely random and investors cannot outperform the major indices.



Written by Andrew W. Lo and A. Craig MacKinlay in 2001, the appropriately entitled A Non-Random Walk Down Wall Street provides the counter argument. Lo, an MIT Finance professor and MacKinlay, a Wharton Finance professor, argue that price movements are not all that random and that predictable components do indeed exist. Let the battle begin!