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Definition of

random walk

  • 1. Markets

    unpredictable movement in stock prices a movement that cannot be predicted, used to describe movements in stock prices that cannot be forecast

  • 2. Statistics

    sampling method producing random selection a sampling technique that allows for random selection within specific limits set up by a non-random technique

Recommended Further Reading (Term count)
  • A Non-Random Walk Down Wall Street
    Andrew W. Lo and A. Craig MacKinlay (1999)
  • Quantifying Corporate Financial Risk
    by David Shimko
    Consider the case of a company that has experienced six months of cash flows this year and wants to forecast the next six months. The usual way to do this is to predict a cash flow growth rate—expected, high, and low—and to base the analysis on these choices. A sample cash flow projection might be illustrated graphically in Figure 1.Figure 1. Deterministic cash flow forecast for last six months In reality, of course, several different cash flow...
  • Eugene Fama
    Author of the efficient markets hypothesis
    Eugene Fama was a tenured professor at the University of Chicago before he was 30, where he taught portfolio theory before modern finance became established. He has spent his career at the Graduate School of Business, University of Chicago, where he revolutionized thinking on the efficient markets hypothesis, and where he is now Chairman of its Center for Research in Security Prices. He is also Director of Research at Dimensional Fund Advisors,...
  • A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
    Burton G. Malkiel (10th ed 2012, originally 1973)
    An investing classic that is also an entertaining read, this is a concise guide for the novice that challenges all preconceptions about investing. Shows how to manage money effectively regardless of personal income, savings, and age, and that diversification is critical to investment success. Also of interest to professionals, as it discusses aspects of investment such as the random walk hypothesis, the efficient market hypothesis, and portfolio...

Definitions of ’random walk’ and meaning of ’random walk’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’random walk’ and other financial terms with our online QFINANCE Financial Dictionary.

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