Free markets, random walk -- are key principles in capital markets.
In free markets -- free is definitely missing. Our markets are not free. The bankers are free to take home the profits. The people are left holding the losses. Quite an equitable distribution of winners and losers.
The random walk -- that is at any given instant the price of a security can move in either direction -- randomly --. Do you know you can have the view that a stock price will appreciate -- and therefore go long? But starting today you can have the view that stock will depreciate -- and however you cannot sell? The randomness manifests only because of such diametrically opposite viewpoints are equally likely. Since only positive outlooks are actionable, the markets can only go up. Therefore, the market is no longer random. There is a bias.
Free markets are not free any more if you are an ordinary share holder. And there is no randomness to the security price movements. Keywords are mis-leading.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment