Are markets truly a random walk?
You might have seen in the news that Nike has dropped by as much as -4% after they, along with H&M, came under fire following accusations of forced Labour in Xinjiang resulting in a brand boycott in China.
This got me thinking about something i read somewhere. Is the stock market truly a 'Random walk' or is there some level of legitimate predictability?
A truly random walk would mean that it is not possible to predict the direction of a stock, and may only present the illusion of predictability through chanced success. However, as we can see here technical analysis presents the formation of rectangle top. This would imply that investors anticipated some sort of impulsive move in the near future. If i recall correctly from some reading i was recommended break out can occur in either direction although tend to signal continuation in bull markets with an 11% fail rate.
I wonder, was the brand boycott simply an unforeseen chance event the market responded to, thus making the market a random walk (no one could have foreseen this event without insider trading)? Or could the market have predicted the boycott/news event in some way (as could be argued based on this technical analysis pattern)? Can one really predict the direction of a stock at all?
Idk just got me thinking
This got me thinking about something i read somewhere. Is the stock market truly a 'Random walk' or is there some level of legitimate predictability?
A truly random walk would mean that it is not possible to predict the direction of a stock, and may only present the illusion of predictability through chanced success. However, as we can see here technical analysis presents the formation of rectangle top. This would imply that investors anticipated some sort of impulsive move in the near future. If i recall correctly from some reading i was recommended break out can occur in either direction although tend to signal continuation in bull markets with an 11% fail rate.
I wonder, was the brand boycott simply an unforeseen chance event the market responded to, thus making the market a random walk (no one could have foreseen this event without insider trading)? Or could the market have predicted the boycott/news event in some way (as could be argued based on this technical analysis pattern)? Can one really predict the direction of a stock at all?
Idk just got me thinking
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