Markets are unpredictable and efficient from "summary" of Random Walk Guide To Investing by Burton G Malkiel
The idea that markets are unpredictable and efficient is a fundamental concept in investing. This means that it is nearly impossible to consistently predict the movements of the stock market with any degree of accuracy. Even the most experienced investors and analysts struggle to forecast market trends with any certainty. Efficient market theory suggests that stock prices reflect all available information at any given time. This implies that it is extremely difficult, if not impossible, to consistently outperform the market by picking individual stocks. In other words, trying to beat the market by timing stock purchases and sales is a risky and often futile endeavor. Market efficiency also implies that prices adjust rapidly to new information, making it challenging for investors to gain an edge by acting on news or rumors. The random walk theory further supports this idea by suggesting that stock prices follow a random pattern and are not predictable in the short term. While it is true that some investors may have success picking individual stocks or timing the market in the short term, research has shown that this success is often due to luck rather than skill. Over the long term, the vast majority of investors who attempt to beat the market fail to do so consistently. Given the unpredictability and efficiency of markets, a more prudent approach to investing is to focus on diversification and long-term investing strategies. By spreading investments across a range of asset classes and holding them for the long term, investors can reduce risk and increase the likelihood of achieving their financial goals.- The concept that markets are unpredictable and efficient underscores the importance of adopting a disciplined and rational approach to investing. While market fluctuations and uncertainties are inevitable, investors can increase their chances of success by focusing on factors within their control, such as diversification, asset allocation, and maintaining a long-term perspective.
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