John Right, an analyst with Stock Pickers Inc., claims: "It is not worth my time to develop detailed forecasts of sales growth, profit margins, et cetera, to make earnings projections. I can be almost as accurate, at virtually no cost, using the random walk model to forecast earnings." What is the random walk model? Do you agree or disagree with John Right's forecast strategy? Why or why not?© BrainMass Inc. brainmass.com June 3, 2020, 8:40 pm ad1c9bdddf
The random walk hypothesis is a financial theory stating that stock market prices evolve according to a random walk and thus the prices of the stock market cannot be predicted. It has been described as 'jibing' with the efficient market hypothesis. Investors, economists, and other financial behaviorists have historically accepted the random walk hypothesis. They ...
The expert examines the random walk model for Stock Pickers Inc.